It is time to tell an uncomfortable truth. Capitalism, as practised in the West, will not bring about gender equality if left to itself. Market forces won’t deliver it – the only time they’ve come close has been in times of crisis like wars, and once the crisis is over, things revert to ‘normal’. If gender equality, in terms of economic empowerment, was going to happen under our capitalist system it would have happened unaided by now. Just look at the gender pay gaps revealed by the biggest UK companies, who, as of this week, have to report the differential.
What the pay gaps expose, more than anything else, is the lack of women in senior positions in most organisations. Some will argue progress is being made, citing, for example, the increasing proportion of women on the boards of the UK’s 100 biggest companies. But that hasn’t happened unaided, and the numbers largely reflect the appointment of more female non-executive directors, who often sit on multiple boards. The proportion of senior women executive directors in boardrooms has barely changed in a decade, and is still below 10%. And the proportion of senior business posts more generally held by women in the UK actually fell 2% last year, to 19%.
It is not that women are less ambitious. But their social conditioning plays a part. A recent study looked at the attitudes of women in China who grew up under the communist regime where gender equality was emphasised, compared to the attitudes of those who grew up during the post-1978 reform era or in capitalist Taiwan.1 It found that those exposed to strong messages of gender equality, even for a short period, were more competitively inclined: culture and institutions matter in women’s willingness to compete.
Where capitalism fails to provide an environment conducive to equality, communism seems, at least on the surface, to get much closer. This is not to defend communism as a system, women in communist states such as the former Soviet Union who struggled to acquire the basic necessities for their family did not enjoy a better life. But what they did enjoy was an equal expectation that they would work, underpinned by free childcare, education and training. According to a New York Times investigation, male chauvinism in the Warsaw Pact countries was seen as a remnant of the pre-socialist era. And although wage disparities were still prevalent, women were represented in bigger numbers in senior positions.
Why are senior women role models lacking under capitalism?
The Anglo-Saxon capitalist system as practised in the UK and the US tends to favour aiming for short-term returns, driven by increased quarterly reporting and continued analysts’ scrutiny. Institutional investors themselves often contribute to the excessively short-term focus by corporate boards.2 Bringing about the cultural change required to make women want to stay at work and fully use their skills doesn’t fit with that model – it requires dedication and long-term investment in childcare, training, and incentives to encourage women to go back to work (for example using “returnship” programmes). It also means fundamentally altering the way an organisation works, including the way men structure their days and their attitudes towards women co-workers.
This is an obvious market failure where talents are lost to the economy because the system doesn’t respond in an efficient way. Skills are a major contributor to productivity – in fact the most important one. And it is productivity that determines an economy’s long term sustainable growth rate and prosperity. But as with Corporate Social Responsibility, or caring for the environment, we know that even though acting in accordance with those principles makes good long-term business sense, firms won’t do it unless pushed – just look at how long it has taken to increase the proportion of women on boards despite the evidence that diverse teams perform better.
Some people will explain away this gender disparity by blaming women’s reproductive tendencies. But that is only half the story – there is ample documented evidence of both conscious and unconscious bias in organisations which discriminates against women irrespective of whether they are mothers. One 2014 survey for example found that 40% of managers were wary of hiring “women of childbearing age”. And according to a 2018 YouGov survey one third of senior managers think it is acceptable to ask women in interviews whether they intend to have children. Indeed a quarter of women have been asked, at work, whether they plan to have children.
Business culture and practice is the problem, not women having children
That is not to ignore the fact that many women do choose to take time out of the workplace to have children. But the cost to them is significant. A 2016 report by the Institute for Fiscal studies showed that when women enter the labour force the gap in mean average hourly pay between men and women is virtually non-existent. By the time women are in their late 20s, the gap has risen to 10%, and it continues rising steadily thereafter. For mothers the gap carries on increasing to 33% by year 12 after the birth of their first child. Those mothers miss out on workplace skills and experience, and therefore promotion prospects, and that is especially the case if they return to work part time. The economy loses out permanently as the system does not seem to either value them or want to invest in them on their return – which is a double loss given firms have already invested in the training and development of those women.
Capitalism is suffering a crisis of care
Childcare provision is key to tackling this female brain-drain. Evidence from Germany suggests that where regional or local government provided childcare is available it allows women to both earn higher salaries and progress up the career path more easily.3 A study of mothers in Italy showed that those who decided to shorten their maternity leave taking advantage of state-subsidised childcare were much less likely to leave the labour market and thus be lost to the economy.4 And of course childcare can pay its way over the long term. Women who work earn more, receive less in benefits, consume more, and pay more direct and indirect taxes than would otherwise be the case.
Women will still want to have the flexibility to look after children – but so would many men if the long-hours culture which tends to put women off, yet still seems to be the route to promotion, was discouraged. Macho enclaves that still frown upon flexible working should have no place in the modern workplace.
As Cambridge University Professor Mary Beard has pointed out, mechanisms that sever women from the centres of power are deeply embedded in Western culture.5 Every meaningful change in the UK has required state intervention – the Equal Pay Act, the Equality Act, Pay Audits, etc. As long as the system prevents women from achieving economic equality, gender power imbalances will remain. #MeToo and similar movements are not going to fix that.
- Alison Booth, Elliott Fan, Xin Meng and Dandan Zhang, ‘Gender Differences in Competitiveness: Evidence from China’, Royal Economic Society conference, March 2018
- Davis, Lukpmnik and Pitt-Warson, What They Do With Your Money, Yale, 2016
- Vidhi Chhaochharia, ‘Childcare policies boost women’s wages and careers: Evidence from Germany’, Royal Economic Society’s annual conference at the University of Sussex, March 2018
- Enrica Maria Martino, ‘The labour cost of motherhood: Evidence from Italy’, Royal Economic Society’s annual conference at the University of Sussex in Brighton in March 2018
- Mary Beard, ‘Women & Power’, Profile Books, 2017
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