A 10% increase in LGBTQ+ rights linked to a €3,100 gain in GDP per capita

A 10% increase in LGBTQ+ rights linked to a €3,100 gain in GDP per capita

There is a strong correlation between the financial and economic success of a country and its openness to diversity and inclusion. Open for Business found that a 10% increase in LGBTQ+ rights was associated with a €3,1000 gain per GDP capita.

Through our webinar, What an increasingly diverse world means for companies in emerging markets, we discussed how companies are currently increasing their support for LGBTQ+ rights and inclusion and the benefits of ED&I on business. We spoke to – among others – Teodora Rosetti-Ion-Rotaru, Executive Director at ACCEPT Romania, George Perlov, Executive Director at Open for Business, Ivan Janković, People and Culture Delivery Manager at IKEA SEE (South-East Europe), Violeta Nenita, Country Manager at IKEA Romania, Claire Harvey, Global Inclusion Lead at Vodafone Group, Javier Leonor-Vicente, Global Inclusion and Diversity Senior Manager, Pride at Accenture and Leonard Rizoiu, Managing Partner at Leo HR. Find the highlights of our conversation below.

What is the economic case for LGBTQ+ inclusion in the workplace?

George Perlov: In our latest report, we looked at four countries with emerging markets, Hungary, Poland, Romania and Ukraine and our biggest finding was that LGBTQ+ discrimination costs these countries between 0.23% to 1.75% of their annual GDP. The 1.75% number is actually the Romanian number and it amounts to around 17.6 billion Romanian Lei which is what the Romanian government spends on the health ministry.  Where do we get our numbers from? We get them from two main sources, statistics on health inequities and wage gaps. The health gap is really in the areas of depression and HIV which we know affect the LGBTQ+ population disproportionately and we have estimated the wage gaps based on our data from the UK and Germany.

These are things that we can measure but there are other things that we cannot measure such as reputation issues. For example, before choosing Amsterdam as their new location after Brexit, the European Medicines Agency did a survey for their employees asking them where they would like to relocate in the EU. 70% of their employees said they would leave the organisation if it would move to Bucharest or Warsaw. Many skilled and creative workers don’t want to work and live in Central and Eastern European (CEE) countries which badly affects the economy.

We know that Romania has suffered from the ‘brain drain’ for many years and data from the World Bank and LinkedIn confirm this. Sadly, Romania is the second-highest country in the world in terms of people leaving the country to pursue their careers elsewhere. This is especially the case for people pursuing jobs of the future in sectors such as technology, communication, finance and science. They are leaving the region and the people coming into the region are coming from countries that are less open and less diverse. These issues need to be addressed because as we have seen there are financial implications for discrimination against LGBTQ+ people.

On the positive side though we have seen a strong correlation between LGBTQ+ rights and economic development. Countries that are more open and diverse and have good LGBTQ+ rights will do better financially. And when it comes to per capita GDP our regression analysis found that a 10% increase of LGBTQ+ rights was associated with a gain of €3,100. Romania could be that much richer if it enacted partnership laws or if it removed other discriminatory laws.

Our Ireland case study found that the passing of its marriage equality act a few years back was due to the business community stepping up and saying “We support this”. Ireland is, of course, a very different country than Romania or the other three countries we studied. But all these countries have strong religious values and at the time all of these countries had leading conservative governments, so there are parallels.

The government in Romania has been mostly inactive but the more we can get companies to work together and support LGBTQ+ rights, the more the situation can change. We have also realised through Open for Business that companies like working together and when one changes the others follow and want to be a part of the movement. We are cautiously optimistic that these kinds of beliefs and attitudes are spreading in the region.

How do you make companies aware of the extent of their losses when they are not open to this talent pool?

George Perlov: Channels of Influence, another Open for Business report, offers an answer to this question. The report looks at what companies can do from a lobbying perspective, from a supply perspective, from engaging with civil society perspective so it is a great resource. We know that companies stand to gain a lot when they reach out and partner with civil society meaningfully. This is a two-way street so it’s important for both sides to engage with each other. So, there are a number of ways in which companies can get involved and I think it’s important for organisations to have a strong D&I programme. In Ireland, the GLEN, the national LGBTQ+ organisation there, had already been working closely with the companies before the referendum. It’s because of their activity, that when the time came for the vote, companies were ready to be advocates. Advocacy is the hardest thing to do, especially in a difficult political environment. We know that companies are risk-averse so we are aiming to help them stand firm and move equal rights forward.