The COVID-19 pandemic has been a great disruptor, accelerating progress in technology, but reversing hard-fought gains in other areas including poverty, quality education, and gender equality.
Governments, businesses, and citizens now want to “build back better” to steer our economies and societies toward a more inclusive and sustainable future.
One group the crisis has had a particular toll on is women. Many have either lost their jobs or been forced to retire from the labor market of their own accord given the increased burden of home schooling (on top of their typically larger share of domestic duties).
Financial institutions can and should help women close the financial asset gap that is limiting their financial independence and security.
The International Labor Organization (ILO) estimates that between 2019 and 2020, 4.2 percent of women’s employment worldwide was destroyed by the pandemic compared to 3 percent of men’s.
In terms of job losses, most of the effects can be linked to the gender distribution of jobs. The lockdowns and other restrictive measures had a greater impact on certain sectors, including hospitality, wholesale and retail trade, and personal services. In developed countries, women are more prevalent in services than in industry or agriculture. In Germany, for example, 85 percent of female employment is in services versus 60 percent for men.
Women also dropped out of the labor force in greater numbers. In countries like Germany and Italy, female labor participation rates are now 1.8 percent lower than pre-pandemic levels. One factor is that women have provided the majority of additional childcare and housework during the pandemic, leaving many of them unable to work. Even before COVID-19, the gender gap in time spent on unpaid care work was substantial in many countries.
Fortunately, first indications signal that the economic re-opening is leading to a stronger percentage increase in female employment, but this increase follows the much steeper decrease in female employment since the pandemic. Globally, female employment is not projected to return to pre-COVID levels before 2022 at the earliest, according to the ILO.
To boost women’s chances in the labor market, governments must avoid further lockdowns. Moreover, remote and flexible working have the potential to act as a catalyst for bolstering female labor market participation rates—at least in some professions—provided that this way of working becomes less stigmatized and more widely accepted for men as well. This could help reduce the pay gap between employees with non-standard work arrangements (predominantly used by women) versus those in standard work arrangements, as well as improve promotion opportunities for women.
It is clearly in the interest of companies to increase the participation of women in their workforce. Our research shows that companies that encourage gender diversity up to the highest levels are more successful. We refer to our Gender 3000 report, which maps gender diversity in both executive management teams and the boardroom in over 3,000 companies. In our analysis, we found that a material correlation exists between companies with a higher participation of women in decision-making roles and their stock market and corporate performance, though we note that we are not asserting cause and effect.
There is another reason why women must find their way back to the labor market as rapidly as possible: wealth creation. It is essential that women close any retirement gaps stemming from the crisis and resume building their wealth. Engaging with their money could not be more crucial for women. Women’s average life expectancy exceeds that of men by four to six years on average, and in some instances even 10 years.
The gender wealth gap is not new. While women represent about half of the world’s population, they hold only around 40 percent of global wealth. We believe that financial institutions such as ours can play a positive role in helping women close the financial asset gap that is holding them back from building their financial independence. We want to help women engage more with their wealth, which we believe they can achieve by following an investing framework that focuses on their lifecycles and uses practical and understandable language instead of financial jargon.
In summary, when looking at the gender gap in labor markets, wages or wealth, there is much room for progress. But it is never too late—a message that should inspire us all to do more in this area.