Gender Perspectives and Gender Impacts of the Global Economic Crisis

Rania Antonopoulos, Rania Antonopoulos

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781136754999
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

With the full effects of the Great Recession still unfolding, this collection of essays analyses the gendered economic impacts of the crisis. The volume, from an international set of contributors, argues that gender-differentiated economic roles and responsibilities within households and markets can potentially influence the ways in which men and women are affected in times of economic crisis.

Looking at the economy through a gender lens, the contributors investigate the antecedents and consequences of the ongoing crisis as well as the recovery policies adopted in selected countries. There are case studies devoted to Latin America, transition economies, China, India, South Africa, Turkey, and the USA. Topics examined include unemployment, the job-creation potential of fiscal expansion, the behavioral response of individuals whose households have experienced loss of income, social protection initiatives, food security and the environment, shedding of jobs in export-led sectors, and lessons learned thus far. From these timely contributions, students, scholars, and policymakers are certain to better understand the theoretical and empirical linkages between gender equality and macroeconomic policy in times of crisis.

1 Introduction to the book

Rania Antonopoulos

DOI: 10.4324/9780203436288-1

1 Introduction

The context of this edited volume is the recent global economic crisis. More than five years have now elapsed since the subprime mortgage debacle first erupted in the United States. Within a few months, its global reach indicated that it could become the worst financial and economic crisis in recent history, earning it the name “Great Recession” – a term reminiscent of the Great Depression. Since 2008, over 38 million people have dropped out of the labor market due to discouraging prospects of finding paid work, with an additional 29 million still looking for a job. Last year alone, that is, in 2012, unemployment increased by an additional four million persons, three-quarters of them from regions other than the advanced economies – with marked effects in East Asia, South Asia, and Sub-Saharan Africa (ILO 2013a).

At the onset of the crisis, while the Northern countries tried to avoid a total financial meltdown, developing and emerging market countries had high hopes that they were sufficiently “decoupled” and expectations of remaining unscathed ran high. This did not come to pass. Instead, spillovers of the crisis hit the Global South hard through a severe international trade slowdown and outflows of finance capital. In 2009, for instance, while global output dropped by 2.2 percent, trade worldwide dropped by 12.2 percent (Kucera et al., Chapter 5, this volume; WTO 2010). Exports in Asia declined by 18 percent; South and Central America by 23 percent; Africa and the Middle East by roughly 30 percent each; and in the Commonwealth of Independent States, countries located in the former Soviet Union region, by 36 percent (WTO 2012).

Yet, despite the crisis, and while admitting great variation in depth of impact and speed of recovery, there is evidence that developing countries have been emerging from the crisis much faster than their developed country counterparts (ILO 2013b). It is indeed telling that the 2013 Human Development Report of the United Nations is titled “The Rise of the South.” Many reasons may account for that, but two of them must be noted. First, most developing countries were not directly implicated in investment products linked to bundled subprime mortgage derivatives, and therefore avoided the immediate wrath of the financial collapse. Second, many economies in the Global South, and the larger-scale emerging economies among them, were better prepared to weather the storm. High growth rates prior to the crisis – fueled for some of them, in part, by favorable commodity prices and current account surpluses together with favorable fiscal balance positions – provided the fiscal space to engage in typically Keynesian countercyclical policy. Political will, therefore, for an expanded role of a clearly interventionist state was backed by adequate domestic finances. With ample international reserves, and without fiscal constraints, China, for example, introduced a fiscal stimulus package of approximately US$600 billion, corresponding to 13 percent of its GDP. Other examples of fiscal interventions include Indonesia, Argentina, and Brazil, all of which intervened at a scale ranging from 4 to 10 percent of GDP (UNCTAD 2011).

In contrast, in the immediate aftermath of the crisis, developed countries were primarily concerned with the danger of a financial meltdown and focused their expansionary policy on saving financial institutions that were “too big to fail,” providing liquidity infusion, mostly via bank bailouts including recapitalization. Fiscal expansion also took place in high-income developed countries, but from the outset, the scale of interventions did not match the challenge at hand. In the United States, for instance in 2009, the stimulus package introduced was US$787 billion, to be spent over the next two years, which represented a mere 2.6 percent of GDP per annum. Still, the worst was yet to come. Beginning in 2010, the policy climate changed dramatically. The genuine threat of a collapse of the real economy and massive increase of unemployment faded away. While recovery was still weak, concerns in the epicenter of the crisis, that is, in the United States and Europe, were suddenly shifted toward the impending dangers of fiscal deficits and debt accumulation. The fact that, in recessionary periods with declining output, tax revenue necessarily also declines was pushed aside. Even if government spending is maintained at pre-crisis levels, let alone expanded in a counter-cyclical manner as it should, budget deficits are set to rise and this necessarily results in higher levels of sovereign debt. There are two views as to the impact of rising debt to GDP. One view holds that when the government borrows and spends with the aim of introducing stimulus packages and reigniting the economy, employment and growth will take place and business activity will recover. As output and incomes increase, tax revenue will increase, too, and the need for government stimulus spending dissipates. This is what Keynes advocated more than 70 years ago.

The opposite view holds that high debt-to-GDP ratios slow down growth and prevent recovery from taking hold, mostly because when government borrows it “crowds out” private-sector borrowing, but also because as sovereign debts rise, borrowing in a country becomes more expensive, reflecting the higher risk premium imposed because financial markets start to doubt the ability of the country to pay back its creditors. For recovery, according to this view, prudence dictates that government spending, even in the midst of a crisis, observes a “sustainable” debt-to-GDP ratio. Hence, the prescription dictates spending cuts and stringent imposition of austerity measures. A little or a lot of pain now will pay off later. This view has been contested in the past with research-based evidence. Przeworski and Vreeland (2000) have in fact shown that austerity measures imposed on countries with high deficit-to-GDP ratios lead to a decline in growth rates. The same controversy has erupted again now. In a recent study, Herndon et al. (2013) have decidedly refuted Reinhart and Rogoff’s (2010) previously influential findings, especially in policy circles, that had claimed that median growth rates for countries are negatively affected with public debt over 90 percent of GDP.

But old habits and ideologies die hard. Post-2010, austerity won the day and procyclical trends soon settled in (Ortiz and Cummins 2012). Greece, Ireland, Portugal, Spain, and Italy provide examples of the disastrous effects of a “balance the budget at any cost” approach. Structural adjustment programs imposed in Latin America and Sub-Saharan Africa in the 1980s and 1990s have been revamped as the only pathway to (eventual) growth. Small government, privatization of public assets, cut-backs of social services, increasing taxes, and a fixation on export-led growth as panacea, which is based on promoting export competitiveness via severe labor rights curtailment and (private-sector) wage reductions, are already leading member countries of the European Union to a wage race to the bottom, double-digit unemployment rates, and deepening recessions of domestic economies. These economic downturns, besides devastating living standards and creating a double dip in some countries with a real danger of a “lost decade” in view (Latin American for some countries and Japanese-style for others) for Europe, in today’s globalized context of finance, production, and trade, are also creating a dangerous overall global drag.

The fact that some countries in the Global South have taken the opposite view engenders optimism. The lesson learned – and discussed in different national contexts by the contributing chapters to this volume – is that a more balanced approach to development requires attention to at least three issues: rebalancing domestic production with an orientation toward domestic consumption, instead of exclusive dependence on export-led growth; sustained wage growth that reduces income inequalities, enhances consumption demand, and generates more employment; and gradual strengthening of social protection institutions that not only ensure access to basic necessities for all, but can also be scaled up for crisis mitigation and economic stabilization as needed. The closer a country is to meeting these criteria, the stronger the resilience it would show against the danger of collapse of its economy and living standards. This stands in sharp contrast to beliefs that still place all hopes in the ability of unfettered markets to self-regulate and produce optimal outcomes. The contributed essays highlight that developing countries’ overall development strategies have differed substantially over the years; and that in turn influenced, on the one hand, the ways individual countries had been linked with the global economy prior to the crisis and, on the other, the policy options they chose to combat it, once the crisis erupted.

Developing countries also differ in terms of their gendered structures of production and distribution, which is the central theme of this book. Patterns of employment, ownership of productive assets, housework and other unpaid household production, and care responsibilities show very clearly that, in aggregate terms, women are at a disadvantage. It is precisely this recognition that has led governments around the world to national commitments and international agreements to implement policies that close the gender gap. While the crisis has been unfolding, there has been a grave concern that progress made in women’s equality may come to a halt. The 2012 ILO report on Global Employment Trends for Women provides evidence that while gender gaps in unemployment, employment, insecure vulnerable employment, and labor force participation were closing during 2002–07, they have now stagnated and in many instances have shown reversals in the crisis period of 2008–12 (ILO, December 2012, p. 2).

Gender equality is about improving women’s lives, but, as many of the chapters highlight, this is better achieved under macroeconomic circumstances and labor market conditions that promote the attainment of adequate living standards and decent work conditions for all. A closing of the gap between men and women is sometimes not cause for celebration, as this may reflect deteriorating trends for men instead of women’s enhanced sharing of benefits. The wide range of gender differences and inequalities between men and women implies that the paths of transmission of the crisis may differ across gender lines (Antonopoulos 2009) and this cautions us to also avoid overgeneralizations as to whether women or men bear the larger share of the brunt of a crisis. Sometimes, gendered outcomes may be contradictory. An initially low female labor force participation may be rising, for example, but women may be accepting the most unprotected and precarious of jobs or may be working as (unpaid) contributing family workers. Statistics about the crisis also show that unemployment has hit men harder than women in some regions. Yet, if we do not have adequate information – and for the most part we do not – to understand how women and men cope differently when household incomes decline in terms of, for example, their paid and unpaid work responses, consumption patterns, health and educational outcomes of male and female children etc., it is hard to draw conclusions. To complicate matters further, women may be able to show more resilience. Past experience, such as the Asian crisis and the years immediately following the dissolution of the Soviet Union, has shown that in times of economic shocks, self-destructive behavior and suicide rates are more prevalent among men.

From the perspective of this book, it is important to understand the differentiated pathways through which men and women are affected by economic shocks and to implement mindful and responsive policy to these differences. In this regard, there are two key issues to keep in mind. The first concerns the fact that the immediate and second-round impacts of these shocks on men and women accumulate on top of pre-existing inequities, and hence are particularly harsh to those who were the least privileged, such as those least well-off households with women being at higher risk of poverty. Second, economic recovery from a crisis neither automatically translates to gains in decent job creation for women, nor ensures social provisioning that reduces their unpaid work burdens and allows for greater reconciliation of work and family life. Furthermore, it does not provide automatically an expanded social security and protection system – not independently of labor market and family ties conditionalities. Hence, it is important to understand not only the immediate crisis impacts and policy responses, but also the type of economic (re)orientation that is emerging in different national contexts since this will influence future developments that can have positive or negative effects for gender equality.

The above issues are addressed, to varying degrees, in the chapters that follow. Written with a wide range of audiences in mind, the book combines analytical description, methodological and technical analysis, and policy-oriented discussion. The focus of this compendium is primarily on developing countries, with the exception of two chapters, one dealing with the United States exclusively and the other with Europe’s response to the crisis as part of a chapter, so as to provide a context for delving into global issues. The remaining contributions are devoted to China, India, South Africa, and Turkey as well as Latin America, exemplified by Mexico, Argentina, and Ecuador – three countries that represent a diversity of experiences in the region – and on transition economies countries.

The book’s chapters concretize and contextualize the necessity for “gender perspectives” in analyzing the crisis in a variety of ways. Two essays provide syntheses of emerging regional employment trends, comparing them along the way with past experiences that include crisis mitigation interventions. Other chapters present research insights based on primary and secondary data that deepen our understanding of how the male and female content of employment in the various sectors of an economy influences gender-differentiated labor market outcomes in times of crisis. Beyond exploring the immediate gender-differentiated unemployment effects of the crisis, we also present findings from studies on women’s decisions to look for paid work (or not) when incomes decline due to men’s job losses. An additional theme deals with policies that aim at crisis mitigation via job creation. As direct job-creation government programs constitute a significant policy intervention in times of crisis, a theme highlighted by several authors in this book, an empirical study on this topic, from a gender perspective, is also included. The financial and economic crisis came at a time when a severe food crisis had already affected millions of people; thus, a chapter looking forward is also included on food security and environmental sustainability in a post-crisis environment.

Finally, across the board, the contributions in this volume allude to the fact that changes in both women’s and men’s world of work cannot be assessed without data on time allocation between paid and unpaid forms of labor activities. Incomes in times of crisis decline due to loss of paid work and, oftentimes, reduced wages. Public services and various in-kind and in-cash subsidies, which also contribute to the standard of living that households enjoy, increase or decrease depending on policy decisions. It has been argued convincingly in the past that when earned income and public-sector provisioning decline, women’s time becomes severely strained in that they provide substitutes for market purchases by stressing their own time to fill in newly created task gaps. We therefore need to go beyond anecdotal evidence but rely more on small sample surveys of time-use allocation that can be of great value in this regard. Second, as this Introduction was written, many developed countries were still immersed in recession, while growth predictions for emerging economies were being downgraded.

The expectation is that policies to be undertaken from now and beyond will move the global economy and its people into a firm recovery era. But the current state of affairs in terms of revealed choices among policy options in Europe and the United States, still the key drivers for global growth, do not allow for much optimism. The opportunity may indeed be stronger than ever before for the Global South to fill in the policy vacuum.

2 About this book

The book opens with Jayati Ghosh’s “Financial Crises and Their Gendered Employment Impact: Emerging Trends and Past Experiences.” The chapter begins by showing that in recent decades, global labor markets have been increasingly characterized by part-time, informal, and self-employed work (i.e., less stable, more precarious employment). This trend has been particularly strong for women workers. Against this backdrop, the author reviews annual unemployment rates by sex and region and notes that while in some parts of the developing world women have been hit harder than men, there is a clear divide in that in developed countries the financial crisis and its aftermath so far have primarily affected male-dominated sectors. Consequently, unemployment rates for men exceeded those of women in developed countries in 2010. Moreover, it is very likely that ongoing austerity policies will soon impact sectors in which women workers are dominant and increase unemployment for women as well as for men. In contrast, unemployment rates for men and women in developing countries have improved since 2010, but lower unemployment rates for women in some regions do not imply that the impacts of the financial crisis have been less severe for women: female workers have also experienced wage cuts, reductions in hours, reduced progress in closing gender gaps, and increased burdens of unpaid work. Drawing on the experience of the Asian crisis of 1997–98, we are reminded that it produced deterioration in the level of full-time employment for women and an increase in the gender wage gap. Furthermore, employment impacts during the recovery phase of the Asian crisis were the result of policy choices that depressed domestic consumption and investment in favor of protecting exchange rates to support an export-led recovery. The author warns that this may be the foreshadowing of things to come in the European context, because, as many of the countries in the region use the same currency, internal devaluation will mean that wages will be decimated, which in turn will reinforce already depressed levels of consumption demand. Ghosh next evaluates the results of fiscal policy responses to the 2008 crisis, observing that most policy responses have failed to deliver adequate employment growth, and, in particular, have undercut the economic position of women engaged in paid and unpaid work. The chapter then concludes with examples of gender-sensitive economic policies implemented in Argentina and Sweden. These governments incorporated targeted policies (e.g., expanded social protection spending, job creation, collective labor agreements, etc.) to reduce gender disparities in labor markets as part of their overall macroeconomic recovery strategy. Such examples are crucial: they prove that well-integrated gender-sensitive policy responses can be enacted even in times of crisis and that, in fact, they are an effective means to reduce the impacts of financial crises while promoting economic recovery and gender equality simultaneously.

Chapter 3, “Investing in Care in the Midst of a Crisis: A Strategy for Effective and Equitable Job Creation in the United States,” co-authored by Rania Antonopoulos, Kijong Kim, Tom Masterson, and Ajit Zacharias, expands on the last idea of the previous chapter and reaffirms that, in fact, gender awareness in crisis remediation interventions can reinforce positive outcomes. The authors of the chapter, which was written in 2010, advocated through their research an increase of a previously introduced fiscal stimulus by the Obama Administration through the American Recovery and Reinvestment Act – but this time, they proposed that directing funds to social service provisioning should be given priority as an effective and equitable means to job creation in the United States. According to the authors, in times of crisis when the private sector sheds jobs, the government ought indeed to provide job-creation programs. As...