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October 2019

Women’s Economic Empowerment in El Salvador: Barriers, Opportunities, and a Path Forward

Introduction

A growing body of evidence demonstrates that gender equality is not only a human rights issue, but also a business imperative. It is estimated that globally countries lose 160 trillion U.S. dollars(USD) in wealth because of the gender pay gap alone, while gender-based discrimination in social institutions induces a worldwide loss of up to USD 12 trillion. Women’s empowerment is therefore an essential element to realizing inclusive and sustainable economies. Despite significant progress towards gender equality over the past decade, as of 2018, at least 104 economies still had laws preventing women from working in specific jobs and 18 economies had laws giving husbands power to prohibit their wives from working at all. As a result, over 2.7 billion women were legally restricted from having the same career choices as men.

In addition to formal restrictions, many women face significant practical challenges in the world of work and business. Even in countries where women’s legal capacities are identical to that of men, sociocultural norms frequently encourage or even require women’s obedience to male family members. Men are typically perceived as heads of households and breadwinners, while women are viewed primarily as homemakers and caregivers. Consequently, women have limited decision-making power in family settings and are often expected to ask for permission from their husbands to enter into contracts, open bank accounts, or transact in any other way. Similarly, even where the legal requirements for registering and operating business enterprises are the same regardless of gender, women experience unique barriers to launching and growing their businesses. They tend to have fewer networking and mentoring opportunities than men; more limited access to information, quality education, and training; and reduced access to public spaces and markets. In addition, women often experience significant difficulties in obtaining financing because of a lack of collateral and limited financial education. Many commercial banks view women as risky borrowers and prefer loaning to men, causing women to turn to smaller and more informal loans from family and friends or from informal lenders who sometimes resort to predatory lending practices. At the same time, working women experience occupational segregation and persistent discrimination in the workplace. Further, women face higher personal costs of doing business, often managing double or even triple working days as they balance household and caregiver duties with work. There is also frequently a trade-off between business success and family success, because income generated by women leads to shifts in power dynamics in the households. To compensate for the perceived loss of power, men may prevent women from making independent decisions about their business operations or the disposition of their income. In the most extreme cases, this may lead to increased levels of intimate partner violence (IPV). In turn, women who experience IPV and other forms of violence against women (VAW) in the household or community may be forced to abandon their income-generating activities, divert productive resources (including credit) toward other uses, and/or keep their businesses small and informal. Research illustrates that economic empowerment interventions can both lower and increase the risk of VAW. Approaches that are sensitive to these risks, such as an integrated financial and nonfinancial service provision, have been shown to mitigate and lower these risks.

Because of this complex web of barriers, women are often clustered in poor-quality jobs, earn considerably less than men for work of equal value, own fewer formal businesses, and are less financially independent than men, resulting in the feminization of poverty. On average, women-owned enterprises are smaller and less profitable than men-owned businesses. Most are unregistered, which further hampers their sustainability and growth potential. It also increases their vulnerability to harassment and extortion from state and non-state actors. In 2018, the World Economic Forum warned that, at the current pace of change, the global economic opportunity gender gap will not close for another 202 years. As UN Women has recently stressed, we must think equal, build smart, and innovate for change to advance gender equality, empower women, and achieve Sustainable Development Goals. This requires transformative shifts, integrated approaches, and new solutions that disrupt business as usual. This also requires exploring and cultivating a wide range of assets that women already possess but are not always able to access. These include human, economic, and social resources, individual agency, self-confidence, resiliency, knowledge, skills, support services, and collective voices.

Efforts to promote women’s economic empowerment yield the best results when they address a country’s challenges while capitalizing on its strengths, available resources, and women’s personal and business assets. To highlight good practices and uncover obstacles that frustrate the achievement of women’s economic rights in El Salvador, the Women and Girls Empowered (WAGE) consortium conducted a multifaceted assessment of opportunities and challenges that Salvadoran women entrepreneurs face when launching and growing sustainable businesses. The assessment is presented in the form of a comprehensive report “Women’s Economic Empowerment in El Salvador: Barriers, Opportunities, and a Path Forward.”

WAGE undertook the study in support of its pilot project, “Reducing Barriers to Women’s Economic Empowerment in El Salvador and Honduras Initiative” (RBI), led by one of its four core partners, the Grameen Foundation, and funded by the United States (U.S.) Department of State, Office of Global Women’s Issues (S/GWI). The findings of the assessment present a rigorous analysis of data on the complex interplay of national laws, policies, sociocultural norms, and practices that impact female business owners in El Salvador. The assessment, based on WAGE’s “Women’s Economic Empowerment Assessment Tool,” serves as the evidence base for reform efforts and technical assistance projects aimed at empowering Salvadoran women entrepreneurs implemented by WAGE, its local partners, and other stakeholders.

Read the Report

    The statements and analysis contained in the report “Women’s Economic Empowerment in El Salvador: Barriers, Opportunities, and a Path Forward” are the work of the Women and Girls Empowered (WAGE) consortium, led by the American Bar Association Rule of Law Initiative (ABA ROLI) in close partnership with the Center for International Private Enterprise (CIPE), Grameen Foundation, and Search for Common Ground (Search). The Board of Governors of the American Bar Association (ABA) has neither reviewed nor sanctioned its content. Accordingly, the views expressed in the report should not be construed as representing the policy of the ABA. Furthermore, nothing contained in this report is to be considered rendering legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel.

    This publication was funded by the United States Department of State, through a grant provided to the WAGE consortium. All opinions, findings, and conclusions stated herein are those of the authors and do not necessarily reflect the view of the United States Government, WAGE, or any members of the WAGE consortium.