The pandemic revealed many things about the way the global economy works. The most striking was its reliance on human capital. Such reliance puts a premium on labour quality over quantity in the push for economic success. But evidence still shows we aren’t using available human capital as effectively as we could, particularly the 50 per cent of the population who are women.
“The uncomfortable reality of the monetary policy response to the pandemic is that it probably entrenches disadvantage.” – Richard Yetsenga
Globalisation is stalling. What the IMF refers to as ‘slowbalisation’ began in 2008, characterised by a prolonged slowdown in the pace of trade reform and weakening political support for open trade.
The pandemic’s effect on cross-border migration was cataclysmic. The work-location link has weakened for certain skilled jobs but in other ways international labour is less available. We shouldn’t presume access to international skills will be restored.
Some economies are now accepting fewer migrants. The United Kingdom and New Zealand, for instance, have flirted with more stringent visa requirements and lower immigration caps.
Several demographic trends have accelerated that, in some economies, will constrain growth. In China a fall in the birth rate during the pandemic brought forward the point at which the population starts to shrink.
In other nations the demographic mix has changed. Korea has had the lowest fertility rate in the world for three years and both the United States and United Kingdom have recorded a sharp rise in early retirements. These changes raise the population’s share of dependents compared with those working, a development the Bank for International Settlements suggests is inflationary.
Central banks, including those of Canada, the EU, the US and Australia, have shifted to targeting low unemployment as well as inflation. Many governments are supporting domestic production and supply chains, both of which lift domestic demand for labour. In all of this, the gender imbalance persists.
The gender imbalance is particularly egregious in economics. The Peterson Institute for International Economics found it “is the least socioeconomically and racially diverse of any major PhD discipline”.
In the US it is even less diverse than mathematics, engineering and computer science.
The Guardian, citing a creatively titled study Yellin’ at Yellen argues “men forget to mind their manners when dealing with powerful women”. Janet Yellen, the first female chair of the US Federal Reserve, was 14 percentage points more likely to be interrupted by a male legislator than her predecessor and 18 percentage points more likely than her successor.
Positive changes are evident. An NBER study found historic penalties for women to be nominated as fellows of the (US) Econometric Society are turning. Since 2012 the nominations committee has had an explicit mandate to nominate women.
Removing existing roadblocks is fundamental. Last year 90,000 people watched England’s women’s football team play Germany, the largest crowd ever for a women’s match. Yet only a century ago, football associations in England, France, Canada, Spain, Brazil and Germany effectively banned the women’s game.
Many less obvious barriers are rectifiable. A UK study shows menopause is impacting the leadership pipeline across financial services with 52 per cent of respondents indicating symptoms made them less likely to take on extra responsibilities. The United Nations found “an estimated 500 million lack access to...adequate facilities for menstrual hygiene”. Medical studies show astonishing gender skews in treatment.
One study found women are “substantially less likely to be treated” with a drug to
address bleeding trauma. Another found female patients treated by male surgeons had 15 per cent higher odds of worse outcomes than those treated by female surgeons.
Economies often underutilise human capital in overlapping ways. The uncomfortable reality of the monetary policy response to the pandemic is that it probably entrenches disadvantage.
The pandemic’s inflation surge has likely disproportionately affected those on lower incomes. A Bankwest Curtin Economics Centre study reports Australia’s stark poverty gender gap. Women feature on the wrong end. The pandemic-related global property boom has no historical precedent. The World Bank reports of the more than fifty countries considered, women’s land ownership exceeded men’s in only two. Of 190 countries worldwide, a full 76 directly limit women’s property rights.
Government efforts to change the trajectory of domestic demographics have had limited success. Improving the utilisation of human capital offers much greater scope.
Nearly one in five Australians has Asian cultural heritage but that demographic comprises less than 5 per cent of senior management positions. More than 6 per cent of US fund managers are minority owned but they manage less than 1 per cent of assets.
The coalition of 25 organisations backing this year’s International Women’s Day ‘More Voices, More Representation’ campaign aim “to build and deliver a campaign that incorporates intersectionality at the core of IWD and beyond”.
Investing in human capital is beneficial but we still need to make better use of what we already have and grow participation, particularly by women.
Richard Yetsenga is Chief Economist at ANZ
A version of this article previously ran in The Australian.