Open for business? The economic case for Czech same-sex marriages

Photo: Pixabay, Public Domain

Open For Business, a coalition of leading global companies dedicated to furthering LGBT+ inclusion, has published a new brief on the Czech Republic making an “economic and business case” for all couples, regardless of sexual orientation, having the right to marry and adopt children. Working together with Jsme fér, a Czech NGO which helped introduce same-sex marriage legislation, the coalition has compiled evidence that LGBT+ discrimination costs this country 0.1 to 0.7 percent of its GDP each year. I spoke to representatives of both groups to learn more about the economic and human costs – and potential benefits – for society at large.

Drew Keller, photo: archive of Open For Business
Drew Keller, the global programme director Open For Business, began his career as a management consultant with McKinsey & Company, where he worked with global companies on pricing strategy, supply chain transformations, and growth strategy. He was seconded to the initiative in 2016 to implement its first set of global roundtables.

I began by asking him to describe the main findings of the coalition’s report, entitled The Economic and Business Case for LGBT+ Inclusion in the Czech Republic.

“Open for Business is a coalition of 29 global companies, and our purpose is to research the economic impacts of LGBT inclusion all around the world; so, essentially looking into the ways that inclusive and diverse societies impact business performance and impact economic growth.

“So, we’ve been working with Jsme fér for a few months and did research on the economic benefits of marriage equality to the Czech Republic. We looked at two different things in the research: on one side, the potential costs of broader LGBT discrimination in the Czech Republic and how these costs could be offset by marriage equality and enacting same-sex marriage; and on the other side, some of the potential benefits to the economy of doing so.

“As for the costs, we found that LGBT+ discrimination in the Czech Republic every year costs between 5 billion and 37 billion crowns, which is about 0.1 to 0.7 percent of GDP. We looked at three main areas to assess this cost.

“The first was health inequalities, primarily driven by a higher rate of depression reported among gay and lesbian people in the Czech Republic, and some of the productivity and economic costs that this entails. We followed methodology set out by the World Bank and World Health Organization to assess that.

As for costs, we found that LGBT discrimination in the Czech Republic every year costs between 5 billion and 37 billion crowns, which is about 0.1 to 0.7 percent of GDP.

“The second area that we looked at was economic discrimination. So, looking at wage gaps that exist between gay and lesbian workers and heterosexual workers, and looking at unemployment as well.

“And the last part we looked at – which is the most pertinent for the marriage equality conversation – is the potential revenue being lost by not allowing gays and lesbians to be married. So, essentially, if they were allowed to be married, how much more money would be spent in the wedding industry, just based on more marriages happening.”

“We followed various methodologies in these areas. But the top line take-away is that it costs the Czech Republic about 5 billion to 37 billion crowns every year. So that’s the cost side. And that’s in line with other estimates made around the world, from India to Kenya to South Africa, a bunch of places.

“They vary a little bit, but they all find that LGBT+ discrimination costs from around 0.2 to 2 percent of GDP. So, actually the cost to the Czech Republic is a bit lower than for other countries, which is to be expected because it’s a more inclusive place than say Kenya.”

Czech political will lags behind company LGBT+ inclusive policies

Photo: Pixabay, Public Domain
Many multinational companies do offer equal benefits for their employees, regardless of their sexual orientation and whether the countries in which they operate recognize same-sex marriages.

According to Open for Business, for example, 81 percent of global companies offer equal life, medical and retirement benefits for LGBT+ couples. The coalition argues that more inclusive societies are more effective at attracting – and retaining – skilled workers.

Drew Keller again:

“A city or country’s attitude towards gays and lesbians, which is marked by same-sex marriage, is what we call a ‘preference factor’ for skilled workers deciding on where to live.

“Of course they are looking at a broad range of things – the economy, what jobs are available – but their ‘preference factors’ include things like quality of life but also how inclusive and diverse a place is.

“So, there’s evidence that show enacting same-sex marriage can enable the Czech Republic to better compete for skilled and talented workers – across Europe and the world.”

“There’s an interesting anecdote to illustrate this. About two years ago, there was an EU agency headquartered in London, the European Medicines Agency (EMA), after Brexit had to move their headquarters.

“Agency employees wrote letters to their leadership saying they only wanted to be based in a country that had same-sex marriage. So, the agency turned down a lot of proposals and ended up being based in Amsterdam. That’s just one example to highlight the broader trend there.”

Studies around the world have shown that cities and countries with same-sex marriage have a significantly higher number of patents.

“The second benefit we found to marriage equality is that can be that it can increase productivity. We have also found, and research around the world has shown, that inclusive economies are less likely to have unemployment and wage gaps, which dampen productivity.

“And they also allow businesses have bought into LGBT inclusion and really understand the business benefits of it provide a favourable environment for them, which in turn makes their employees more productive.”

“The third is it has the potential to boost innovation. Studies around the world have shown that cities and countries with same-sex marriage have a significantly higher number of patents. That’s kind of a proxy for innovation. They typically have these innovation eco-systems that enable people to bring a free flow of ideas and boost innovation that way.

“And then last thing we found is that it would improve business performance. So there’s a large body of evidence on the benefits of LGBT inclusion – and of diversity inclusion overall – for businesses. But those businesses are better able to have LGBT inclusive policies when they are operating in a fully inclusive place.

“The businesses face a bit of an administrative burden when they are operating in the Czech Republic because they provide equal benefits to all employees, whether they are gay, lesbian or heterosexual.

“So, there is a cost to their HR and benefits departments to make sure that those benefits are equal. And in some cases, they have to pay extra more to ensure there is equality.”

‘It’s quite a simple calculation’

Adéla Horáková, photo: Ian Willoughby
Having gotten an overview of the Open for Business report from Drew Keller, who was speaking by phone from Washington, D.C., I met with Adéla Horáková, advocacy director at Jsme fér. A former lawyer with the world’s largest law firm Dentons, she spent over a dozen years in the corporate world before becoming an activist.

“Basically, in short, we can say the lack of marriage equality causes serious economic damage to the country. On the macroeconomic level, on a sectoral level and on a personal level.

“On the macroeconomic level, these are costs that the [Czech] state are incurring that it wouldn’t have to if it adopted marriage equality. This concerns, for example, health services.

“Discrimination against LGBTI people – and that includes not introducing marriage equality – leads to the higher isolation of people, higher risk of poverty, higher of children being left without care, and other negative social phenomena that then the state has to pay for to patch up – it never really solves them.

“For example, we have one of the highest rates of infants in institutional care in the world. The cost of caring for each infant in an institution is, I think, roughly 40,000 to 80,000 crowns per month [more than twice an average Czech salary], which is a huge number.

“These infants could be placed within Rainbow families, but same-sex couples are not allowed to adopt jointly, which of course also decreases their demand to do so. Because if the law is not on your side, you will think twice about launching yourself – and the child you would potentially adopt – into this legal uncertainty.”

“On the macroeconomic level, it’s estimated to cost us between 1 billion and 19 billion crowns a year. On the sectoral level, there’s a whole sector that could profit from having more marriages. There’s a lot of money tied to romantic relationships, to dating and marriages as such (....) In the recent study by Open for Business, this economic loss is estimated at 2.7 billion crowns.

It’s not by coincidence that the richest countries in the world are those where marriage equality already exists – obviously, with some exceptions.

“And then on the personal level, there’s an economic theory, we call it the cost of thinking twice, the fact that part of your brain is dealing with being an employee, where you cannot be ‘out’. You can compare it to a computer, if part of your processor is always, constantly working on hiding a part of yourself, then by definition you cannot be using that capacity to work well – human potential is not being utilised to the full.”

“I worked in corporations for 12 years prior to joining Jsme fér. At one point, I became also the manager for diversity of our European offices – 20 offices in 20 countries, 2,500 people and this is something we looked at very closely. Not only do you want people to perform well, you want them to feel good. If they don’t, you as an employer are losing money, and therefore the state is losing money. It’s quite a simple calculation.

“And it’s not by coincidence that the richest countries in the world are those where marriage equality already exists – obviously with some exceptions – but all of North America, Western Europe, most of South America, South Africa, Australia, New Zealand. And that goes hand in hand. Equality and embracing diversity is the key to success of any country in the world for the future.

“Countries which are monolithic, which may appear to be uniform and solid and without any differences internally, appear to be strong internally, but they are very fragile. We in this country had an experience with monolithic and uniform culture – I was born before the Velvet Revolution, so I remember.

“The Czech Republic becoming the first in Central and Eastern Europe to adopt marriage equality will help it prosper economically, will prepare it much better for the future, whereas the other countries will be sliding further and further behind and not be prepared for what’s coming.”

This is a little off topic, but so much of the propaganda from the Kremlin is about the ‘deviant’ West, as they put it, in trying to take countries outside the orbit of the EU. Do you see a lot of disinformation related to marriage equality (such as with the Istanbul Convention)?

“Certainly there’s a lot of misuse of information, manipulation of information in the public sphere that applies to the lives of non-heterosexual people, and trans people. And it concerns us very deeply. I receive a press monitoring in the morning, and I can tell you the fake news content is always very, very large.

Photo: Pixabay, CC0 Public Domain
“When speaking of Russia, it’s clear – and many [political] scientists, including ones I know personally, will tell you that Russia has for a very long time been using homophobia – institutionalised and sort of woven into the fabric of the state control, as a tool of its foreign policies. They cannot compete with free and prospering states in terms of their economy, in terms of the happiness and satisfaction of their own population. So they resort to these actually very weak tactics.

“Unfortunately, it doesn’t concern only Russia. It very much concerns Poland, where it has become maybe even worse. The deconstruction of a secular and democratic state, because those go hand in hand, is painfully obvious, and in a country which is just across the border, two hours from here.

“The Polish state media is publically shaming with fake information LGBTI people and tirelessly working towards artificially building up hate, for their own benefit. And that concerns the ruling party [PiS] and the Church.”

A vote of conscience: Six Czech parties have no position

Now, in Czech politics, those opposed to marriage equality are the Christian Democrats, the right-wing Freedom and Direct Democracy party (SPD), and the Civic Democrats (ODS), is that right?

“The Christian Democrats and the SPD are the only two that have a party line position, and that is ‘No’. And there is only one with a party line ‘Yes’ and that’s the Pirates.

“The six other parties in Parliament have an ‘open vote’, a vote of conscious – their MPs can vote as the want; which is better than a party line ‘No’ but also indicates a certain indecisiveness among the leaders to take a strong stand; the voters can hardly read them, they don’t really know what the parties think.

“And I know lesbian, gay, bi, trans people who would not want to move into countries where their lives wouldn’t be valued equally. And where if something happened to their children, maybe the other parent would not be recognised.

“So, if say a British economist, lawyer or scientist would want to move for work to the Czech Republic, I know they would think not twice but five times whether to move to a country where their children will be at risk. And it’s very likely that they will decline that offer. Therefore, the Czech Republic, is losing a valuable labour force and often a qualified labour force.

“The failure of a state to give equal treatment to same-sex couples and our families and children, is sometimes being compensated by the private sector – the public sector is ahead of the state, which of course is completely absurd.

“And that should be an argument especially for the conservatives, and I’m frankly astonished that the ODS doesn’t seem to be very responsive to these economic arguments. Maybe it will come, and I welcome discussion on this; maybe they should a little more concerned by the state not really doing its job.”

www.open-for-business.org/czech-republic