Are women bearing
the burden of the
recession?
A Fawcett Society report. March 2009
by Dr Katherine Rake, OBE
Research by Abigail Rotheroe
Section 1:
Introduction
This report is published less than six weeks after the UK was officially declared to be in recession. It represents
the first of Fawcett’s contributions to the debate about the impact of the recession on women and is written
against a backdrop of increasing concern that the advances made by women in the workplace during the
past twenty years are currently at risk.
The report argues that the recent collapse in the UK’s financial institutions has given new impetus to the need
for greater diversity among decision makers in Britain’s major businesses and it makes the case for legislation
that would impose quotas for female board members on FTSE-listed companies. It documents the fact that
women are more directly exposed to the impact of this recession as employees than they were in the recessions of the 1990s or 1980s and argues that the fact that women have entered this recession on an unequal
economic footing makes them particularly vulnerable to the impact of the downturn.
But the report is not fatalistic. It points to the fact that in these early days the Government has power to shape
both the impact of this recession and to build a path to recovery that creates a fairer and stronger economy.
Government has a choice as to how workers’ rights are treated during the downturn.
In the US, Barack Obama committed to new equal pay legislation as one of his first political acts, saying
“Making our economy work means making sure it works for everyone”. The report argues that the UK
Government must commit to similarly bold measures and sets out a five point plan for economic recovery
that would promote women’s rights. This is Fawcett’s call to action which, if honoured by the Government,
would protect and promote women’s rights and deliver economic recovery.
“In the US, Barack Obama committed to new equal pay legislation as one
of his first political acts, saying “Making our economy work means making
sure it works for everyone”. The report argues that the UK Government
must commit to similarly bold measures.”
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Section 2:
A man-made recession
The collapse of the UK’s financial institutions has had huge repercussions. One consequence has been the
fact that during the collapse of our banking system the faces of leading figures were put on the front pages
of every newspaper. For the first time, the public has seen for themselves who holds power in our major
businesses, and they were the faces of white men. Indeed, recent select committee hearings have shown
male domination not only at the top of the banks but among the ranks of financial journalists, in senior positions in regulatory bodies and even among the MPs who are scrutinising the decisions.
“The Equality and Human Rights Commission estimates it will take
73 years before equal numbers of women are in the boardroom of
the FTSE100 and it won’t be until 2225 before parity is realised in
all of the UK’s boardrooms.”
Not only have male dominated decisions plotted the course into recession, political and business decisions
about how we exit from this recession, who faces redundancy, etc., continue to be made mostly by men.
Currently, only 12% of Directors on FTSE100 boards are women and the Equality and Human Rights
Commission estimates it will take 73 years before equal numbers of women are in the boardroom of the
FTSE100 and it won’t be until 2225 before parity is realised in all of the UK’s boardrooms.
It is important that the argument about why this is a problem is made without descending into simplistic
caricatures of women and men’s behaviour (i.e. that men are testosterone-fuelled risk takers while women
are risk averse and compassionate). We would argue that the problem lies, rather, in the fact that these
institutions have drawn their senior figures from one narrow demographic. This means, firstly, that they are
by definition missing out on the talents of 52% of the population. This clearly compromises their search for
the best talent. Secondly, engaging only men - and frequently only white Oxbridge educated men - at the
very top carries a high risk of creating ‘group think’ within the institution. Where decision makers are drawn
from the same background they are likely to have a similar world view, the same sources of intelligence and
are less likely to challenge one another. Thirdly, women and men continue to have different life experiences
and their needs and interests are often different as a consequence. Better governance comes when a rich
variety of life experience is reflected among decision makers. Not surprising then that studies have identified
that the most creative and innovative institutions arise where there is a gender balance in the senior teams
(McKinsey 2007; Catalyst 2007).
There is now a pressing, indeed critical, need for new forms of decision making that better protect the public
interest and the economic future of the UK. Part-nationalisation of a number of our major banks gives a new
imperative to ensuring good and representative governance. In politics, the use of positive measures in the
form of all women shortlists has driven the increase in the number of women MPs. Following the introduction
of quotas, Norway’s female representation in the boardroom has soared from 6% to 44% in six years while
the figures in the UK, by contrast, regressed or stagnated.
We argue that the Government must use this opportunity to make lasting change to the governance of our
major corporate. We are today calling for the introduction of quotas for female representation on boards of
listed companies. We maintain that this is the only way of achieving rapid progress on women’s boardroom
representation.
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Section 3:
The impact of the recession
on women
The impact of this recession on women is shaped by three major factors.
First, the significant increases in the numbers of women in employment over the past thirty years mean that
women are more directly exposed as employees to the impact of the current recession than ever before.
There are currently just under 13.5 million women employed in the UK. This is a net increase of 4 million
women in the labour market since the 1970s and an additional 1.5 million since the last recession in the
early 1990s (the equivalent figures for men being just under 1 million in both cases).
Figure 1: Proportion of women and men economically active today and during previous recessions
Economic activity rates 1971 to current day
1971
Women: (%)
Numbers in 000s
Men (%)
Numbers in 000s
59.3%
(9,072)
94.9%
(15,731)
1982
1992
Latest (Dec 08)
64.3%
(10,359)
89.6%
(15,659)
70.8%
(11,902)
86.4%
(15,629)
74.2%
(13,408)
83.9%
(16,550)
Source - Labour Force Survey (Time Series Data), women aged 16-59, men aged 16-64
Second, the narrowing of the gender employment gap combined with the increase in the proportion of lone
mother households means that women’s wages are more important than ever to the family economy. The
percentage of families head by a lone mother has tripled over the past thirty years from 7% in 1971 to 22%
currently (ONS 2008). Among women in couples, the latest available data shows a woman’s income makes
up a third of family income on average and in just over a fifth of couples (21%) women’s incomes accounts
for half of family income (Women and Equality Unit 2006). More families will therefore be relying on a woman’s
wage for their welfare through this recession.
Third, women and men enter this recession on an unequal footing. Although there have been major increases
in women’s employment over the past 30 years, the nature of women’s employment still remains markedly
different from men’s and their experiences of employment are shaped by motherhood and other caring duties,
concentration in particular sectors of the economy and the traditional undervaluation of women’s jobs. Their
working patterns make them, on the majority of counts, more economically vulnerable than men from the
outset. But the recession does not affect employment alone; the recession will have a broader set of social
and economic consequences, some of which will unravel only slowly. A number of factors make women less
likely to be able to withstand the impact of the recession - women are more likely to live in poverty, especially
in old age, have fewer financial assets, more likely to manage a household budget and act as shock absorbers
when this changes, are more likely to experience violence, and as mothers and carers will need to make a
complex set of decisions about their family and work life influenced by - among other things - the cost of
childcare, the tax and benefit system, etcetera.
Throughout this analysis, it is important to be clear about how the impact of recession is measured and what
insight this will give us on women and men’s experiences. Topline measures of unemployment and redundancy
may not be as useful in measuring women’s experience as men’s. Women have traditionally registered lower
unemployment rates and redundancy levels and this continues to be the case, with some minor exceptions,
in recent Labour Force Survey results. This is a result of the fact that women with employed partners are less
likely to register as unemployed and, given that women change jobs more regularly and are more likely to be
on temporary contracts, they are less likely to be entitled to redundancy pay which accrues only after two
years of service. We therefore have to utilise a broader set of measures in capturing women’s experience;
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some of which, frustratingly, are not regularly recorded. There is, for example, no standard government measure of maternity discrimination and factors like take up of flexible working are measured only irregularly. In
these early days, therefore, it is highly unlikely that the full impact on women of the recession will have fed
through into available data so our analysis draws on existing understanding of women’s position in the labour
market as well as early indications from data and from other sources, including helplines and service delivery
organisations.
One factor has protected women employees from the first round of impact of the recession…
The labour market is still highly segregated with women and men concentrated in different sectors of the
labour market. The one factor that has protected women from the worst impact of the recession to date is
their concentration in public sector jobs - 38% of women are employed in public administration, education
and health (Labour Force Survey). However, as the recession rolls out, these jobs are also likely to come
under threat. Furthermore, just under a quarter of women are in the retail, hotel and restaurant trade and the
impact of the downturn on this sector is expected to be seen in the statistics shortly.
But many others make them more vulnerable…
Women experience pregnancy and maternity discrimination
Even before the recession began, at least 30,000 women a year were losing their job simply because they
were pregnant or on maternity leave (EOC 2005). Around three-quarters of a million women will have a baby
over the course of 2009, and the signs are that they will be particularly vulnerable to unscrupulous employers
who will dismiss these women while on leave or refuse their request for flexible working, making their return
to work impossible.
The recession will heighten new mothers’ fears of losing a job and make maternity leave unaffordable to many,
especially those with limited access to maternity pay or benefits. A 2008 study (Maternity Rights and Mothers
Employment Decisions, DWP) found that maternity leave decisions are strongly influenced by financial considerations and mothers who were economically disadvantaged took the shortest periods of leave. The recession
is therefore likely to force many new mothers into uncomfortable compromises about the amount of time spent
with their newborns.
“One woman had an agreement from her employer that she could return to
work for two days a week; however, three weeks before her return she was
told that the only option available to her was to return to work full time.
The employer had effectively made it impossible to for her to return to work
and avoided paying redundancy.”
(Working Families 2009)
Families currently face very limited choices about sharing care in a child’s early years: while women are entitled
to up to twelve months (of which nine months receives statutory maternity pay), fathers have rights to just two
weeks paternity leave. Improved provision for sharing leave entitlements would enable true choice about how
families care for young children. Also, and critically, sharing leave entitlements could reduce workplace discrimination by removing the ‘perceived’ liability of employing women who may have children.
Women are more likely to work part time and in vulnerable employment
5.7 million women compared to 1.8 million men are in part time employment. Over two fifths (42%) of women
in employment work part-time making it a common experience among women, particularly mothers, while for
men it remains a minority experience (just under 12% work part-time and the majority of these are students
or nearing retirement) (Labour Force Statistics, Oct-Dec 2008 from First Release Feb 2009). Women account
for 54% of the 1.4 million workers on temporary contracts and 59% of the 1.1 million workers with second
jobs (Labour Force Statistics 2008). They are also more likely to be unpaid family workers and homeworkers
(Fawcett 2005). Women, workers from minority-ethnic groups and young workers are over-represented among
those in low-paid temporary jobs. Women’s over-representation in each of these vulnerable groups means
that they are at greater risk of having no or minimal employment rights, making them easy targets for
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unscrupulous employers. They will also have more limited access to redundancy pay and other statutory
support if they lose their jobs.
Women are more likely to work flexibly
2008 figures show that a full third (33%) of mothers compared to just under a fifth (18%) of fathers use some
sort of flexible working arrangement (Labour Force Survey, Office for National Statistics, Q2 2008). While it is
not yet clear exactly how flexible working will be affected by this recession, women will lose out disproportionately if flexible working arrangements are rolled back. There is evidence that some employers are imposing
change on flexible workers, such as moving to uncertain shift patterns, that makes working life impossible for
parents who have to organise childcare. Furthermore, there is a risk that the right to request will be used less
by all employees, and particularly men, if they fear it shows they lack commitment to an organisation and
singles them out as a target for potential redundancy.
Women experience a gender pay gap and are more likely to be low paid
Women in or seeking work are affected by the pay gap which is currently 17.1% for full time workers and
36.3% for part-time workers. Both of these figures widened in 2008 after a period of stagnation (ASHE 2008).
The UK now has one of the worst pay gaps in the EU. The TUC estimates that 29% of women compared to
16% of men are in low paid work.
Women’s employment decisions are more directly affected by childcare costs and
availability and by whether their partner is in work
Women continue to bear the prime responsibility for childcare, domestic work and other unpaid caring work.
This means that women’s decisions to enter or remain in employment are more likely to be affected by
childcare costs and availability. While there have been many improvements in childcare provision, childcare
costs remain prohibitive for many women seeking to return to work and many still struggle to find appropriate
childcare, particularly for children with a disability or to cover atypical working hours. The costs of childcare
relative to earnings may pose a particular problem during the recession, making it impossible for many women
who want to find employment to return to work.
This may be further compounded by the design of the tax-credit system. For women in a couple on a low to
modest income, a critical factor affecting their decision to return to work will be whether their partner is in work.
Tax credits are assessed according to family income, with the result that it often does not pay for a second
earner to enter the labour market.
Ethnic minority women are doubly disadvantaged in the labour market
The employment rate among ethnic minority women is lower than that of ethnic minority men and white
women, currently standing at 52.8%. Women from ethnic minorities were also more likely to be registered
unemployed or economically inactive even before the recession began – for example, the latest available
date shows that nearly two-thirds of Pakistani and Bangladeshi are economically inactive (Factsheet: Ethnic
Minority Women in UK, Government Equalities Office 2008).
Women’s working and family patterns mean they are less likely to have access to
benefits and back to work support
Entitlement to contribution based Job Seekers Allowance depends on having made sufficient national
insurance contributions which exclude the many women who work below the NI lower earnings level. Income
based Job Seekers Allowance is assessed according to family income, and so many women with a partner in
work won’t be entitled to JSA. As a result, fewer will register as unemployed and will therefore be excluded
from access to some of the New Deal programmes and other back to work support. It is critical that all
women seeking work have fair access to back to work programmes and that these programmes recognise
the specific needs of mothers returning to work.
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Women are more likely to head lone parent households
As 90% of lone parents, lone mothers are most likely to experience the challenges of combining employment
with sole or primary responsibility for children. Even before recession struck, lone mothers were less likely to be
in paid work than their couple counterparts (71.4% of mothers in couple family were in paid work, compared
with 56.5% of women single parents). As a consequence 43% of children living in poverty are found in lone
parent families.
...and women’s social and economic circumstances make them particularly vulnerable to economic downturn
Women are more likely to be the victims of sexual and domestic violence
Women are the vast majority of the victims of sexual and domestic violence and there are early indications that
incidents of such crime are on the rise (the Metropolitan police, for example, record an annual increase in reported rape of 18.5% and in reported domestic crime 4.7% to January 2009). In addition, a number of service
providers have reported an increase in domestic violence referrals. It is critical that the Government monitors
changing rates of violence against women to ensure that increased violence against women does not become
a hidden consequence of the recession.
Women are more likely to be living in poverty and have fewer financial assets
Women face a greater risk of living in poverty overall, with lone mothers at particular risk. While women are
more likely to save, they hold fewer savings overall (Women’s Financial Assets and Debts, Fawcett 2007).
The impact of this over a lifetime is felt by older women who are likely to have accrued lower pension entitlements and fewer savings over their lifetime. Single women in retirement have on average 10-15% less income
than men of the same age (DWP Women and Pensions 2005). The recent drop in interest rates will particularly
affect those older women with small amounts of additional savings. Overall, this makes women less resilient
to changing economic circumstances and less able to draw on savings to tide them over difficult times.
Women act as “shock absorbers” when family budgets are under pressure
Women are more likely to manage the family budget and so will directly feel the pinch when daily costs go up
or income falls. Studies of families living in poverty suggest that women act as “shock absorbers” when there
are changes to the family budget. Women tend to feel the impact of straitened circumstances more directly by,
for example, prioritising spending on the household and children above meeting their own needs or spending
more time shopping around for the best deals for the family.
Section 4:
The Government’s role in
shaping an equal path
to economic recovery
While it may feel like early days to talk about the path to economic recovery, the Government’s policies today
will shape how the UK economy exits from this recession.
“The Government should be sending a signal that it wishes to create a stronger and
more just economy post-recession, in which women’s skills and talents are put to
best use. However, the early signs are bad.”
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The Government should be sending a signal that it wishes to create a stronger and more just economy postrecession, in which women’s skills and talents are put to best use. However, the early signs are bad. The
Secretary of State for Business, Peter Mandelson, has already made an attempt to roll back on extending
flexible working and it now looks as though he has set his sights on other equality measures. The Times
reports that he is expected to delay ‘enhanced maternity leave provisions’ which would mean reneging on
a prior commitment to increase the length of entitlement to statutory maternity pay and to introduce a provision to transfer a portion of maternity leave to dads in 2010 (The Times, February 23rd 2009). Harriet
Harman’s commitments to tougher measures on equal pay also seem to have been compromised with the
Institute of Directors declaring a victory as their demands for no new measures on equal pay have been met.
(The Guardian 21st February 2009).
All of this sends out a very damaging signal to business – that equality measures are there for the good times
only and that the Government is prepared to trade on women’s employment rights at this difficult time. This
puts at risk the advances made by women in the labour market over the past twenty years. Additionally, it
compromises the UK’s economy; fostering and nurturing the talents of the entire workforce not only makes
good business sense, it will secure the UK a more rapid exit from the recession.
In the US, Barack Obama signed new equal pay legislation as one of his first political acts. Voters in the UK,
especially women voters, will be looking to the Government for similarly bold measures. We are therefore today
recommending the Government adopts the following five point plan that promotes women’s rights and
economic recovery:
1. Promote women’s rights and stamp out discrimination
The Government needs to be extra vigilant that the recession does not lead to an upturn in illegal discrimination,
particularly pregnancy and maternity based discrimination. Mothers are an essential part of our workforce and
their wages protect many families from poverty. The Government must ensure that women know their rights
for example around pregnancy and maternity leave and should use every opportunity to give employers a
clear message that the recession cannot be used as an excuse to break the law. The Government must begin
to monitor, as a matter of urgency, maternity related discrimination and take tougher measures to end the
dismissal of pregnant women.
2. Deliver a bold package to end pay discrimination
Women in the UK experience one of the worst pay gaps in the EU – the Government’s latest estimates show
that the average pay gap experienced by all women is a whopping 23%. In other words, for every pound paid
to a man, a woman is paid just 77 pence. The upcoming Equality Bill offers an ideal opportunity for the Government to take bold measures to tackle the pay gap and require all organisations to audit their pay for any bias
and discrimination.
3. Promote flexible working as a solution to the downturn
There has been a welcome increase in flexible working in recent years - a full third of mothers, and just under a
fifth of fathers, currently use some sort of flexible working arrangement. The Government must recognise that
flexible working is a key feature of a competitive, modern labour market and must take action to extend entitlement to all those who need it. This would work not only for the individual but also for companies who are seeking flexibility to deal with fluctuating demand. Currently, the right to request flexible working kicks in only after
you have been in a job for six months. Fawcett is today calling on the Government to extend that right to the
day a job begins, so that job seekers with caring responsibilities have access to a broader range of opportunities.
4. Fast-track women into decision making positions
The collapse of financial institutions has vividly demonstrated how power in our major corporate rests almost
exclusively in the hands of white men. It is important not to descend into outmoded stereotypes about women
and men which characterise men as testosterone driven and women as risk-averse. The stronger argument lies
in the fact that the selection for these positions bypassed 52% of the population, clearly compromising their
search for the very best talent. In addition, by engaging only one narrow demographic in decision making
positions, they created a high risk of “group think” whereby people from the same background and world view
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were less likely to challenge one another. By using quotas, Norway has increased its representation of women
on the board from 6% to 44% in six years. Fawcett is calling on the Government to adopt quotas for FTSE
companies to ensure better governance across the corporate sector.
Ensure women’s skills are harnessed on the road to recovery
Women’s skills are frequently untapped or under-utilised in the UK economy. The Women and Work
Commission estimates that closing the gender skills gap would boost GDP by between £15 and £23 billion
annually. It is critical that women have fair access to skills and back to work programmes and that these
programmes recognise the needs of mothers returning to work. Access to these programmes should be
relaxed so that women seeking to return to work after a period spent looking after children are able to do so.
Furthermore, Train to Gain, apprenticeship schemes and other continuing education provision needs to be
better tailored to women’s needs for training that fits around childcare commitments and that is suitable for
uptake later in life.
For more information on Fawcett and our work visit www.fawcettsociety.org.uk
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London
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Tel: 020 7253 2598
Fax: 020 7253 2599
Email: [email protected]
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