In any business or field of work, gender equality is an important issue. Both men and women should be given the same opportunities and judged by the same standards. Unfortunately, this is not always the case in finance and business. In these industries, there are still many disparities between men’s and women’s roles, pay, and opportunities.
This needs to change if we want to achieve true gender equality. In this blog post, we will explore the issue of gender equality in finance and business and discuss some ways to address these disparities. We hope this information will help promote gender equality in these industries and create a more equitable workplace for all employees.
Does Gender Still Affect Financial Stability?
The debate over whether gender affects financial stability is ongoing. Some believe that gender equality has led to greater financial stability for everyone, while others contend that gender sensitivity is still an important issue. The reality is likely somewhere in between.
Gender still plays a role in financial stability, but its impact is complex and nuanced. In every economy and industry, we see massive instances of the gender pay gap, which leads to an investment gap and a pension gap. Understanding the root causes will help create solutions to address these challenges.
Understanding the Root Cause of the Gender Pay Gap
For centuries, women have been paid less than men for their work and denied many opportunities for advancement. This history of discrimination has made it difficult for women to build wealth and achieve financial security.
Even today, women earn an average of only 77% of what men earn for the same job. In addition, women are more likely to work part-time or have low-paying jobs, and they are more likely to take time off from their careers to care for children or aging parents. As a result, they are less likely to have retirement savings or other assets that can provide financial stability later in life.
Social norms have constantly perpetuated gender inequality. Although women have made great strides in recent years, they are often expected to take on most domestic responsibilities, such as cooking, cleaning, and childcare. This can leave them with less time and energy to focus on their careers, impacting their earnings potential.
In addition, women are often assumed to be the primary caretakers in a family, even if they work full-time outside the home. This can create guilt or anxiety that makes it difficult for them to focus on their own financial needs.
It is also important to consider the psychological impact of gender inequality. Women who feel like they are not being treated fairly or who do not have the same opportunities as men may suffer from low self-esteem or anxiety. This can lead them to make impulsive decisions about money that can jeopardize their financial stability.
A Close Look at the Gender Pay Gap in the Swiss Banking Industry
The banking and finance industry is one of the industries where the gender pay gap is most prevalent despite the entry of women into the workforce. This industry has been historically male-dominated, which is still evident in the gender pay gap within the sector. In Switzerland, women earn, on average, 24% less than men in the banking industry. This pay gap exists even though gender equality is enshrined in the Swiss Constitution and is a high priority for the government.
The survey that revealed the pay gap in the Swiss Banking industry also showed that men were paid 24% higher than women and got 36% higher bonuses. This gap grew when age was factored in, with men employed for over 20 years receiving 40% more bonuses than their female counterparts.
Several factors contribute to the gender pay gap in banking, including gender segregation in the workforce, a lack of flexible working arrangements, and a lack of transparency around salaries.
However, there is evidence that change is slowly occurring. Banks are gradually becoming more gender-sensitive, and more women are entering the workforce. With continued efforts to promote gender equality, it is hoped that the gender pay gap in banking will eventually be eliminated.
The Gender Pension Gap as a Result of the Gender Pay Gap
A gender pay gap has enormous implications on the amount of pension a worker gets upon retirement. In Switzerland, the gender pension gap—the difference in the amount of money men and women receive from their pension scheme—is 37%, one of the highest in the world. The EU average is 39%, with Germany leading the pack at 47%. The gender pension gap is primarily caused by unequal pay as well as earlier retirement age and longer life expectancy of women.
On average, Swiss women earn 11% less than Swiss men but live three years longer. This means that they have to rely on their pension plans for a more extended period. However, since women earn less and work fewer years, their retirement provisions are considerably less than their male counterparts. Most pension plans are contingent on the years of employed service, placing women at a disadvantage.
Many women take career breaks or work part-time to care for children or elderly relatives. In Switzerland, 80% of working mothers are employed part-time, with the majority having less than 50% workload. As a result, they often have lower salaries than men and are less likely to receive promotions or bonuses. Meanwhile, the rate for pension insurance for low salaries is below average.
Lastly, most women retire earlier than men. Swiss women retire at 64, while men retire at 65 although recently, Swiss voters backed increasing women’s retirement age to 65. The disparity in retirement age gives women less time to pay for their retirement provisions while extending their time to rely on them. It’s no surprise that poverty is one of the fears women face as retirement looms ahead.
The Gender Investment Gap
Earning less also means having less for investments. With men making more and having more disposable income than women, they are more likely to take riskier investments with potentially higher gains. Most financial investment institutions are also governed by men, making it intimidating for women to seek help with their investment decisions. Research by Morningstar Inc. has shown that the percentage of women fund managers is 14%, which has been largely unchanged since 2020.
However, the gap is slowly closing as more women become financially literate and turn to investments to extend their smaller incomes. A 2021 US survey revealed that 67% of women have started investing outside their retirement funds, which is 44% higher than in 2018. In Western Europe, McKinsey & Company reports that only one-third of the total assets under management are controlled by women investors.
The CFA Institute predicts that the gender investment gap will close by 2025 as the financial industry starts addressing women’s investing needs and providing technology to make investing easier.
Benefits of Gender Equality in Business and Finance
Gender equality has enormous benefits for companies and the economy as a whole. Countries are more progressive, and businesses are more productive if they commit themselves to fostering gender equality and providing equal opportunities for all.
More Robust Economies
"Gender-equal sustainable development" recognizes that gender equality is essential for sustainable development and women’s empowerment is key to achieving it. Women comprise half of the world's population, so their needs and concerns should be given equal weight in any development process.
Women can help drive economic growth and social progress when empowered to participate fully in society. Studies have shown that investments in women's education and health tend to benefit not only individuals but also families, communities, and economies.
The EU's gender equality strategy aims to eliminate discrimination and create a more inclusive society where everyone can participate fully in economic, social, and cultural life. As a result, the employment rate for women in the EU has increased by over 8% since 2005, reducing the gender employment gap by 16%.
By promoting gender equality through equal labor opportunities and closing the gender pay gap, the EU GDP per capita is estimated to increase to 3.5 trillion euros by 2050 due to the addition of 10.15 million jobs. More than half of these jobs will be filled by women, reducing poverty rates. Countries with much to improve can expect a 12% increase in GDP by 2050.
As more women join the workforce and are given higher-paying roles, their economic contribution increases significantly. With around half of the population being women, these individual contributions would form a significant whole.
Better Management Teams
For companies, the benefits of gender equality are also profound. In today's business landscape, the most successful companies are those that embrace diversity and promote gender equality. A growing body of evidence shows that mixed management teams are more effective than those that are homogeneous.
Companies with mixed management teams are more likely to be gender-sensitive, leading to better decision-making, improved communication, and increased creativity. In addition, mixed management teams can better identify and solve problems, leading to a more efficient and productive workplace.
As the business world continues to become more competitive, the power of mixed management teams will only become more evident. Those companies that embrace diversity and promote gender equality will be the ones that thrive in the years to come.
Addressing the Gender Gap in Finance
As we can see, the sooner we close the gender gap, the faster we reap its benefits. Fortunately, steps are being taken toward gender equality.
Gender-Equal Sustainable Developments
The European Union has long been a champion of gender equality, and this commitment is reflected in both its policies and budget.
One of the key ways in which the EU promotes gender equality is by promoting STEM pathways for young women. This aims to increase the number of female entrepreneurs in industries traditionally occupied by men, such as tech and engineering.
The EU is also committed to providing affordable child care that helps women pursue careers without having to worry about taking care of their children. There are also policies to help women return to work after giving birth and raising kids. In most European countries, aside from generous maternity leaves, there are also transferable parental leaves that aim to give fathers the same amount of paid leaves to take care of children, thus reducing the burden on mothers.
Switzerland provides the mandatory 14 weeks of maternity leaves and 2 weeks of paternity leaves, which aren’t shared or transferable. It falls short in comparison to neighboring countries, such as Germany and Austria. In Germany, they provide three years of parental leave for each parent where they receive a parental allowance instead of their monthly salaries. Austria gives 16 weeks of paid maternity leaves but only 31 days of unpaid paternity leaves.
As the EU continues to provide directives to improve these policies, it will help provide equal treatment for both parents.
Financial Literacy for Women
To close the gender pension gap, it is essential that women take control of their retirement and invest in themselves. Financial illiteracy is one of the crippling factors why women are less financially savvy than men.
However, these can be addressed by being financially literate and learning about the various investment options available to build a decent retirement fund. By taking charge of their retirement investments, women can ensure that they have enough money to live comfortably in retirement.
Working with a trusted financial advisor can help women navigate the seemingly complex world of finance and investments and foolproof their financial future. It will help them gain the confidence they need to make smart investment decisions to bolster their financial independence.
Helping Women Become Confident Investors
To help narrow and close the gender investment gap, financial institutions have increased their awareness of the things that matter most to women, such as sustainable investments and the aid of a trusted financial advisor.
By providing women with choices of stocks and funds that reflect their core values, they are more likely to feel comfortable investing in companies that are dedicated to issues they care about. Female-oriented management firms are helping women understand the various options for diversifying their investments and making intelligent decisions that are financially sound and value-driven.
The availability of digital platforms that make investing straightforward also helps women invest faster and give them the knowledge the need to make smart investment choices. This increase in confidence will eventually result in a narrow investment gap.
Despite some progress in gender equality, it is still evident that the gender pay gap persists, causing a gender pension gap and gender investment gap. However, this gap is slowly closing as countries pursue gender-equal sustainable development and women increasingly taking charge of their investment decisions.
Acting early and investing as soon as possible is also an essential step in reducing the gender gap and ensuring women have enough funds for their retirement. With the help of trusted financial advisors, women can make smart investing decisions and take charge of their income. They can be confident that their hard-earned funds are handled delicately and wisely by trustworthy asset managers.
At Marmot, our team of financial advisors is here to help women start investing and taking control of their financial future. Contact our experts to know how Marmot can assist you with your financial goals.
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