WOMEN HAVE BEEN at the forefront of the COVID-19 response, working across essential, frontline sectors and providing care for family or persons in need of assistance.
In general, women are both more likely to lost their jobs in an economic downturn and reduce their hours or even quit their jobs when greater care responsibilities arise. This the reality for women in all sectors of the economy.
In financial services however, women have to contend with additional challenges, including massive under-representation at the executive levels. Now with added COVID vulnerabilities, female representation in the financial services industry is under even greater threat.
The unfortunate truth remains that women continue to be under-represented in senior positions across almost all sectors, despite the fact that they account for nearly half of the workforce and more than half of university graduates in the EU. The financial services sector is no different.
In 2019, women’s global representation on executive committees in major financial services firms was only 20%, up from just 16% in 2016. This is despite the fact that in countries like the United States, Spain, Japan and Singapore, women make up more than 50% of the workforce in financial services firms.
Critically, having women in senior positions in a company is not just a nod to diversity, but has proven financial returns for the company and the economy as a whole. Recent research by MSCI has shown that gender diversity on a company’s management board has a significant impact on productivity growth and on returns to investors.
In March 2019, Christine Lagarde, then Managing Director of the IMF, outlined the clear economic benefit of empowering women in the IMF’s Finance and Development publication.
Ms. Lagarde stated that the IMF had recently increased its emphasis on women’s empowerment “precisely because, beyond the important ethical considerations, it also represents a missed opportunity in the pursuit of macroeconomic stability and inclusive growth.”
Ms. Lagarde went on to state that: “Adding one more woman in a firm’s senior management or corporate board—while keeping the size of the board unchanged—is associated with an 8–13 basis point higher return on assets. If banks and financial supervisors increased the share of women in senior positions, the banking sector would be more stable too.”
More women in leadership positions in financial services would ensure that these companies understand and serve their customers better. It is now estimated that in over 50% of cases, women control the household finances and take the primary decisions when it comes to mortgages, insurance and savings.
If financial services firms want to respond better to the needs of a more diverse clientele, commitments should be made to achieving gender balance at the highest level of the firm.
However, barriers for women in financial services are not just in the executive boardroom, it is also at middle management level.
A study by SKEMA Business School Observatory in 2018 looked at the female representation of 71 banks in 20 countries around the world. It found that while women account for 52 per cent of all employees, that number falls to 38 per cent of middle managers, and just 16 per cent of executive committees.
Gender balance is something that needs to be permeated right through an organisation, it cannot be simply at the lowest levels. The ‘pale, male and stale’ moniker will continue to blight the financial services industry if we don’t create pathways for women to climb up the ranks.
To achieve true gender balance in financial services, and thereby continue to grow the sector, we need policymakers and regulators leading the way but we still have a long way to go in this regard.
While it has been positive to see Christine Lagarde appointed as the first women president of the ECB in 2019 and Mairead McGuinness as the first woman Commissioner for Financial Services in 2020, gender balance in key EU economic positions is at worryingly low levels.
Only two of the 25 members of the ECB´s governing council are women. The Chairs of the three European Supervisory Authorities are all male. Out of the 17 Eurozone Finance Ministers, only two are women.
In March 2019, the European Parliament adopted a resolution on “gender balance in EU economic and monetary affairs nominations”. This resolution calls on “the governments of the Member States, the European Council, the Council, the Eurogroup and the Commission to actively work towards gender balance in their upcoming proposals for shortlists and appointments, endeavouring to include at least one female and one male candidate per nomination procedure.”
It also says that “in the future, Parliament commits itself not to take into account lists of candidates where the gender balance principle has not been respected alongside the requirements concerning qualifications and experience in the selection process.”
It is now a question of breaking down each barrier for women’s financial inclusion, one by one. This needs to be a systematic push within every public sector entity, within every company, within every NGO and within every community to strive for the equality that our citizens demand and need.
The data shows the strong economic argument for empowering women and how it is so critical for the European economy and its people. It is a global imperative from both an equality and economic perspective.
Let us use this crisis as an opportunity to build a more inclusive economy, with consideration of how to be more inclusive of women as part of the recovery by diversifying and creating a greater equality of opportunity.
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