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Article27 May 2020

Female Job & Growth Setback

COVID-19 to Erode Female Labor Force Participation Gains
May 27, 2020 - In the Citi GPS 'Women in the Economy' series, we introduced the concept of 'women as global growth generators'. Following the great financial crisis, with global economic growth rates fairly anemic, we suggested increasing the number of women in the workforce could be a lever to increase growth levels. Back in 2015, our work showed that increasing female labor force participation to the same level as males could add 12% to the GDP of OECD countries by 2030.  Even reducing the gap by 50% could lead to GDP gains in countries like Germany, France, and Italy of 5.6%, 4.7%, and 11%, respectively. In 2017 we adjusted those numbers with a conservative assessment on the potential impact of gender policies and changes. Even with these conservative assumptions, we showed that increasing the female labor force participation rate could drive a 6% increase in GDP growth in advanced economies.

The COVID-19 pandemic has been the largest economic shock since the great financial crisis. Although the pandemic's affect is global, preliminary data indicates an uneven breakdown in job losses  between genders — women are bearing the brunt of the layoffs at a much higher rate than men. This is largely due to the segmentation of female laborers into sectors which have been adversely affected by the coronavirus disruptions. Generally, women occupy 75 percent or more of the jobs in the personal care, health care, and clerical professions and roughly 70 percent in the education sector. In the U.S., layoffs of women in the services sector were 1.4 times that of men.

Overall,  in a subset of economies (not including China) we've looked at, a total of 44 million employees will likely face layoffs due to the pandemic. Of those, ~31 million are likely to be women compared to ~13 million men. If our forecasts are accurate and roughly 31 million women lose their jobs, the equivalent loss to real GDP could be about $1 trillion , or 1.2 of the 3.6 percent year-over-year drop in  GDP growth we expect in 2020.

In addition to losing more jobs, women are also more likely to be the caretakers of the sick, children and elderly, which increase the risk of them not being able to rejoin the workforce. Together, there is a risk that any gains made in female labor force participation over the past five years will be lost.

Given this level of economic loss from women leaving the workforce, decision makers must take women into account in any policies being implemented to address the COVID-19 economic disruptions. These policies should be some of the same vital policies that supported female labor force participation and employment prior to the coronavirus shock. They include policy options that support women, workers, and families with caring responsibilities, options that support women, workers, and families facing job and economic loss, and policy options to support entrepreneurs and small business owners.

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COVID-19
Labor Force Participation
Layoffs
Unemployment
Women

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