How Covid is hurting women’s financial health
How Covid is hurting women’s financial health
No one will come out of this economic crisis unscathed, it has touched every single aspect of society in one way or another.
Yet, just as with the virus itself, certain groups are affected more profoundly by the economic fallout than others. We’re only starting to understand the impact of this on the finances of those people.
We’ve already seen evidence that the crisis could stall the rise in households where women earn more than men, thanks to the heavy caring responsibilities brought about by closed schools.
Yet that’s just one way in which this astonishing time we’re living through could affect women’s financial security now and in the future.
Reducing hours, cutting pay
On those rare occasions when it snows in Britain, it’s always massive news if the schools close even for a day because of the disruption it causes to workers. And now the schools have been almost entirely closed for three solid months.
Unsurprisingly, it’s having an impact on the workforce. A survey carried out by comparethemarket.com found that parents in a quarter of families with children at home have voluntarily reduced their hours and salaries so they can manage care and homeschooling.
And almost a fifth of those think that they or their partner may need to leave work entirely in order to manage parenting without schools or holiday clubs.
Anna McEntee, product director at comparethemarket.com, says: “The big danger is that households which are forced to make changes to their working arrangements to enable them to meet immediate financial and parenting responsibilities may be unable to switch back to their former job structures once schools return to normal.
“In other words, some families may be faced with a significant long-term financial impact due to the need to address a shorter-term challenge.”
With men out-earning women in just over three-quarters of two-parent heterosexual relationships, there’s an obvious risk that the parent who will be giving up their work will be the mother.
Long-term pension pain
Women who leave their jobs or cut their hours are not just risking their current financial stability. They could be damaging their long-term financial security as well.
Maike Currie, investment director at Fidelity International, says the repercussions of this pandemic “will echo into retirement for many women”.
She says: “Currently, there are 50 per cent more women than men heading towards retirement without any private pension savings. 1.2 million women in their fifities have no private pension wealth and hence will rely on the state pension system and their partner to provide a retirement income. Without proper financial planning, there is a risk the outbreak will only exacerbate this further.
“However, when it comes to retirement saving, it’s certainly true that it’s the little things that count. By putting an extra 1 per cent of your monthly income into a pension each month you can make a dramatic difference in the income you’ll have in retirement.”
It could widen the gender pay gap
A recent survey of 3,500 households carried out by the Institute for Fiscal Studies revealed that mothers are 14 per cent more likely to have been furloughed than fathers. There are some concerns this could widen the gender pay gap.
Alison Andrew, a senior research economist at the Institute for Fiscal Studies, says: “Mothers are more likely than fathers to have moved out of paid work since the start of lockdown. They have reduced their working hours more than fathers, even if they are still working and they experience more interruptions while they work from home than fathers, particularly due to caring for children.
“Together, these factors mean that mothers now are only doing a third of the uninterrupted paid-work hours that fathers are. A risk is that the lockdown leads to a further increase in the gender wage gap.”
Then there’s the fact that the pandemic has swept the gender pay gap under the carpet this year completely. In March, the UK government suspended the requirement for companies to report their 2019-20 gender pay gap.
Research carried out by Business in the Community shows that half the companies which reported last year have not done so this year. The charity has warned this crisis could “set back women’s equality a generation”.
Charlotte Woodworth, gender equality campaign director at Business in the Community, says: “Pay gap reporting is a vital tool in understanding and tackling gender inequality at work. If we don’t have a clear picture of women’s status at work entering the crisis, we won’t be able to take the right steps going forward.
“It is hugely disappointing to see so many opted out when the legal requirement was lifted – and a worrying sign of attitudes towards gender equality during the crisis.”
The jobs most at risk
Women are overrepresented in the sectors that have been most impacted by lockdown, according to the London School of Economics (LSE), including the hospitality sector – which is only due to begin reopening in July.
These are also the sectors that will face the most disruption if there are further lockdowns or localised lockdowns, and which may struggle to remain profitable under social distancing restraints.
Dr Claudia Hupkau, associate in the education and skills programme at the LSE’s Centre for Economic Performance, said: “Women are facing great challenges.
“They make up the majority of those working in jobs on the front line and those working in industries that have been closed entirely – particularly in those sectors, such as hospitality, which are at higher risk of being destroyed, as it is unclear when and at what capacity they will be able to reopen.”
Everyone will feel the economic effects of Covid-19 for many years, even if so far they have been insulated. But women could feel more of the pain and for longer.