Gender-inclusive policies will boost emerging markets' post-Covid recovery, Moody's says

Narrowing gender gaps in education and employment will help drive sustainable economic growth

Policies to tackle structural gaps in women’s access to education, employment and finance will help to sustain the economic recovery of emerging markets after Covid-19, according to Moody’s Investors Service.

Governments in several emerging markets have factored gender into their recovery policies and introduced measures to address unpaid care work, job market participation and violence against women, a report by the credit rating agency said on Tuesday.

While gender-focused income support could improve the economic security of women, structural measures to improve their access to education and the workforce "are more likely to create enduring change and promote sustainable growth over the long term”, said Atsi Sheth, managing director of credit strategy at Moody’s.

The coronavirus pandemic affected employment in several sectors such as hospitality and tourism where women are highly represented.

Many were forced to drop out of the workforce to take care of children and other family responsibilities after the pandemic led to school closures.

Several countries such as Chile, Colombia and Mexico have since introduced educational programmes to boost the workforce participation of women.

Moody's said greater economic participation by women would boost growth and productivity, widen tax bases and mitigate household income volatility.

In turn, this would support the broader credit environment for a range of debt issuers.

The coronavirus crisis threatens to undo years of hard-won economic and social gains for women, according to the International Monetary Fund.

In developing countries, women are over-represented in the informal sector where they are underpaid and have less job security and social protections, the fund said.

In such countries, more girls have dropped out of school to help out at home.

"These disparities worsen already-large gender gaps that persisted before the crisis," IMF chief economist Gita Gopinath said in a speech on March 8.

While women have been successful in pushing the boundaries to lead corporations and countries, “there is much more than needs to be done to achieve gender equality”, she said.

The workforce participation of women around the world is 55 per cent, compared with 78 per cent for men. In 72 countries, women are barred from opening bank accounts or obtaining credit.

Female workers continue to earn about 50 per cent less than their male co-workers for the same type of work. At a political level, only a quarter of parliamentarians are women.

Ms Gopinath said there is also a clear economic case for gender equity.

“Tapping into the huge potential of women is a win-win for both women’s empowerment and inclusive global economic growth,” she said.

She highlighted three main advantages, the first being that gender equity in the job market can significantly improve national income.

Secondly, better economic opportunities and equal pay will reduce gender and income inequality, leading to higher and more durable growth.

Thirdly, Ms Gopinath said banking boards with more female directors have been associated with greater financial sector resilience, a reduced chance of insolvency and increased profitability.

To achieve these economic gains, the responsibility of empowering women must be shared by governments, the private sector and international bodies, said Ms Gopinath.

Ms Gopinath urged governments to use their fiscal policies to help advance the cause of women and improve their financial inclusion.

Gender budgeting can ensure that tax and spending policies improve the access of women to opportunities in education and the workplace.

Higher spending on childcare and flexible working arrangements were also listed as crucial to the reduction of gender gaps in labour market participation.

Well-designed workplace regulations backed by law and tax policy reforms that penalise secondary earners – who are often women – would boost the economic participation of female workers, she said.

Ms Gopinath also called on governments to “level the playing field for women” by removing outdated legal, regulatory and institutional impediments.

She encouraged the private sector to promote gender equity by ensuring equal pay for equal work.

Companies were urged to offer women mentoring and leadership opportunities, flexible schedules, travel and childcare subsidies and to adopt zero tolerance towards workplace harassment.

The finance industry can also step up to improve their financial inclusion. Currently, seven in 10 female-owned businesses in developing countries are underserved by financial institutions.

In a separate March report, PwC said Covid-19 is causing a "shecession" as the pandemic will set back progress for women in the workplace to 2017 levels by the end of 2021.

The consultancy said that if policies failed to address this disproportionate impact, women would be forced to return to low-paying positions that require lower skills.