Women’s financial progress recovery slows on COVID-19 pandemic shock

Bianca Hartege Hazelman, Chief Executive Officer at Financy and Author of Financy Women’s Index

Women’s progress to financial equality with men suffered a setback in the June quarter, as COVID shock factors put the brakes on the female-led recovery at the start of 2021.

The latest Financy Women’s Index (FWX) June quarter report has shown this trend.

While the Financy Women’s Index rose by 0.9% to 72.2 points in the June quarter, the pace of progress is slower than the 1.06% recorded in the March quarter 2021.

Findings of the Financy Women’s Index

The June quarter result was helped by a record high in the number of women occupying ASX 200 board positions to 33.5% and a narrowing of the gender gap in the underemployment rate.

Digging deeper into the closing of the gender gap in the underemployment rate, it is less affected by actual progress for women and instead reflects more women opting out of work.

“While the long-term trend for women’s economic progress is still one of improvement, as we continue to combat the pandemic, women remain vulnerable to lockdowns and the disruptions from public health and social distancing orders,” said Financy CEO Bianca Hartge-Hazelman.

“The concern is that the longer the pandemic continues, unpaid work seems to rise and the harder it is for many women to participate in the workforce to their full potential.”

Unlike any other economic crisis in Australia’s history, the fallout from the COVID-pandemic has exacerbated the financial inequalities faced by women and the most vulnerable.

The Australian economy was picking up, helped by a female-led employment recovery in sectors most hit by the pandemic such as Retail Trade and Food and Accommodation Services.

The recovery started in June and the number of monthly hours by females fell by 2.3%, almost five times that males and contrasting to a 4.6% gain for women in the March quarter.

The gender pay gap also widened to 14.2% from 13.4%, reflecting the biggest dollar difference ($261) between men and women’s full-time weekly wages since 2016.

Stakeholder commentary on the Financy Women’s Index

“The pink recession, whatever you want to call it, the impact of COVID-19 has not been gender-neutral,” said Deloitte Access Economics partner, Simone Cheung.

“We continue to see Australia’s key economic indicators bounce around in the lockdowns and varying degrees of restrictions but women have tended to be more impacted by the pandemic.

“This release of the Financy Women’s Index shows a big improvement in the gender under employment gap. but there were less women in part-time work who preferred more hours.”

“Women are not only impacted by economic cycles, but they are also more likely to willingly opt out of the workforce or reduce work hours due to non-economic reasons,” said Ms Cheung.

“Why? Women are much more likely to stop looking for work due to childcare and other family considerations or caring responsibilities compared to men.”

While the FWX rose in the June quarter, the pandemic and lockdowns are exacerbating existing financial inequalities between men and women in critical areas like pay and hours worked.

AMP Chief Economist Shane Oliver said that “even abstracting from the impact of the pandemic we have a long way to go before women attain financial equality with men.

“The pandemic, in accelerating progress towards flexible working may help progress to financial equality for women. But at this stage we are still a long way from that,” said Dr Oliver.

In the 12-months, the FWX is down 1% from a record high of 72.9 points in June 2020. But when comparing the FWX score to December 2019, progress is up a much more positive 4%.

The Women’s Index June report supports the argument for immediate attention at a government and business level to address long-standing financial inequalities that directly impact the most vulnerable, particularly women, during times of crisis.

Caroline Stewart, CEO of Ecstra Foundation observed that, “Financial inequality remains a major obstacle to the progress of women, including women in caring roles.” 

“Ecstra strongly supports the publication of Financy Index, which highlights the challenges women face in relation to gender equality and financial security,” said Ms Stewart.

It will take at least 21 years for parity to be achieved in the gender pay gap.

At least 31 years in employment, 16 years in the underemployment rate and another 7 years for 50/50 gender diversity to be achieved on ASX 200 boards. 

Overall, the most significant obstacle relates to unpaid work.

It will take 101 years before equality is achieved in this area and before we can say equality has been achieved across all areas of financial inequality measured in the FWX.