A.T. Kearney identifes the economic benefits of gender equality in Mexican economy

25 October 2017 Consultancy.lat

According to a new report from consulting firm A.T. Kearney, entitled ‘Beyond Gender Diversity: Inclusion 2.0’, the prevalence of a ‘macho' culture is hindering Mexican workplace productivity.

Recently, there has been an international push to increase gender diversity in the workplace. The creation of a more inclusive work environment is not only socially advantageous, but also economically beneficial, according to an A.T. Kearney report. By tackling diversity issues, businesses can increase productivity and potentially save billions. The financial cost of having a lack of women in managerial positions across three markets — the U.S. the U.K. and India — runs $655 billion in forgone business opportunities, according to a separate business case study. This knowledge has created a desire for both governments and the private sector to act; however, the practicalities of doing so are impeding the transition.

Women in Mexico are affected by low-level workers' rights, gender stereotyping, and a lack of opportunities to climb the ladder. In comparison to other OECD countries, Mexico is at the bottom end of gender inclusivity in the workplace. In terms of female participation in the labour force, only 47% of women who are of working age are contributing to the Mexican economy. The OECD average sits at 60%, and is led by Northern European countries. 

Female labour force participation

In a regional context, Mexican gender inequality is marginally higher than its Latin peers. Female participation in the workplace lags behind Chile, Colombia, Peru, and Brazil; and while 17 of 25 Latin American and Caribbean countries improved in the OECD’s 2016 Global Gender Gap Index, Mexico regressed. The report identifies that for the Mexican women who do work, there is low pay and little security or social protection due to the informal nature of jobs that women can acquire. As a result, Mexico remains one of the lowest preforming countries in terms of female professionals in the region. According to the study, by tackling the issue of the gender gap in the workforce, Mexico can increase growth with a bottom line of 0.2 percentage of per capita GDP by 2040.

A.T. Kearney's report indicates that in order to improve diversity and inclusion, socially-ingrained biases and normative policy structures that hold women back must be dismantled. In order for Mexican women to gain greater gender equality, it is important that national companies establish policies that both protect and create opportunities for women in the workplace. The task to foster inclusion must be shared between government and private companies, changing both policy and cultural barriers. 

In the instance of both maternity and paternity leave, Mexico falls far below the OECD average. Less than half of all Mexican women are legally entitled to paid leave, and on average, the country has regressed since the 1990s on the provision of parental leave. This is shaped both by a lack of a public framework to secure women’s rights in the workplace, and by private company culture. The report suggests that policy barriers like this feed into wider social expectations, acting as barriers for female advancement in the workplace.

Mexico lags other OECD countries

Despite government attempts to boost the number of females in the workplace and decrease issues such as violence against women and sexual harassment, gender inequality remains entrenched in the culture of many firms. While gender inequality is a problem throughout the entire country, international companies are more diverse than private national companies, reflecting a global push towards gender equality. Currently, men continue to have higher salaries than their female counterparts, dominate managerial positions, and prefer to work with other men.

Within the public sector, the Mexican government has recognized the weight of the issue, enacting a number of successful gender-related measures and policies. Additionally, the Mexican government has an unusually high number of women parliamentarians in comparison to the OECD average.

Mexican ‘Machismo’

Masculinity or ‘machismo’ is seen to be one of the driving forces of Mexico's particularly wide gender gap, according to the study. ‘Machismo’ is a cultural stereotype that can be described as a strong masculine pride, and often includes the belief that women belong at the family home and not in the workplace. This culture is perpetuated by both men and women who reinforce these stereotypes and place expectations on how women should act. 

Measures to tackle the issue are multifaceted and need to come from both public and private sectors, as well as through social change. The study suggests multiple areas in which change can address the gender gap in Mexico. Through the means of education and role model development, the country can address some of the fundamentals of the issue. To challenge ‘machismo’, it is first important to bolster education, from a family level to inclusion in universities. At a business level, an open educational system will create a greater talent pool. This level of encouragement to participate should be replicated in the workplace through sponsorship programs and leadership mentoring. 

By creating an atmosphere where women can get to positions of power, the culture of machismo and the correlation between women and home life will begin to break down. This in turn will raise confidence that women have an equal opportunity to succeed professionally and will encourage other women. Efforts must come from multinational firms introducing more equitable corporate cultures, as well as from the public sector enshrining equitable worker's rights through policy. At the same time, local SMEs must also incorporate policies to encourage women to participate in the workplace. According to the consulting firm, if Mexico is successful in increasing diversity, the economic benefits will be widespread. 

Digitization could add $240 billion to Mexico’s GDP by 2025

22 January 2019 Consultancy.lat

New in-depth analysis by McKinsey & Company ranks Mexico 55th in digital maturity out of 151 countries. When compared to countries with similar economic output, Mexico is in good shape, but the country has “yet to achieve the kind of world-class digital transformation that fuels productivity and economic growth.”

Countries that have adequately transformed, such as Estonia and Malaysia, have incomes close to Mexico, but punch “above their weight” when it comes to digital maturity. Mexico is about halfway there. Taking steps to improve its global digital position, however, could increase the country’s GDP by  7-15% (approximately $155-240 billion) by 2025. Such an increase would be powered by increased productivity and employment in existing industries, new digital businesses, a broadened expanded information-and-communication-technology (ICT) sector, as well as the successful labor force transition into the digital world.

Mexico is the second-largest economy in Latin America, meaning it is in the unique position to set the regional standard for a “digitally enabled” government.

For their analysis, McKinsey & Company researchers Alberto Chaia, Gonzalo Garcia-Muñoz, Philipp Haugwitz, Max Cesar, and Andre de Oliveira Vaz defined digital maturity using four categories: government, foundations, economy, and society. The study also laid out steps that Mexico could take to improve its digital maturity. Of these four factors, Mexico has the most work to do in digital economy and digital foundations, categories in which its scores are just below average – and which are highly correlated.

Digital maturity of Mexico according to McKiney

The bad news first

Digital foundations essentially encompass the ability of citizens to participate in a digital society. This means internet access, mobile networks, and so forth. “In 2016, Mexico had just 13 fixed-line broadband subscriptions for every 100 inhabitants” the analysis found. “The rate of subscription to mobile broadband is higher, at 61%, but this still leaves a sizeable portion of the population unconnected and thus spending additional time and money getting to physical centers to access government services.” This lack of access causes Mexico to rank 93rd overall in the digital foundations category. 

Mexico’s digital economy, in turn, is hindered by its “shaky” digital foundations. It sits in 92nd place of all countries surveyed. There is a lack of access to high-speed internet, as stated, as well as an unreliable postal service and a lack of bank accounts among the population, with just 40% of citizens aged over 15 having an account. These factors decrease the country’s potential to develop an e-commerce industry that is widely and conveniently used. Exports of ICT goods, as well, account for an astonishing less than 1% of all exported goods and services.

And now for the good news

Mexico’s digital government, which ranks 39th overall, has made great strides in recent years. The creation of gob.mx, for example, provides "a one-stop portal that consolidates 34,000 databases from 250 government institutions and 5,400 public services. The platform is described as the “centerpiece” of Mexico’s digitization efforts, allowing citizens easy access to important legal documents such as birth certificates, as well as automating internal processes, making workplaces tasks run more smoothly for government employees.

Despite this – and the appointment of a national digital strategy coordinator who sits on the president’s staff - Mexico “receives low scores from its citizens on their overall satisfaction with the convenience and accessibility of government services.” Citizen experience was the worst-rated of those group countries surveyed (Canada, France, Germany, Mexico, the United Kingdom and the United States). There was also a largest perception gap between the private and public sector.

How digital can boost Mexico’s GDP

A digital society, according to the report, “can improve the quality of life for citizens by fostering greater civic participation, providing access to information, and offering new tools for health and education.” As previously shown, Mexico is pushing such platforms, including several subsections of gob.mx, on which citizens can participate in public polls and discussions, and present potential digital solutions to serious societal problems such as earthquake detection systems.

Mexico is well on its way to achieving a “good” or “very good” digital maturity rating (right now, the country is “acceptable”). According to McKinsey, “There are three basic initiatives Mexican government leaders could consider putting on top of their priority lists [to speed the transition into the upper echelons of digitization].”

First, the Mexican government must define a digital vision and strategy. Second, it must link that vision to policymaking. Entwining the two ensures that digitization acts as a “lever” to a policy’s success. “To establish a clear link between its digital vision and public value, Mexico’s incoming administration may want to consider revisiting the country’s "National Digital Strategy" for 2013 and aligning it with Mexico’s current and future needs, as well as with the new government’s priorities,” the report states. A “test and learn” attitude toward linking digital vision and policy will also be necessary, as the only way to avoid repeated mistakes is by closely evaluating those that have been made, then planning accordingly. Adopting this attitude, according to the report, will necessitate more flexible budgetary strategies.   

The third suggested initiative is all about power to the people. Successful digital transformations are those that are centered around the citizens, rather than the institutions that serve and govern them. This means service delivery is key, and centralization of digitalization efforts – initially, perhaps, in the form of a council that would oversee governmental transformation – could greatly aid government agencies in getting the people what they desire. As Mexico transforms, so would the ways in which ideas are generated and put into action. For instance, the United States has the US Digital Service, which works with the White House, and Singapore relies greatly on the Government Technology Agency, which reports to the country’s president and implements digital strategies.

Digital maturity benchmark

Filling in the cracks

Because Mexico ranks on the low end of the “digital foundations” category, it is obvious that the other four categories, which by nature fall under the “foundations” umbrella, are potentially negatively affected. As such, McKinsey offers five steps that could be taken to strengthen the country’s digital infrastructure. 

Private companies, for one, could be offered incentives to provide broadband internet to “marginalized” communities, such as those in Oaxaca and Chiapas. The study points to India as an example, where the government-created National Optical Fibre Network (BharatNet) “successfully brought broadband services to approximately 115,000 villages, aiming to deliver broadband connectivity to 250,000 villages overall.” 

Talent is also an issue. “In recent years, Mexico has made significant strides to boost the number of college graduates with degrees in science, technology, engineering, and mathematics (STEM),” the report states. In 2016, 25% of university graduates with a STEM degree. 

But degrees aren’t so much the problem as education in general. “Only 17% of Mexicans graduate from college, making the talent pool small.” Programs that keep primary and secondary school teachers in the loop are a must – as are “reskilling” programs meant to train a percentage of the workforce that is soon to be displaced by technology such as automation. 

Rounding out the five suggestions are a system that easily and simply explains new regulations regarding technology - an invaluable resource for startups; the development of cybersecurity units required to monitor the security of such a large, overarching transformation; and a streamlined, interoperable model for data sharing across multiple government agencies. 

It’s an investment

The challenges and obstacles in Mexico’s path to digital transformation are not inconsiderable, but are neither without long-term reward. “Going digital will require an investment of financial resources, extensive coordination among the multiple stakeholders and levels of government, and new regulations governing the growing e-commerce and fintech sectors. It most likely would entail participation incentives for the private sector, since governments should not attempt to 'go it alone.' In the end, both sectors of society stand to reap the value digitization will sow.” 

Related: Mexico leads Latin America in robotization, followed by Brazil and Argentina.