The steps that both employers and individuals can take to promote financial equality have a huge impact on empowering women and achieving gender parity in the workplace. Fiona Dunsire, UK CEO of Mercer, the global consultant helping companies improve the health, wealth and careers of their people, discusses how the need for financial independence framed her own career decisions. She also highlights the actions employers can take to recognise and support the different financial needs of women.
Despite all the talk and genuine good work being undertaken by many companies, we have to acknowledge that in the workplace there is a long way to go before we achieve gender parity. Only 25% of senior leadership roles are held by women. At Mercer, we are in the privileged position of advising companies on actions they can take to ensure they have a diverse and thriving workforce and we can see what is working, and not, in practice.
For me, steps that both employers and individuals take to promote financial equality will have a huge impact on empowering women and achieving gender parity. The gender pay gap is well publicised and increasingly under the spotlight, but the adverse financial position of women is much broader than just a pay issue.
In the UK working women are paid 18% less than men, on average (far more than that if you work part-time), but come retirement, women’s pensions are almost 40% lower than men’s. That’s the triple whammy from time out of the workforce, part-time working and longer life expectancy: women have 12 years’ less time in the paid workforce on average, 41% work part-time (compared to 12% of men, so even if everything else is equal, absolute earnings are much lower) and women live 13% longer in retirement, so they actually need higher pension savings than men.
The demands on women’s money are also telling: 1 in 4 women are responsible for funding childcare compared with less than 1 in 10 of men, and the same percentage spend between a quarter and half their salary on childcare.
Women are also more vulnerable to losing income through caring responsibilities, of which elder care is a growing proportion – 1 in 9 of UK employees are working carers, of whom 1 in 5 will leave employment as a result. Indeed, the gender pay gap is greatest for women over 40, a function of time out of the workforce.
Divorce can also materially impact women’s income, particularly in later life – divorce in the run up to retirement can come as a shock which it is difficult to recover from financially.
Finally, there is evidence that women are more risk averse than men. In Defined Contribution pension schemes, which are now the norm, the size of your pension savings depends on the investment choices you make and taking less risk will normally mean lower growth and a lower pension over the long term.
There is a ‘virtuous circle’ whereby the more there is equality in earnings between women and men, the more that further supports women’s career progression and financial resilience. For example, greater financial equality allows for a more healthy balance in the household decisions that have typically led to women’s lower workforce participation. In my experience, it also allows you to delegate or outsource many of the tasks that consume women’s time and energy in the home!
It is fair to say that my own early life experience framed my career decisions and choices, and strongly influenced where I am today.
My father died suddenly when I was 10 and at that point, it became very obvious that my mother had nothing to fall back on – she had married young and despite good school qualifications, had not completed further education. She was a great role model to my sister and me, and went back to college to get qualifications and become a teacher. We lived solely on her student grant and widows’ pension, which was an early lesson in responsibility and careful budgeting. As a teenager growing up in the early eighties, the need to ensure I was financially independent and resilient to whatever adverse outcomes life might throw at me was very important. It has undoubtedly framed my career choice to become an actuary and progress to senior leadership. It has also allowed me to have much more balanced discussions with my partner about our careers and family life than many of my peers. In practice, at any point in time, this became about what the opportunity and motivation was for each of us, rather than a purely economic decision. I am lucky in this respect.
If employers are serious about getting more women into senior leadership, and thus a more gender diverse workforce, then addressing the adverse financial position of women is an enabler. The steps companies can take range from obvious actions to identify and address pay, promotion and performance rating differences; to more innovative solutions such as paying higher pension contributions to women; financial education and communications tailored to women and health policies and workplace benefits which reflect women’s differing needs. Evidence shows that companies which recognise the specific financial needs of women have more women in senior leadership roles. The requirement for larger UK employers to publish gender pay data will be painful for practically all companies. This is a good opportunity for companies to face up to the issue and reassess what they are doing to support financial equality for women.
If you are experiencing any difficult leadership challenges please get in touch to find out how I can help you. Christine Griffin, Executive Coach firstname.lastname@example.org – +44 (0)7796 147127 – www.griffinity.co.uk.