(Photo: Getty Images)
(Photo: Getty Images)

BusinessNovember 5, 2020

Why are so many women leaving the workforce?

(Photo: Getty Images)
(Photo: Getty Images)

Covid-19 is still having a disproportionate impact on employment across the genders. Kiwibank economist Mary Jo Vergara explains the trends, consequences and what could it mean for the gender pay gap.

The latest labour market statistics for the September quarter came with few obvious surprises. The unemployment rate increased to a lower-than-expected 5.3%, and the impact across the genders was far less disproportionate than last time. The female unemployment rate rose to 5.8% (18,000 more women unemployed) and the underutilisation rate shot to 16.2%, up from 14.9%. The numbers for men were roughly the same.

However, these quarterly changes reveal only a snippet of the whole truth.

When looking at changes between the March and September 2020 quarters, you see the true impact of Covid-19 on women’s employment – and the figures are concerning.

Since March, when the virus first emerged in New Zealand, the seasonally adjusted number of people in employment fell by 31,000. About 70% (22,000) of these people were women. This disproportionate impact was captured in the June quarter data, which showed that of the 11,000 people who lost their jobs, 10,000 were women. For the same reasons male employment was hardest hit in previous recessions, women are especially vulnerable this time around; over 60% of sales workers and over 70% of hospitality workers are female.

The decline in female employment since March stemmed from job losses within the tourism industries, including accommodation, travel agencies, sightseeing operators, and cafes and restaurants. And Stats NZ’s latest tourism satellite accounts show that the blow to tourism has disproportionately affected Māori women. There were 4,000 fewer Māori women employed in tourism industries in the June quarter than a year ago – a whopping 20.5% drop. With closed borders and future limitations on domestic travel, it wouldn’t be a stretch to see more job losses among Māori women.

(Graphic: Stats NZ)

Turning back the clock

Looking ahead, it’s possible we see a rise in female part-time employment. Employers sought a flexible workforce during the recovery phase in the 90s. As our economic recovery from the Great Lockdown builds momentum, firms today may share the same preferences. Women currently make up around 70% of the part-time labour force. So, for the same reason that women in part-time employment were the first to be let go, these women may be the first to be hired.

The problem with part-time employment, however, is that it’s often low paid and unsecured. And this doesn’t bode well for the gender pay gap. The gap has narrowed over the past decades – from 16% in 1998 to 9.5%, as more women have moved into different fields (notably, law, medicine and commerce) and into higher positions. But with some women either moving into part-time employment, forced to take a pay cut, or dropping out of employment altogether, the pay gap may widen.

Back to the books

A crisis can often influence the decision between employment and education. And this decision may be front of mind for our younger generation. Unemployment rose the highest among those aged 15-24 years, with 9,100 more unemployed over the quarter. Given the fragility of the service industry, young women may wish to extend their studies. And therein lies a silver lining. A return to or extension of higher education can have positive implications on the pay gap. Much of the progress women have made in the economy is anchored by their rising participation in education. Indeed, the improvement in women’s educational attainment is a recognised factor behind the narrowing pay gap.

Not only may more young women look to extend their studies into higher education, but the current crisis may also spur a change in study preferences. The current vulnerability of the service industry may crush any hopes of a future career in the industry. Instead, some may make the switch into studies with careers that have fared well. Crisis recovery 101 involves investing in infrastructure as a way to raise productivity and stimulate economic activity. But infrastructure is a historically male-dominated sector. That’s where the government’s $1.6 billion trades and training apprenticeship programme comes in.

Encouraging more young women into vocational training may help to future-proof, to some extent, female employment when the next crisis comes around. And smoothing out the distribution of women across occupations will help to narrow the gap. But just like the rise in the number of female lawyers, scientists, doctors and businesswomen, change begins in the classroom.

Of course, that’s a long-term solution to a current problem. What about the here and now? The decline in female employment means that we need to design a range of support for employment. Crisis recovery 101 won’t cut it this time. An extended approach is needed to combat future female job losses.

Job-making programmes and supporting start-ups

What’s most worrying from the September labour market report is the growing number of women leaving the workforce. In the September quarter, the number of women not in the labour force (seasonally adjusted) rose by 1,000, while 6,000 men re-entered the force. More government support is needed to limit the number of women dropping out of the labour force. Our Tasman neighbour seems to have the formula right. The Australian government introduced the “JobMaker Hiring Credit” – a programme designed to provide businesses with an incentive to take on employees aged between 16-35 years. There’s no reason we can’t introduce the same here. It would provide our most vulnerable a way back into the labour market.

Some women who have become unemployed may look to be redeployed into other industries seeking workers, notably in infrastructure. But it’s not as easy for a female barista to put down the coffee grinder and pick up a shovel. The other option is to venture down the path of self- employment. Those freshly unemployed could repurpose their skills and start a new business. But forming a start-up is no doubt a scary endeavour. And there’s understandable reluctance to take on debt in the current environment. But this is a space where the government could play with the use of grants. A “start-up” grant could be offered to support those in the cost of going it alone and help unleash the creative within.

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