Early indications show that, financially, women are faring worse than men during the coronavirus crisis. But it could actually work in our favour if the situation is resolved sooner rather than later.
OK, do you want the good news or the not-so-good news first?
Let’s start with the not-so-good news and finish on a high, shall we? Women are bearing the brunt of the initial economic impact of the COVID-19 pandemic, according to women’s money publication Financy.
“The result reflects the weakest start to a calendar year since March 2015 as we start to see the COVID-19 impact hit female employment,” says Financy of its March-quarter Women’s Index, an economic scorecard on the financial progress of Australian women relative to men. And based on the numbers from this report, Aussie women are now 32 years away from achieving economic equality with men, a gap that could very well widen if the trend continues during the coronavirus crisis.
While not entirely surprising with lockdown laws and social distancing leading to businesses shutting, job losses and all-round financial insecurity, the fact that women are suffering more than men raises the question of ‘why’? Because, as Financy founder Bianca Hartge-Hazelman points out: “From an economic perspective, past downturns and wars helped advance women’s financial equality, but only this time, early indicators suggest that COVID-19 appears to be driving a setback.”
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So what makes this time different?
“When I first saw the stats on COVID’s impact on women having lost more jobs than men, and the financial effect was worse for women, I had to think why,” says Helen Baker, a financial adviser and the author of On Your Own Two Feet: Steady Steps to Women’s Financial Independence.
“Firstly, the issue is that many of the industries hit the hardest are dominated by women – many women take on the part-time and lower-paid roles to balance out their career with family life. You’ll always see women in reception and admin roles, waitressing, retail and child care.
Secondly, we still have the gender pay gap and so women’s statistics show they are harder hit.”
Nicki Hutley, a partner at Deloitte Access Economics, adds that women are also being harder hit because they’re usually the primary caregivers. “We don’t know exactly how this is playing out at the moment, but with schools only just starting a staggered return and homeschooling continuing for now, it seems highly likely that more women will have to sacrifice work to look after kids,” she explains, adding: “Women are also more affected as they are more likely to be in casual work and anyone working less than 12 months in casual work does not qualify for the JobKeeper payment.”
Baker warns that if this downturn continues, recovery may be more difficult. “If/when women go back to work, they’ll still have the gender pay gap and therefore their recovery time will take a lot longer than a man’s both from a disposable-income perspective as well as reduced superannuation prior to COVID, potentially no superannuation during this time and then lower superannuation going forwards.”
But wait! I did say there was good news
While these early reports do seem worrying, don’t freak out just yet, because that’s exactly what they are – early reports. “Such findings may be just temporary and are also yet to be fully factored into the Index,” Hartge-Hazelman says. And there is the chance that this downturn could actually work in our favour when things go back to normal.
“If we can rapidly adapt to fight COVID-19 from a health perspective, perhaps we can also learn from successful temporary measures and then change to better support the financial security and progress of individuals, particularly women, in post COVID-19 world,” Hartge-Hazelman says. She’s referring to measures such as free child care and flexible working arrangements that before this crisis were major barriers for women returning to work after having babies. It’s also highlighted how vulnerable – and valuable – women in female-dominated industries are.
The report also suggests that the situation has created a somewhat level playing field between the genders on work-from-home arrangements. It cites research by Bain & Company and Chief Executive Women that shows that men are twice as likely to have their request to work flexibly rejected. So now that men have had the opportunity to prove that they too can be productive from home, who knows the repercussions that may have post-COVID?
Women are fighters
But what can you do now to get through and, beyond that, make your post-COVID financial situation better? “Women are incredibly resilient,” says Baker. “And when it comes to finances, they are generally making money work around what they have. They also tend to be sacrificial, so they should be able to sacrifice what they need to, to keep them on their own two feet.”
Depending on what you had in place as an emergency fund, what your debt levels were like and how long before you can get back to full salary, will determine your future, she says. “For those who were earning a low wage, the combination of the stimulus and other Centrelink benefits that perhaps you weren’t entitled to before – such as family tax benefit, rental assistance – and with opportunities for lower rent, utility rebates, cheaper petrol, etc, this may be an OK time for you.” This depends on what you qualify for and how long before you can get back to work and earn what you need going forwards. For higher earners, it depends on how much income you need to stay afloat and if the stimulus packages cover those costs.
6 practical money tips to get you financially back on track
“Women are wired for financial security,” says Baker. So if you’re worried now, “having strong foundations to protect where you are now, with a plan for how you build for your future” should bring back a sense of control and hopefully help you sleep better at night. Baker recommends you focus on:
1. Rebuilding your emergency fund that may have taken a hit during COVID.
2. Putting realistic amounts into your spending plans – your “living the dream”, “getting by” and “absolute basics” plans. Adjust your plans according to where you are at now and work with real amounts, not percentages. That way you can analyse line by line what is working and what is not.
3. Managing your debt – work on getting rid of your credit-card debt and high interest loans.
4. Your investments. Start investing while the market is down – just like you love a shoe sale, some investments are on sale now!
5. Protecting your future with income-protection insurance. Make sure you’ve checked out your opt-in requirements if it’s inside your superannuation fund.
6. Maximising your superannuation by having appropriate investments, reasonable fees and avoid investments that can blow up.
Having gone through a crisis, it’s all about making sure that if a different one occurs, or a second phase hits, you’ll be prepared for it.
So yes, things are a little scary right now, but everything is going to be OK – maybe even better than before!