Tough times even tougher on women

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A senior economics academic says tough economic times, such as the current cost-of-living crisis, can cause the gender pay gap to widen.
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Tough economic times, like the current cost-of-living crisis, can cause the gender pay gap to widen, a senior economics academic says.

Research by Dr Asha Sundaram, a senior lecturer at the University of Auckland’s school of business, found female employees with access to parental leave policies are disadvantaged during economic downturns.

Sundaram recently co-authored a report with fellow researchers Fariha Kamal and Cristina Tello-Trillo, both of the US Census Bureau.

Their study looked at the entire US private sector between 2002 and 2004, and focused on the impacts of the US Family and Medical Leave Act (FMLA) – a federal law related to parental leave in the US that provides new parents with 12 weeks of unpaid, job-protected leave.

The researchers found female employees working in companies with mandated parental or family leave were relatively worse off, Sundaram said.

“When the US economy was faced with greater import competition from China, the US manufacturing sector contracted, and what happened was that businesses who were mandated to provide family leave ended up employing or promoting fewer women relative to men in comparison to other businesses that were not mandated.”

Sundaram said it was difficult to tease out why that happened, but the researchers had some hypotheses.

“It’s possible that during difficult economic times women may prefer to stay home to focus on caregiving responsibilities in the home rather than work for a low wage. If employers think this is likely to happen they may invest less in them, the women then end up being less productive and fewer women may be hired than men, exacerbating gender inequality.”

The research showed the women most affected by this were those in prime childbearing ages and without university degrees.

Sundaram said “rigid gender norms” that place women as the primary caregivers led to employers assuming women would not return to work from leave during periods of economic stress.

The companies where it was more likely to happen had no women managers, she added.

By contrast, New Zealand had “very generous” family leave policies and businesses do not have to pay an employee for parental leave.

But she said the leave entitlement policy still affected employers in different ways.

“Employers do bear some of the cost, such as reallocating tasks to other staff or hiring new employees to replace those on leave.”

She said New Zealand consistently ranked high internationally in prioritising gender equality. In 2023 it ranked fourth out of 156 countries in the World Economic Forum’s Global Gender Gap Index 2023.

According to Manatū Wāhine / Ministry for Women, the gender pay gap in Aotearoa has reduced steadily from 16.3 percent in 1998 but has fluctuated over the past decade. It is currently 8.6 percent. The gender pay gap for wāhine Māori, Pacific and Asian women, and disabled women is significantly higher than the overall gap.

Policies offering flexible work arrangements for parents or those with other caregiving responsibilities would continue to be “critical”, Sundaram said.

“It’s not just for women but everyone. For example, there are better health and education outcomes for children.

Workplace Relations Minister Brooke van Velden.
Photo: VNP / Phil Smith

“But gender stereotypes or cultural norms can generate unequal effects among genders when the economy hits turbulent times.”

This week Rachel Mackintosh, acting president of the Council of Trade Unions (CTU), said proposed changes to the Holidays Act and sick leave entitlements would affect 500,000 New Zealanders “who are overwhelmingly women, young people and disabled people”.

In response, Workplace Relations Minister Brooke van Velden said she was “not looking at any particular race or gender when I’m creating these laws. What I’m looking at is what is good practice for our economy and what will work for workers”.

Sundaram said governments made decisions based on a range of outcomes.

“[Lawmakers] are not thinking specifically about inequality or gender pay gap, but more flexibility would be good.

“[What’s needed are] flexible workplace policies that make the trade-off between family and career goals easier and not so stark for both men and women.”