WOMEN’S FORUM SPECIAL REPORTS
"Women in the Economy: Looking for New Business Models"
Part 2: Could the global economic downturn have an upside for women?
During the past decade the Women’s Forum for the Economy and Society has emerged as the world’s leading platform enabling women to speak out and be heard on vital issues. If we were to single out one issue in particular, one that has fueled endless debates and shaped countless discussions at Women’s Forum events over these 10 years, we would have to point to the global economic downturn.
In 2005, the year of the inaugural Women’s Forum Global Meeting in Deauville, France, the first tremors were already being felt on the other side of the Atlantic. By the following year, US housing prices were in free fall, sucked down into the chasm opened by the collapse of the US subprime mortgage market. By 2008 the financial crisis and recession in the United States had spread globally, wreaking havoc with financial markets and wrecking international trade. GDPs plunged. Governments of high-income countries were beseeched to fork over trillions of dollars to save the world banking system from total collapse.
“Downturn”. Could there be any less appropriate word to sum up all that has gone wrong with the world economy? What happened felt much more like an earthquake that shook the whole planet at once, although real earthquakes originate beneath the Earth’s crust and this one was spawned in banks and brokerages. “This has been a manmade catastrophe,” said Robert Zoellick, speaking in the heat of the moment in 2008 as president of the Word Bank. And “manmade” is exactly what it was. Women have traditionally been underrepresented if not actively excluded from the upper echelons of the financial world. Which means men are mostly to blame for steering the world economy into a ditch. “I genuinely think the financial crisis would not have been as deep if there had been a better gender balance,” Jayne-Anne Gadhia, CEO of Virgin Money, explained in a recent UK newspaper article. She also said: “I think that banks are in part an ‘alpha male’ environment where there were those motivated by the thrill of the chase.” She should know. Jayne-Anne Gadhia worked at the Royal Bank of Scotland under Fred Goodwin, who oversaw the bank’s rapid rise (£1.9 trillion in assets in 2007) and demise (£24.1 billion in losses for 2008).
While men may shoulder the blame for the current financial crisis, women shoulder the burden for it. Women and girls suffer disproportionately whenever the economy goes belly-up. They comprise the most vulnerable sector of the world’s population. Girls are more likely to be taken out of school to earn money for their family. They are the first to reduce the quantity or quality of the food they eat or to forego essential medicines. They are more likely to sell sex in order to survive.
Since 2008 reduced demand from high- and middle-income countries has caused export markets to shrink or evaporate in low-income countries. As women in these countries make up as much as 80% of the manufacturing workforce, already low standards of living have dived even lower. From the cut-flower industry in Uganda to garment manufacturing in Thailand, women have had to turn to the informal economy and sex work to make up for lost income. Gains that have been made in women’s health and in girls’ education have deteriorated.
A report compiled by the Boston Consulting Group with the support of OECD and released during the Women’s Forum Global Meeting within the Engage the Future initiative found that, despite strong progress over the past 10 years, girls are still less likely to attend secondary school than are boys. Some girls live in areas where there are no schools, or the enrolment fees are cost-prohibitive. In some cases, when parents can only afford to send one child to school, sons are favored over daughters. In other cases, girls are routinely discriminated against – denied an education due to their gender.
In this grim context, it seems dangerously flippant to suggest there could be an upside to the downturn as far as women are concerned. And yet research shows that fresh opportunities can indeed appear in the wake of economic disaster. While gender inequity can be exacerbated as in the cases mentioned above, other scenarios show how existing gender norms may bend to fit new economic realities, with gender parity the clear winner. Maybe a husband loses his job and he must adjust to his wife being the family’s sole breadwinner. Or maybe a woman decides to test the entrepreneurial waters, set up a small business, network with other women, gain new skills.
“[The financial crisis] is truly an opportunity for change,” said Linda Basch, president of the National Council for Research on Women in the United States, during a session at the Women’s Forum Global Meeting in October 2009. “You should never let a good crisis go to waste.” Ms Basch and her colleague, Jacquelyn Zehner presented a report entitled Women in Fund Management, which decried the absence of women in financial services: in early 2008, the report showed, women managed a mere 3% of the approximately $1.9 trillion invested in hedge funds. The report went on to demonstrate that women fund managers out-performed their male peers. Women-managed funds averaged 9% gains from 2000 to 2009, compared to 6% for a general index. To what did these women owe their success? According to the report, women fund managers are more patient, consistent and measured in risk-taking; they are more methodological and have a more detailed approach to decision-making; and they prioritize long-term success over short-term gains.
The authors of Women in Fund Management admitted their interest was not purely academic. “This is not research for research – this is an action paper,” Jacquelyn Zehner explained. Few would argue with the report’s call for “deep change in the structure, culture and practices of the financial services industry.”
Policymakers take note. Women and girls must be shielded from the worst predations of the global economic crisis. Efforts to make gender parity a reality must continue and accelerate. But take care not to cast women exclusively in the role of victims because they are also a big part of the solution.
Unlock the door to opportunity and women will flourish.
The Cartier Women’s Initiative Awards, an international business plan competition created in 2006 by Cartier, the Women's Forum, McKinsey & Company and INSEAD business school, supports and encourages projects by women entrepreneurs.
The Rising Talents initiative aims to distinguish highly talented young women under the age of 40 who are on their way to becoming influential figures in our economies and societies. This initiative is a commitment to promote women leaders and bring the vision of rising generations to the Women’s Forum.