The Global Financial Crisis
Could investing in women help prevent the next one?
Crises affect women and men differently, and the current global financial crisis is no exception. The differential impact will vary across countries, but is expected to hit women harder in developed and developing countries alike due to a combination of factors. This is bad news for poor families, many of which are headed by women. Even in poor, two-parent households, women are usually the primary caregivers of children, and any additional resources available to them are more likely to benefit children than resources controlled by men.[1]
Women around the world have higher rates of unemployment and poverty and smaller retirement and pension funds than men. These factors mean that households headed by women shave less of a buffer when crises strike.[2] The greater longevity of women leaves them especially vulnerable to impoverishment in old age. And in difficult financial times, families are less able or willing to help an elderly parent as much as they would otherwise.
In many developing countries, women tend to be concentrated in export manufacturing industries, meaning their jobs are among the first to go when global demand for goods is down. Because jobs in education, health and social services are predominantly held by women. The public sector budget cuts can also lead to a disproportionate increase in female joblessness.[3] In some countries, gender norms are such that women are fired before men because a man's job is seen as more important.
Beyond its direct negative effects on incomes and livelihoods, the disproportionate impact of the global economic crisis on women is also expected to affect entire families and to put recent development gains at risk. Policy responses that focus specifically on protecting women’s jobs and social programmes will shield the greatest number of people from the impact of the crisis.
Facts, Figures and Trends
Nature of the crisis
According to the International Labour Organization, the global economic crisis is deepening and experts expect a prolonged labour market recession.[4] More specifically:
- At the global level, after four years of progress, the number of unemployed increased in 2008 by 14 million. Global unemployment levels could rise to 30 million workers in 2009, and to more than 50 million if the situation continues to deteriorate.
- Export-oriented sectors, which in many developing countries are major providers of formal jobs, especially for women, face rapidly shrinking world markets. Large numbers of people working in these sectors are expected to lose their jobs entirely or to see their hours and wages cut.[5]
- Past financial crises show that it takes the labour market four to five years to rebound after economic recovery, which is not expected before the end of 2009.[6]
- The economic slowdown, which is projected to be most severe in developed countries, is anticipated to have ripple effects on middle- and low-income countries via declines in the demand for manufactured exports, plummeting tourism expenditures and a drop in foreign direct investment.
- The drop in remittances from family members living and working in developed economies will hurt many developing countries[7] and may also lead to return migration. Labour markets in countries of origin will be less likely to absorb the returnees, even some who have developed useful new skill sets.
- Decreases in aid due to the downturn in developing countries has a large negative impact. In
Effects of the crisis on women
· The impact of job losses on men’s and women’s well-being differ among countries but men are generally better positioned to weather the crisis because they have higher paying jobs, more assets, more wealth, and their jobs are more likely to offer benefits and be covered by unemployment insurance.
· Women are more likely than men to be under-employed or employed in the informal sector, with limited social safety nets. Exacerbating all these factors is the reality that most women have less access to and control over economic and financial resources than men.[8]
· Migrant women, especially those who are undocumented, are at higher risk of exploitation than men if they lose their jobs.
- Economic crises exacerbate pressures on women to remain in abusive relationships, migrate for work or enter into the sex trade and other risky professions.[9]
· The World Bank has identified 33 developing countries where women and girls in poor households are particularly vulnerable to the effects of the global economic and food crises.[10] In 15 of these countries, mostly in Africa, the situation is especially precarious. These countries already are characterized by limited educational opportunities for girls and by high infant and child deaths.[11]
- In developing countries in which women are concentrated in export manufacturing industries (such as in Latin America and Asia), or in tourism (the Caribbean), the effects on women are expected to be greater than for men. This is particularly worrisome in regions such as the Caribbean, where a large percentage of households are headed by women.
· The largest impact could be in the Asia-Pacific region, which has one of the highest ratios of women of working age. And, among working women, about 65 per cent are in vulnerable employment, largely in the region’s informal sector. Many of them have no benefits such as maternity leave and pensions or job security, and thus risk falling into poverty in economic downturns.[12]
· When family resources become scarce, education for girls may be seen as a luxury. When household incomes decline, girls are more likely to be withdrawn from school and to take on more work responsibilities than boys.[13]
Impact on development
· Decreased welfare of poor households. The loss of women’s income usually has greater negative implications for the welfare of poor households than an equivalent loss of men’s income because of both the contributions women make to current household income and their ‘preference’ for investing scarce resources in their children’s health and well-being. In Bangladesh, Brazil, Kenya and South Africa, evidence shows that children’s welfare (nutritional status, schooling attendance) in poor households improves more when income is handled by women rather than men.[14]
· Infant mortality. In countries that already had high child mortality rates before the crisis, the fall in household incomes could further increase infant and child deaths, with disproportionate effects on women and girls. One estimate suggests that the result of the financial shock will be the additional deaths of at least 200,000 babies per year between 2009 to 2015 -- or more than 1.4 million infant deaths, if the crisis persists. The majority of deaths are likely to be girls.[15]
· Increased pregnancy risks. Lower spending on public health information and services puts expectant mothers at risk, especially in countries where maternal death and disability are already high. Having more children is one strategy to cope with lower survival rates, but this multiplies mothers’ risks of pregnancy-related death and disability.[16]
· Increased violence against women. Women and girls are often exposed to a greater risk of violence in times of hardship, and their economic and social rights may be jeopardized. Earlier this year, the U.N. High Commissioner for Human Rights said, “we have seen recent media reports of increasing numbers of women in the sex industry and an increasing number of domestic violence incidents against women linked to the financial crisis”.[17]
· Decreased school enrolment. Educational gender gaps in poor countries are likely to widen as girls are pulled out of school as households cope with declining household income.[18]
· Decreased employment and small business activity. The crisis is expected to reduce women’s income in developing countries as a result of losses in employment in export-oriented industries, tightened micro-finance lending and declines in remittances. Women are also affected by the diminished availability of credit worldwide because women constitute the majority of clients of small community-based lending institutions. As credit tightens, their earnings from small businesses will decline, especially in places such as
WHAT NEEDS TO BE DONE
· Ensure that stimulus packages and other policy responses are gender-equitable. Past experiences have shown that policy responses to financial crises have disproportionately disadvantaged women. It is critical to recognize gender equality as a fundamental human right and an issue of social justice essential for economic growth, poverty reduction, environmental sustainability and development effectiveness.[20] Stimulus packages should ensure that spending is gender-equitable in job creation and does not focus only on physical infrastructure projects and other sectors that overwhelmingly employ men over women.[21]
· Maintain and expand gains in gender equality by continuing to emphasize girls’ education and universal access to reproductive health care, including family planning. Much progress has also been made to improve women’s positions in the household, increase their negotiating power and reduce violence and harmful traditional practices. These gains must be maintained or recovery from the financial crisis will take much longer.
· Invest in women’s economic empowerment. It pays – both in terms of mitigating current hardships and preventing future ones.[22]
- Invest in health and social services. Allocating funding for social infrastructure investment in areas such as public health, education, child care, and other social services, has two benefits. First, it generates jobs for women since women are heavily represented in those occupations. Second, directing funding to activities that help women with their family life – e.g., child care services, contraception, and school feeding programmes – can soften some of the negative effects of the crisis for entire families. The suggested expenditures on the social infrastructure, aside from cushioning women and children, have the added effect of contributing to long-term health of the economy by raising productivity. [23]
At the 1994 International Conference on Population and Development in
According to the World Bank, the crisis could lead to increases in infant and maternal mortality, female dropout rates and violence against women and girls. If left unchecked, these consequences will reverse progress in women's empowerment and in meeting several of the MDGs, especially the first five (end poverty and hunger, universal education, gender equality, child health, and maternal health). As more people slide into poverty and health budgets are slashed, the crisis could also jeopardize progress in combating HIV/AIDS (MDG6). Policy responses that build on women's roles as economic agents and their preference for investing in their children can do a lot to mitigate the effects of the crisis on development.
Related resources:
Global Employment Trends Report 2009 - (pdf 616KB)
A global policy package to address the global crisis - (pdf 10.05MB)
The Financial and Economic Crisis: A Decent Work Response - (pdf 789 KB)
World of Work Report 2008 - Income inequalities in the age of globalization (pdf 1.6 MB)
[1] Shwetlena Sabarwal, Nistha Sinha & Mayra Buvinic, The Global Financial Crisis: Assessing Vulnerability for Women and Children, World Bank (March 2009), http://www.worldbank.org/html/extdr/financialcrisis/pdf/Women-Children-Vulnerability-March09.pdf
[2] Erin Abrams & Pamela Weinsaft, Bailout and Current Economic Crisis May Have Disproportionate Impact on Women, The Glass Hammer (Oct 14, 2008), http://www.theglasshammer.com/news/2008/10/14/bailout-and-current-economic-crisis-may-have-disproportionate-impact-on-women/
[3] International Labor Organization, The Financial and Economic Crisis: A Decent Work Response, Executive Summary (2009), http://www.ilo.org/public/english/bureau/inst/download/tackling.pdf
[4] International Labour Organization, op cit.
[5] ILO op cit
[6] ILO, op cit
[7] Stephanie Seguino, Emerging issue: The gender perspectives of the financial crisis, UN Commission on the Status of Women, 53rd Session (March 2–13, 2009).
[8] Thalif Deen, Financial Crisis Threatens Women's Meager Gains, Inter Press Service (March 4, 2009), available at: http://www.commondreams.org/headline/2009/03/04.
[9] Deen, op cit
[10] Malcolm Ehrenpreis & Alejandra Viveros, Women In 33 Countries Highly Vulnerable To Financial Crisis Effects, World Bank, News Release No:2009/245/PREM (3/06/2009), http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTGENDER/0,,contentMDK:22092604~menuPK:2643809~pagePK:64020865~piPK:149114~theSitePK:336868,00.html.
[11] Sabarwal, Sinha & Buvinic.
[12] Deen, op cit
[13] Deen, op cit
[14] Sabarwal, Sinha & Buvinic
[15] Shwetlena, Sinha & Buvinic.
[16] Ehrenpreis & Viveros, op cit.
[17] Deen, op cit.
[18] Sabarwal, Sinha & Buvinic
[19] Sabarwal, Sinha & Buvinic
[20] Rosa G. Lizarde, Facilitator for the CSW NGO Consultation Day Break-out Group on the Emerging Issue: Gender Perspectives of the Financial Crisis, 1 March 2009.
[21]Seguino, op cit..
[22] Shwetlena Sabarwal, Nistha Sinha & Mayra Buvinic.
[23] Seguino. Op cit.
