Battling a She-cession with a She-covery
This pandemic has given birth to a host of new economic, political, and cultural phenomena, throwing policymakers for a once-in-a-lifetime wrench in terms of how to respond. On one hand, COVID has created an economic recession, with record unemployment that peaked in May 2020 at 13.7%. With that being said, average household savings managed to increase this year, an unexpected by-product of a suite of generous government programs like CERB and CESB. Is now the time to reimagine society through a variety of equity lenses and ‘build back better’? Would it be more prudent to stabilize the economy so as not to prolong the pain and practice evidence-backed spending? Well, the answer lies somewhere in the middle.
In typical economic recessions, governments respond in the Keynesian fashion by investing in “shovel-ready” infrastructure, as Prime Minister Harper did following the 2009 financial crisis. However, when crafting an economic recovery strategy, the distribution and sectoral focus of job losses is critical to creating a plan that adequately addresses labour force and economic dynamics. In the COVID-19 pandemic, the early job losses and labour force underutilization of women has been revelatory, with the term “she-cession” being coined.
So why exactly are we in a she-cession? In the early days of the pandemic, women made up 70% of employment losses for Canadian workers between 25-54 years old. Those job losses began to recover as women-majority industries like hospitality, retail, and food services came back to work in the summer. However, with school closures and hybrid learning, 57,000 women exited the labour market in September, compared to 54,000 men that joined it - revealing a marked gender difference.
But there’s also a utilization issue. Workforce underutilization measures those who are unemployed, those who gave up looking for work, and those who are still employed but lost all or the majority of their hours. This figure peaked in April at 36.1% and has declined consistently as the pandemic wears on. However, what hasn’t changed is the fact that women have been consistently more underutilized than men, a phenomenon that didn’t exist pre-pandemic.
This creates a clear moral and economic imperative to design a COVID recovery that prioritizes the needs of women. According to Kweilin Ellingrud, a Senior Partner in McKinsey’s Operations practice, women generate 40% of global GDP and that by realistically mobilizing women to formally work in the workplace and take on more full-term employment, we could boost global GDP by $12T. If we want to mobilize our economy to be more efficient, effective, and equitable, it is imperative that we empower and enable women to fully participate in the economy and the workforce. An economic recovery focused on correcting the she-cession should be centered around three key pillars: Gender-lens investing and Gender Based Budgeting, a national childcare strategy, and an inclusive innovation ecosystem.
Gender-Lens Investing and Gender Based Budgeting
Gender-lens investing essentially describes public and private market investing done with the intent of addressing gender issues and promoting gender equality, either through directly investing in solutions or assessing gender impacts throughout the investment process. Public market gender lens investing has grown to $3.4B AUM as of 2019, up 427% from 2016 and $4.8B was raised for private market gender lens investing through 2019. Additionally, large institutional players like Goldman Sachs and the NASDAQ are creating new IPO and listing requirements that mandate the inclusion of female and BIPOC board members. Capital providers are continuing to develop a gender-lens for their operations because gender-diversity at the executive level is correlated with greater profitability, higher levels of performance, and enhanced value creation. By advancing gender-lens investing, we can enhance financial profitability and operational success while working to dismantle systemic barriers that often exist because no one with lived experience as a woman is present at decision-making tables.
One of the ways governments are beginning to incorporate this gender analysis into policy decisions is by adopting Gender Based Budgeting (GBB). Gender budgeting was pioneered by the OECD and involves using processes and analytical tools to create gender-responsive policies in the budgetary process. While GBB is fairly new in Canada, countries like Australia, Japan, South Korea, Spain, Mexico, and the Scandinavian countries have already been practicing this in some form. Why utilize GBB? Well, it provides policymakers with rich data sets on the gender outcomes of specific policy actions, allowing governments to create responsive, evidence-backed solutions to create stronger economic outcomes and resolve systemic issues. In a time where it feels like money is flowing out of the government coffers at unprecedented rates, GBB provides a foundational data to inform policymakers and business leaders to make decisions that strengthen the economy and equity-outcomes.
The Need for a National Childcare Strategy
Gender Based Budgeting is a highly applicable budgetary tool in assessing one of the most crucial policy decisions impacting the she-cession – a national childcare strategy. Canadian governments, both Liberal and Conservative, have been promising a national childcare strategy for 50 years with little to show for it. The Royal Commission on the Status of Women recommended the creation of a national childcare strategy in 1970 to increase women’s workforce participation. PM Martin came the closest in 2005 with the Foundations Program, a $5B childcare strategy centered around quality, universality, accessibility, and developmental programming. However, after signing bilateral agreements with every province, he was beaten by the Conservatives in the 2006 federal election and PM Harper quashed the program and introduced the Universal Child Care Benefit (UCCB). This was a monthly cash transfer of $100 received by parents for each of their children under age 6. The Conservatives believed this would increase parental choice and recognize the unpaid labour done by family members and stay-at-home parents.
The UCCB has had great benefits, offering parents greater flexibility, reducing child poverty, and stimulating the economy. However, there are two key drawbacks: there is no guarantee that parents spend the transfers on daycare and there is no direct correlation with women’s increase in labour force participation. Because women still overwhelmingly perform childcare responsibilities, they cannot increasingly participate in the labour force without adequate daycare capacity. Critics of the UCCB argue that the credit has not created a sufficient number of childcare spots and that women are disincentivized from participating as a direct result of the policy because a double tax penalty is created for families who increase labour productivity and income because of UCCB’s household income thresholds.
What has become startlingly clear throughout this pandemic is that we rely on schools for childcare and when schools closed, parents could not go back to work. Creating a national childcare strategy is a concept that has achieved consensus among business leaders (including the major banks and the Canada Business Council), unions, and educators. However, while popular support is critical for policy reform, clear economic benefits are also necessary. Jim Stanford, an economist and Director for the Centre for Future Work, predicts that a national childcare strategy that enrols most Canadian children ages 1-5 would create over 200,000 direct jobs (administrators and educators) and tens of thousands of indirect jobs (construction workers, utilities, etc.). This would boost national GDP by $20B per year, but it pales in comparison to the annual $45-90B boost in GDP that comes from halving or eliminating the labour force participation gap. This would result in 250,000 to 500,000 women joining the labour market, creating 280,000 full-time equivalent jobs. This strategy would also increase government revenues by $17-29B per year, meaning the program pays for itself and then some. Childcare is clearly a key driver of Canada’s economic engine, and by doing the hard work to create a national childcare strategy, we will enhance our economic situation while levelling the playing field for low-income and marginalized women, who often struggle the most due to a lack of affordable and available childcare
Female Entrepreneurship and Rural Communities
While economic growth is crucial, ensuring that growth is well-distributed is paramount. Canadians often forget the crucial role rural communities play, accounting for 27% of the national GDP and serving as a significant contributor to the national supply of food, water, and shelter. However, rural communities face significant challenges in being able to attract talent, grow their economic base, prevent youth attrition to cities, and tackle pressing modern-day challenges. Entrepreneurship has been key to many rural communities in trying to revitalize their communities. Innisfil, ON, a small community of approximately 36,000 people, rapidly grew expanded its population base and grew its tax base with pro-entrepreneurship policies, like the town’s partnership with the Ryerson DMZ to create a start-up incubator-accelerator program.
Women may be particularly drawn to entrepreneurship, as it offers purpose-driven work opportunities and flexibility. Additionally, unlike urban markets, rural communities are undersaturated from a business creation standpoint and start-up costs are relatively low, making the downside of trying something new relatively low and the upside quite high. To create a more inclusive innovation ecosystem, federal and provincial governments can provide further funding for programs that promote and support female entrepreneurship, both with access to growth capital as well as mentorship and learning. In urban centers, we’re beginning to see signs of this, with co-working spaces being created in Toronto, Montreal and Vancouver that have childcare services offered at the space. This makes it more accessible for single mothers and mothers without childcare support to start and grow their own business. Not only will this help to fuel Canada’s innovation engine, it may also work in a rural context to build strong and resilient communities, reversing trends of dwindling populations and youth attrition.
While rural townships must create female-focused innovation programming, local business coaching, and inclusive coworking spaces, federal and provincial governments should support from both a funding and programmatic perspective. Governments can leverage non-profits to create specific networks for female entrepreneurs, like the Women of Ontario Social Enterprise Network (WOSEN). This was created by the Centre for Social Innovation to build connectivity and support for women in social entrepreneurship, allowing these entrepreneurs to build connections across geographies and gain learnings and new practices from a large peer network. By empowering rural townships to create inclusive innovation ecosystems alongside provincial and national counterparts, they can work to increase their tax base and business start-up growth, powering their communities and the Canadian economy for decades to come.
Tian Wei, an award-winning Chinese journalist who was honoured by the World Economic Forum as a Young Global Leader, said, “Any society that fails to harness the energy and creativity of its women is at a huge disadvantage in the modern world.” In a time of crisis, it’s important to look at the resources we have at our disposal. Currently, over 50% of Canada’s population is being underutilized and it is time to double down on activating Canada’s women in our economic recovery to create jobs, drive economic growth, build businesses, and create a more just and equitable society for all