Are financial and monetary institutions adequately preparing to promote women’s employment, particularly in leadership roles? This issue is currently under discussion in various international forums, where high-ranking executives from major banks engage in detailed conversations about the functioning of their financial institutions and the strategies implemented for their growth. However, despite many of these executives expressing their banks’ commitment to addressing women’s needs, polls and data suggest otherwise.
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Let’s start by examining central banks, widely considered the apex of the financial system. According to a recent survey by the International Monetary Fund, less than half of the employees in central banks of developed economies are women. Among these women, only about one-third hold positions as economists or managers. In contrast, women dominate administrative and human resources roles, comprising approximately 80 percent of such positions, indicating significant occupational segregation within central banks.
A concerning aspect of central banks is the prevalence of part-time employment, with women constituting 65 percent of the total number of part-time employees. In some central banks, this percentage rises as high as 80 percent. While part-time contracts offer flexibility, they can impede women’s career advancement, leading to a decrease in the number of women in managerial positions.
Gender wage gap
The gender gap becomes more pronounced when it comes to wages, with only 27 percent of women earning in the top 20 percent of annual income. A notable example of this disparity comes from a Japanese study, revealing that women working in Japan’s largest banks earn just over half of what their male colleagues earn. On average, female workers in the top five banks on the standard Topix index earn only 54.9 percent of their male counterparts’ salaries.
In Japan, while the labor market participation rate of women is relatively high, a significant portion of available jobs for women consists of part-time positions that provide limited opportunities for higher wages or career advancement. This concern was emphasized by Claudia Goldin, Nobel laureate in Economics, in her research aiming to uncover the factors contributing to wage and employment disparities between men and women.
Janet Yellen’s historic achievement
Historic milestones were marked by the appointments of Janet Yellen as the inaugural female head of the U.S. Federal Reserve Bank in 2014 and Christine Lagarde as the first female president of the European Central Bank in 2019, gaining global acclaim. In 2023, Lagarde underscored the significance of diversity in fostering improved outcomes. However, the absence of women among Europe’s top central bankers became apparent when Lagarde shared a photo on Twitter featuring herself alongside other members of the ECB’s Governing Council, all of whom were male.
According to the 2023 Gender Balance Index, published by the Official Monetary and Financial Institutions Forum in June, only 22 women were at the helm of central banks out of a total of 186. This indicates marginal progress since the inception of the Gender Equality Index in 2014. Recent examples, such as Hafize Gaye Erkan’s resignation in early February 2024 in Türkiye and the appointment of Australia’s Michele Bullock, serve as illustrations, but the overall representation of women in such influential positions remains notably low.
In contrast, a research study conducted last year revealed that women occupy 25 percent of senior positions (full-time or associate professor) and 37 percent of junior positions in some of the world’s premier universities and business schools. Margarita Delgado, the deputy governor of Banco de España, stressed the importance of diverse perspectives in navigating the ever-changing financial landscape and providing enhanced tools for success in a complex world. She argued that central banks should mirror society and set an example for the financial sector.
The IMF contends that policies directed at eliminating gender gaps have achieved only partial success, emphasizing that central banks can do more to address the prevailing gender imbalance.
Women entrusted with ‘cleaning up’ the aftermath
In an interview with the head of a commercial bank in an Arab country, a troubling perspective was shared. She expressed concern that women are often brought in to “clean up” the mess left by others. Despite an increase in the proportion of women holding significant positions in financial and monetary institutions in the Arab world, women’s employment participation rates in the region remain among the lowest globally.
The banking executive clarified that there is a misconception linking economic challenges to the gender of central bank leaders, highlighting that women are fully capable of making sound decisions, akin to their male counterparts. However, she noted that governments, especially those which focus on inflation, tend to prefer central bank governors who can effectively stabilize inflationary expectations by prioritizing low inflation above other reasonable objectives. Unfortunately, the stereotype of monetary tightening is often associated with “masculinity,” leading to the underrepresentation of women in situations where a stronger stance on tightening is necessary. She stressed the importance, in the current global context, of enhancing women’s presence in central bank leadership roles.
Claudia Golden, the recipient of the 2023 Nobel Prize in Economics for her groundbreaking research on women’s participation in the labor market and gender gaps, has played a pivotal role in shifting the research focus from viewing women’s work as marginal to recognizing its central importance. This recognition prompts the question of whether the adoption of policies aimed at fostering gender equality and increasing women’s presence in leadership roles will continue to expand.
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