If the female employment rate across the OECD matched that of Sweden, OECD GDP could be boosted by over US$6 trillion, according to PwC’s latest Women in Work Index, which analyses female economic empowerment across 33 OECD countries.
Between 2017 and 2018, the OECD continued to achieve incremental gains to female economic empowerment. Iceland and Sweden retained the top two positions for the fifth year in a row, with Slovenia in third place. Czechia experienced the biggest improvement in its ranking of all OECD countries, rising four places from 23rd to 19th, owing to small but positive improvements across all the indicators in the Index. The US saw a modest increase in its ranking from 22nd in 2017 to 20th position in 2018.
Although the UK performed above the OECD average and is second only to Canada when compared to other G7 economies, its position has barely budged since 2000 when it stood at 17th position, despite improving its performance across all five indicators.
Estonia and Ireland recorded the biggest decline in
their ranking on the Index this year, both falling by four positions mainly due
to a decrease in the female full-time employment rate in Estonia and a widening
of the gender pay gap in Ireland.
Closing the gender pay gap
The PwC report also finds that closing the gender pay gap could boost female earnings across the OECD by over US$2 trillion, an increase of 21%.
Jing Teow, economist at PwC UK, says:“Although progress has been made across the OECD, the rate of improvement is still slow, despite the prospect of huge economic gains from increasing female participation in the workforce. In order to realise these gains, businesses and governments need to work together to help get more women into work and ensure that there is a fair and equal pay structure. It’s also crucial that women get the right opportunities to upskill in the face of increasing automation as we enter the Fourth Industrial Revolution.”
Women in technology
On average across the G7, women account for only 30% of the tech workforce, and even fewer women occupy the top echelons of tech companies. According to PwC’s Women in Technology Index, which is included in this year’s study, Canada is the best performing country within the G7 in terms of gender representation and equality in the tech sector, with France in second and the US in third place.
The UK is fifth out of the G7 in the Women in Technology Index. Its poor performance is driven by its worse than average performance on all indicators except the share of women on boards in the technology, media and telecoms (TMT) sector.
Impact of technology on female employment
The PwC study also finds that AI and new technologies such as robotics, drones and driverless vehicles could displace jobs for women, but can also create new ones. There could be a small gain to female workers in the OECD, but the distribution of gains and losses can vary markedly across countries and industry sectors. The health and social care sector, the largest employer of women in the OECD, is expected to experience a net increase in female employment as a result of technology. However, the wholesale and retail trade and manufacturing sectors in the OECD are expected to experience a net decrease in female employment as a result of technology.
As technology continues to change the world of work, a recent PwC global survey found that more than half of workers globally believe that automation will either significantly change or make their job obsolete within the next decade.
Colm Kelly, Global Leader, Tax and Legal Services, Global Leader, Purpose, PwC, adds:“Policymakers and businesses have a key role to play in helping people, including women, adapt to technological change throughout their working lives. This includes offering more training in digital skills and STEM subjects, supporting retraining into other jobs in sectors where the “human touch” is crucial, and providing opportunities to learn softer skills, such as creativity, problem solving and flexibility. With the right interventions, everyone including women can benefit from the gains in productivity from technology and automation.”
Financial education gaps are primary barrier to retail investing in capital markets
New research from the World Economic Forum finds that 40% of non-investors have chosen not to invest because they do not know how or find it too confusing. Furthermore, roughly 70% of people would be more likely to invest, or invest more, with expanded financial education
Done in collaboration with BNY Mellon and Accenture, The Future of Capital Markets: Democratization of Retail Investing also finds that increased participation of retail investors in capital markets is a largely positive trend. Though some concerns about riskier investments remain, retail investors are showing themselves to be prudent investors using markets to build long-term wealth.
“Even amid market volatility, participation in capital markets can empower people to take ownership of their financial future,” said Meagan Andrews, Investing Lead at the World Economic Forum. “We’re just now starting to understand the new wave of retail investors and the power they are wielding in the market. It’s important industry leaders take steps to empower individuals so they can optimize financial decisions for their betterment, whether they currently invest or not.”
Based on a global survey of over 9,000 respondents from 9 countries and expert interviews, the report highlights the importance of enhancing personalized advice for retail investors and improving the reliability of information and investor protections. It also underscores opportunities to improve education, trust and access to increase inclusion in global capital markets.
With the current market volatility, industry players, policy-makers and others need to act now to ensure the benefits of investing are increasingly accessible worldwide.
“Global capital markets are undergoing a fundamental transformation, with more individual and retail investors seeking access than ever before in history,” said Akash Shah, Chief Growth Officer at BNY Mellon. “This research highlights opportunities for the entire financial industry to build the trust and transparency needed to empower and democratize market participation in underserved communities around the world.”
Trends of retail investors
The survey results provided critical insights into the factors and mindsets impacting individuals’ decisions to enter capital markets globally.
Notably, the survey found that individuals primarily look to capital markets to build long-term wealth, especially in emerging markets. Half of those surveyed were investing to save for retirement or to build generational wealth.
Retail investors are skewing younger, with Gen Z and younger Millennials investing at higher rates. Younger investors are much more likely than their peers to have received financial education earlier in life.
Meanwhile, non-investors are less confident they will achieve their long-term financial objectives and, when compared to investors, a higher proportion only learned about investing many years after entering the workforce. Their main reasons for avoiding financial markets were fear of losing money and because of an investing knowledge gap.
Generational wealth also plays a vital role in deciding to invest early. Respondents whose parents invested in the market reported that they began investing earlier in life compared to those with parents who did not invest.
The survey also revealed significant gaps in product awareness. For instance, surveyed investors noted they had a greater understanding of newer products like cryptocurrencies and non-fungible tokens (NFTs) compared to more traditional instruments like stocks and bonds.
Expanding the benefits of retail investing
There are many ways capital markets and global society can work together to grow wealth for more individuals in a responsible manner.
1. Financial literacy and improving investor education
Personal finance education – from setting a budget to learning how to secure one’s retirement – is integral to building wealth responsibly. Industry players should focus on increasing basic financial literacy, promoting responsible investment strategies and improving proactive retirement planning outside of pensions.
Providing information is not enough – content should be fit for purpose, with efforts to make it as understandable as possible. Both policy-makers and private sector actors need to improve their tactics to meet the desires of today’s investors.
2. Personalized, outcome-oriented advice for all
Solutions that financial institutions currently offer are often siloed and don’t always resonate with investors. Those at lower wealth thresholds are often left with few options to get financial advice: 80% of current investors state being able to speak with an adviser is essential to making an investment decision but only 48% are able to turn to a financial adviser or wealth manager for advice.
All investors should have access to the tools and guidance they need to be successful participants in capital markets. This should be inclusive of investors of all income and wealth levels. The industry must expand access to personalized advice and scale services to thrive to meet increasing retail investor demand – this must happen across all wealth brackets.
3. Collaboration and public-private partnerships
Increased collaboration across the industry, including public-private partnerships, will be needed.
Brokerages, wealth managers and exchanges are integral to this effort due to their proximity to retail investors and the speed at which they can enact change. From educational efforts to initiatives to lower the barriers to entry for retail investors, public-private partnerships will be essential.
“Increasing market participation and empowering retail investors has to include collaboration from all stakeholders,” said Kathleen O’Reilly, Global Lead, Accenture Strategy. “Financial institutions especially, from the C-suite to individual wealth managers, must play a critical role in offering relatable education efforts in addition to the investment products that will help investors become smarter and more confident.”
Global economy: Outlook worsens as global recession looms
Still reeling from the COVID pandemic and Russia’s invasion of Ukraine, the global economy is facing an increasingly murky and uncertain outlook, according to the latest report released on Tuesday by the International Monetary Fund (IMF).
The World Economic Outlook Update July 2022: Gloomy and More Uncertain, highlights the significant consequences of the stalling of the world’s three main economic powerhouses – the United States, China and the major European economies.
“The outlook has darkened significantly since April,” said Pierre-Olivier Gourinchas, IMF Economic Counsellor and Director of Research.
“The world may soon be teetering on the edge of a global recession, only two years after the last one”.
The baseline forecast for global growth is for it to slow from 6.1 per cent last year, to 3.2 per cent in 2022 – 0.4 per cent lower than forecast in the last Outlook update in April.
Three key economies
With higher-than-expected inflation – especially in the US and the largest European economies – global financial conditions are becoming tighter.
In the US, reduced household purchasing power and tighter monetary policy will drive growth down to 2.3 per cent this year and one percent next year, according to the outlook.
China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, with negative effects from Russia’s invasion of Ukraine continuing.
Moreover, further lockdowns and a deepening real estate crisis there has pushed growth down to 3.3 per cent this year – the slowest in more than four decades, excluding the pandemic.
And in the Eurozone, growth has been revised down to 2.6 per cent this year and 1.2 percent in 2023, reflecting spillovers from the Ukraine war and tighter monetary policy.
“As a result, global output contracted in the second quarter of this year,” said Mr. Gourinchas.
Despite the global slowdown, inflation has been revised up, in part due to rising food and energy prices.
This year it is anticipated to reach 6.6 per cent in advanced economies and 9.5 per cent in emerging market and developing economies – representing upward revisions of 0.9 and 0.8 percentage points respectively. And it is projected to remain elevated for longer.
Broadened inflation in many economies reflects “the impact of cost pressures from disrupted supply chains and historically tight labour markets,” the IMF official stated.
The report outlines some risks ahead, including that the war in Ukraine could end European gas supply from Russia altogether; rising prices could cause widespread food insecurity and social unrest; and geopolitical fragmentation may impede global trade and cooperation.
Inflation could remain stubbornly high if labour markets remain overly tight or inflation expectations are too optimistic and prove more costly than expected.
And renewed COVID-19 outbreaks and lockdowns threaten to further suppress China’s growth.
“In a plausible alternative scenario where some of these risks materialize…inflation will rise and global growth decelerate further to about 2.6 per cent this year and two per cent next year, a pace that growth has fallen below just five times since 1970,” said the IMF economist.
“Under this scenario, both the United States and the Euro area experience near-zero growth next year, with negative knock-on effects for the rest of the world”.
Current inflation levels represent a clear risk to macroeconomic stability, according to the outlook.
Responding to the situation, central banks in advanced economies are withdrawing monetary support faster than expected, while many in emerging market and developing economies began raising interest rates last year.
“The resulting synchronized monetary tightening across countries is historically unprecedented, and its effects are expected to bite, with global growth slowing next year and inflation decelerating,” said Mr. Gourinchas.
While acknowledging that tighter monetary policy would have economic costs, the IMF official upheld that delaying it would only exacerbate hardship.
And hampered by difficulties in coordinating creditor agreements, how and whether debt can be restructured, remains unpredictable.
He argued that domestic policies responding to the impacts of high energy and food prices should focus on those most affected, without distorting prices.
“Governments should refrain from hoarding food and energy and instead look to unwind barriers to trade such as food export bans, which drive world prices higher,” advised the IMF official.
Meanwhile, mitigating climate change continues to require prompt multilateral action to limit emissions and raise investment to accelerate a “green transition”.
Policymakers are urged to ensure that measures are temporary and only cover energy shortfalls and climate policies.
Teetering on the edge
From climate transition and pandemic preparedness to food security and debt distress, multilateral cooperation is key, said the IMF economist.
“Amid great challenge and strife, strengthening cooperation remains the best way to improve economic prospects and mitigate the risk of geoeconomic fragmentation,” he underscored.
Slow Moving Regulatory Decision Making for Cryptocurrency not Economically Favourable
A new study by the World Economic Forum suggests that the current, indecisive regulatory approach for both crypto and stablecoins poses the greatest risk to financial and monetary stability while also hindering innovation.
Based on interviews with 15 expert economists worldwide, the new white paper, The Macroeconomic Impact of Cryptocurrency and Stablecoins, says that letting both crypto and stablecoins play a regulated role in an economy is the optimal way to promote the advantages of innovation while curtailing potential downsides. The whitepaper also provides important perspectives on the options available to policymakers as they deliberate the path forward for their respective jurisdictions.
“Cryptocurrencies and stablecoins have grown in significance as enablers of economic activity. The time for regulatory ambiguity has passed,” says Matthew Blake, Head of Shaping the Future of Financial and Monetary Systems, World Economic Forum. “Effective regulations are needed to help mitigate the risks associated with digital currencies while realizing the benefits.”
Analysis of macroeconomic net benefit of each regulatory option for cryptocurrencies
Image: World Economic Forum
Analysis of macroeconomic net benefit of each regulatory option for stablecoins
Image: World Economic Forum
The analysis of the macroeconomic impact was carried out using a qualitative review of interview notes from individual interviews.
Next steps for cryptocurrency and stablecoins
Much of the benefits of cryptocurrency and stablecoins will depend on how regulations are designed and enforced. A key component of this regulation will be common definitions surrounding different types of digital currency. The Macroeconomic Impact of Cryptocurrency and Stablecoins lays out important definitions of both crypto assets and stablecoins that will be key for policy-makers to build on as they develop and implement digital currency regulations.
Other steps for regulators to take now are coordinating with other governments, including crypto and stablecoins in monetary financial statistics, and including economic projections in their regulations as they become more available.
In the coming months, the World Economic Forum will release further analysis and recommendations for regulators, business leaders and others in the digital currency ecosystem through its Digital Currency Governance Consortium community.
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