Women: Is The Economy Becoming More Inclusive?
The data on financial knowledge, job opportunities, and cultural changes in companies paints a different picture from what marketing campaigns show. And the coronavirus is taking us backwards.
Coronavirus risks look set to seriously affect women's economic, financial, and working lives. In recent weeks, I have discovered certain data and events that provide food for thought.
The first is a survey carried out by the Global Thinking Foundation, with the contribution of Powderly (a beauty app and also one of Italy's largest online female communities), among 1,000 Italian women between February and July, which includes the lockdown period. The survey reveals a high level of financial illiteracy that makes women vulnerable, especially in a crisis such as the current one. Although 68% of those questioned state that they have savings, 56% say that they leave them in their current account as they do not know how to invest them. Almost one in two do not know the difference between a stock and a bond and do not even how much it may cost them to keep cash in the bank.
On the issue of pensions, the results are alarming. Some 21% do not know what a supplementary pension scheme is or could define it correctly. The highest percentage (24%) is in the younger age group (28-35) and in southern Italy (30%). This data contrasts with how important it is to start putting money aside for retirement. It is risky to leave it too late to rely on sufficient resources for old age.
Work: A Real Headache
Work is another worrying indicator. Almost 33% of those surveyed state that they are unemployed. The young are among the hardest hit (35.7%), but the oldest age group is also above average (36.4% of those aged 46-60). In the south, almost one woman in two is unemployed.
The risk is that it is women who are paying the highest price for the pandemic--and not only in Italy. According to the United Nations, the pandemic will widen the global gender gap with 47 million “new poor women,” wiping out the progress made in recent decades. The situation looks set to worsen over the next 10 years. It is estimated that in 2021 for every 100 men in extreme poverty (defined as less than 1.9 dollars a day), there will be 118 women in the same situation. This ratio will increase to 121 out of 100 by 2030, the year in which it should then return to pre-pandemic levels (and in any case still with a gap).
The Value of Equality
With the outbreak of the pandemic, women have lost jobs more quickly than men, because they are employed in more-vulnerable sectors, such as hospitality, retail, or the hotel industry. Many are also employed in domestic work with limited healthcare coverage or social security protection. According to McKinsey's calculations, female employment is 1.8 times more at risk than male employment during this crisis. Some 54% of those who will lose their jobs because of the coronavirus are women, despite being only 39% of the global workforce. If nothing is done, global gross domestic product could be $1,000 billion dollars lower in 2030, with consequences for the whole population. On the other hand, if gender equality is promoted immediately, this would add $13,000 billion dollars in the same period.
The instruments to effect change exist, also in the economic and financial field. Above all, training: In Italy, October is ”financial literacy” month. The Global Thinking Foundation, which has been promoting the Donne al Quadrato (Women Squared) program for three years, in collaboration with ALTIS (Graduate School of Business and Society at Sacro Cuore Catholic University), has measured the social impact of its courses through a questionnaire given before and after lessons.
“The financial well-being of course participants rose by 5%,” notes the Foundation. “This figure is reflected in an improvement in the macroeconomic context (+6%), an enhancement of the individual aspects of financial well-being (+5%), and an increase in knowledge (+10%), which then led to an improvement in aspects connected to personality (+5%), skills (+5%), and behavior (+4%). In particular, participants' knowledge of debt (+21%), controlling impulsive behavior (+10%), and the ability to monitor personal spending (12%) improved.”
Sustainable Development Goals
A second instrument are the United Nations Sustainable Development Goals, which celebrated their fifth anniversary on Sept. 25. In recent years they have become a benchmark for investors to tackle the challenges of sustainability and to implement shareholder engagement policies with companies. Despite the progress made in gender and inclusion issues, both at the portfolio strategy level and in the engagement and resolutions of companies' shareholder meetings, there is still much work to be done. The 2020 data of the Social Progress Index, which measures, through 50 environmental and social indicators, progress on the goals in 163 countries, shows that it will be difficult to achieve these by the established deadline of 2030. This is unlikely to happen before 2082, and the pandemic could cause further delays. Moreover, for inclusion the figure is among the lowest this year: 39.25 points compared with 64.24 for the general index. Only the figure for the quality of the environment is lower (36.87).
From Words to Deeds
Companies and financial players are not the only ones responsible for these delays. Nonetheless, it is important that these goals are not just a marketing tool, or, as Andrew Parry, head of sustainable investment at Newton IM (a BNY Mellon Investment Management company), said recently, “a simple investment mapping exercise, no more than a simple relabeling tool replacing existing index sector classifications.” The risk exists, and alarm bells are already ringing in the United Kingdom, where Bhavini Shah, the CEO of City Hive (an independent organization that supports companies in creating a culture of diversity, equality, and inclusion), wrote to the heads of investment companies to express his disappointment at the lack of “real and genuine” action on the issues of diversity and inclusion. “To create impactful changes, firms must make significant cultural changes, and that starts at the top,” he stated. “Awareness does not equal action. The lack of tangible, measurable results, shows where these issues sit in terms of priorities on leaders' agendas.”