Will Women Fuel The Next Revolution In Investing? – Forbes

Looking back on 2021, one of the startling data releases was that in January 2020, all of the 140,000 jobs lost in the US economy were those held by women. In Europe, a similar picture had emerged – across the European Union the unemployment rate for women is 8.1%, whereas for men it is 7.2%, with these rates having been close to each other last April. Women have also suffered disproportionately in terms of wage adjustments. 

She-cession

Data from the International Labour Organization, show that across the EU women have suffered a bigger decline in wages than men. A year on and there are still large labour market disparities between men and women.

These and other statistics, contribute to the view of a long-run ‘she-cession’ – the fact that the economic downside from the coronavirus crisis has fallen disproportionately on women, and this is not even considering the impacts on childcare, reskilling and the rise in domestic violence.

Ironically, the ‘she-cession’ occurred just as women have taken their places at the top of international financial institutions – notably Christine Lagarde at the ECB, Kristalina Georgieva at the IMF, Janet Yellen at the US Treasury, Jane Fraser as CEO at Citi bank and more recently the successful candidacy of Ngozi Okonjo-Iweala at the World Trade Organisation.

At the same time, there is a growing effort to ensure that women are better represented on corporate and institutional boards, following a growing body of evidence that they improvement the quality of decision making and corporate performance. In some countries, such as France, the authorities require companies to publish a gender equality score.

Taken together these trends suggest that efforts to open up gender equality are having some success at public and executive levels across institutions and corporates, but that as far as the situation is concerned for everyday women, there is enormous work to be done.

Investment parity

In particular, it is important that the rebuilding of economies in the post COVID era focus on women more than never before – both in terms of ensuring they are on an equal footing with men in terms of pay and opportunities, that they have the necessary supports to enable them to work (such as childcare) and that the sectors where women tend to be overrepresented figure in stimulus plans.

One of the oddities of the coronavirus crisis, and I would say moral inconsistencies, is that stock markets have traded at all-time highs, whilst unemployment rates and economic precarity also touched extreme levels, though thankfully employment is recovering. The lesson here is that in 2022 we need to ‘build back better’ in the sense not only of President Biden’s spending plan, but in terms of the demographic that the spending focuses on.

One element that is of growing importance into 2022 is ‘investment inequality’. Women work less than men, are paid less and live longer, but they also invest less than men. They face many barriers when it comes to investing – traditionally banks and asset managers have not been women friendly, either from the point of view of female clients or employees. Most women do not view the financial industry as an inclusive one. And, men and women alike find the products and services of many financial institutions overly technical and not well framed to their needs.

Women must invest more

In 2021 the OECD released an important research project that examined the differences in pension provision between men and women and found that on average across OECD countries the difference in retirement income that men and women receive, averages 26%.

The OECD recommend a number of measures, such as the relaxation of eligibility requirements so more women are able to participate in retirement savings plans, the  tailoring of communication to women to raise their awareness of the importance of saving, allowing flexibility for women to contribute to plans however and when they can, implementing non-conservative default investment options to overcome women’s risk aversion and consider women’s longer life expectancies in the design of the options to provide retirement income from these plans.

In 2022, with stock markets at all time highs, attention should focus more on gender investment parity. In many countries there is a new generation of women who have the capacity to become financially independent. Equally the rise of digital finance provides the means to make investment more accessible to people, and equally social media now provides the mechanism for women for example, to have a greater, more powerful voice.

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