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COVID-19 is reversing the important gains made over the last decade for women

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Progress for women in work could be back at 2017 levels by the end of 2021 as a result of the COVID-19 pandemic, according to analysis conducted for PwC’s annual Women in Work Index, which measures female economic empowerment across 33 Organisation for Economic Cooperation and Development (OECD) countries*.  The evidence emerging globally is that the damage from COVID-19 and government response and recovery policies, is disproportionately being felt by women.

For nine years, countries across the OECD* made consistent gains towards women’s economic empowerment. However, due to COVID-19 this trend will now be reversed, with the Index estimated to fall 2.1 points between 2019 and 2021, according to analysis undertaken for PwC’s annual Women in Work Index. The Index will not begin to recover until 2022, where it should gain back 0.8 points. 

In order to undo the damage caused by COVID-19 to women in work – even by 2030, progress towards gender equality needs to be twice as fast as its historical rate.

Bhushan Sethi, Joint Global Leader, People and Organization at PwC, said:

“The setbacks that we are experiencing with COVID-19 in terms of the workforce tell a worrisome story. While the impacts are being felt by everyone across the globe, we are seeing women exiting the workforce at a faster rate than men. Women carry a heavier burden than men of unpaid care and domestic work. This has increased during the pandemic, and it is limiting women’s time and options to contribute to the economy. In the labour market, more women work in hard-hit human contact-intensive service sectors  – such as accomodation and food services, and retail trade. With social distancing and lockdowns, these sectors have seen unprecedented job losses.”   

Between 2019 and 2020, the annual OECD unemployment rate increased by 1.7 percentage points for women (from 5.7% in 2019 to 7.4% in 2020). In the US, the female unemployment rate increased sharply from 4% in March 2020 to 16% in April 2020. The female unemployment rate stayed high for the remainder of 2020, ending the year in December 2020 at 6.7%, 3 percentage points higher than in December 2019.  In the UK, the full impact of job losses from COVID-19 is yet to be realised due to job retention schemes, but furlough data shows that women are at greater risk of losing their jobs when these schemes come to an end. Between July and October 2020, a total of 15.3 million jobs were furloughed in the UK. For furloughed jobs for which gender was known, 52% of these were women’s jobs, despite women only making up 48% of the workforce.*** 

The disproportionate burden of unpaid childcare falls on women

Before COVID-19 hit, women on average spent six more hours than men on unpaid childcare every week (according to research by UN Women). During COVID-19, women have taken on an even greater share and now spend 7.7 more hours per week on unpaid childcare than men**  – this ‘second shift’ equates to 31.5 hours per week; almost as much an extra full-time job. 

This increase in unpaid labour has already reduced women’s contribution to the economy. If this extra burden lasts, it will cause more women to leave the labour market permanently, reversing progress towards gender equality and reducing productivity in the economy. 

While some women may choose to leave the workforce temporarily due to COVID-19 with the intention to return post-pandemic, research shows that career breaks have long-term impacts on women’s labour market prospects, and women will return to lower paid and lower skilled positions. 

PwC Women in Work 2021 Index (performance prior to COVID-19 pandemic)

Iceland continues to hold the top spot on the Index out of OECD countries. It is a consistent strong performer in female labour force participation (84%), has a small participation rate gap (5%), and even smaller female unemployment rate (3%).  

Greece saw the largest increase in terms of Index score between 2018 and 2019, driven by improvement in all labour market indicators except for the share of full-time female employees. On the contrary, Portugal experienced the largest decline in Index score between 2018 and 2019 due to a widening of its gender pay gap by 5 percentage points.

New Zealand and Slovenia both increased their rankings on the Index by one position. New Zealand saw an upward trend across all five indicators and has risen by 5 spots on the Index over the course of nine years. Government policy and a history of female representation in political institutions have helped to drive these gains. Slovenia’s improvement was driven by a fall in the participation rate gap and in female unemployment, as well as an increase in the share of full-time female employment. 

If OECD countries increased their rates of female employment to match Sweden’s (consistently the top performer), the gain to GDP would be over US$6 trillion per annum. The US, with one of the highest female unemployment rates, is expected to gain the most – as much as US$1.7 trillion per annum. 

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Commodity Prices to Stabilize after Early 2021 Gains

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Commodity prices continued their recovery in the first quarter of 2021 and are expected to remain close to current levels throughout the year, lifted by the global economic rebound and improved growth prospects, according to the World Bank’s semi-annual Commodity Markets Outlook.

However, the outlook is heavily dependent on progress in containing the COVID-19 pandemic as well as policy support measures in advanced economies and production decisions in major commodity producers.

Energy prices are expected to average more than one-third higher this year than in 2020, with oil averaging $56 a barrel. Metal prices are expected to climb 30 percent; and agricultural prices are forecast to rise almost 14 percent. Almost all commodity prices are now above pre-pandemic levels, driven by the upsurge in economic activity, as well as some specific supply factors, particularly for oil, copper, and some food commodities.

“Global growth has been stronger than expected so far and vaccination campaigns are underway, and these trends have buoyed commodity prices. However, the durability of the recovery is highly uncertain,” said Ayhan Kose, World Bank Group Acting Vice President for Equitable Growth, Finance & Institutions and Director of the Prospects Group. “Emerging market and developing economies, both commodity exporters and importers, should strengthen their short-term resilience and prepare for the possibility of growth losing momentum.”

Crude oil prices rebounded from record lows reached during the pandemic, supported by a rapid global economic recovery and continued production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its partners. Demand is expected to firm over 2021 as vaccines become widely available, especially in advanced economies, pandemic restrictions are eased, and the global recovery is sustained. Prices are expected to average $60 a barrel in 2022. However, if pandemic containment falters, a further deterioration in demand could put pressure on prices.

Metal prices are expected to give back some of this year’s gains as stimulus-driven growth fades in 2022. A faster-than expected withdrawal of stimulus by some major emerging market economies could pose a downside risk to prices; however, a major infrastructure program in the United States could support prices for metals, including aluminum, copper, and iron ore. An intensification of the global energy transition to decarbonization could further strengthen demand for metals.

Agricultural prices have risen substantially this year, particularly for food commodities, driven by supply shortfalls in South America and strong demand from China. However, most global food commodity markets remain adequately supplied by historical standards, and prices are expected to stabilize in 2022.

While global food commodity prices have remained stable recently, emerging evidence continues to confirm the effects of COVID-19 on food insecurity that are expected to continue through 2021 and 2022. An increasing number of countries are facing growing levels of acute food insecurity, reversing years of development gains.

“Although food commodity markets are well supplied globally, COVID-19 has severely impacted local labor and food markets around the world, reducing incomes, disrupting supply chains and intensifying food and nutrition security issues that were present even before the pandemic struck,” Kose said. “It is high time for policymakers to address the underlying sources of food insecurity.”

A Special Focus section investigates the impact of sharp changes in metal prices on metal-exporting countries. Metals, especially copper and aluminum are a major source of export revenue for 35 percent of emerging market and developing economies, with important implications for economic growth, macroeconomic stability, and, hence, poverty reduction. As metal prices are primarily driven by global demand, these countries can be particularly hard-hit by global recessions, which can trigger both a drop in metal prices and export revenue. Windfall revenues from high metal prices, which tend to be short-lived, should therefore be set aside in anticipation of the longer-lasting negative effects of price collapses that would warrant policy support.

“Metal price shocks are primarily driven by external demand factors, such as global recessions and recoveries,” said World Bank Senior Economist John Baffes. “During a recession, metal exporters may be hurt by both the broader downturn as well as a collapse in prices. Output losses associated with price drops are greater than the gains from price increases, and policymakers should prepare accordingly.”

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Major Opportunities in Decarbonizing Maritime Transport

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The World Bank today published new research on decarbonizing the maritime transport sector with findings that indicate significant business and development opportunities for countries, including for developing and emerging economies.

To lower and ultimately eliminate its climate impact, maritime transport needs to abandon the use of fossil-based bunker fuels and turn toward ‘zero-carbon bunker fuels’, namely shipping fuels which emit zero or at most very low greenhouse (GHG) emissions across their lifecycles. The first report being launched today, “The Potential of Zero-Carbon Bunker Fuels in Developing Countries”, identifies two alternative fuels – ammonia and hydrogen – as the most promising zero-carbon bunker fuels for shipping at present, more scalable and cost-competitive than other biofuel or synthetic carbon-based options.

The second report, “The Role of LNG in the Transition Toward Low- and Zero-Carbon Shipping”, finds that liquefied natural gas (LNG) is likely to play a limited role in the decarbonization of the shipping sector, noting its specific niche applications on pre-existing routes or in specific vessel types. The research further recommends that countries should avoid new public policy that supports LNG as a bunker fuel, reconsider existing policy support, and continue to regulate methane emissions.

By transitioning toward zero-carbon shipping, many countries, especially those with large renewable energy resources, can break into a future zero-carbon fuel market, while modernizing their own domestic energy and industrial infrastructure. The reports evaluate which developing and developed countries may be well positioned to take advantage of this emerging investment opportunity, and present initial case studies for Brazil, India, Mauritius and Malaysia.

“The maritime community, particularly in developing countries, has a unique opportunity in the context of these emerging zero-carbon bunker fuels.” said Bernice Van Bronkhorst, Global Director for Climate Change at the World Bank. “Not only will they help decarbonize shipping, but they can also be used to boost domestic infrastructure needs and chart a course for low-carbon development more generally.”

The global maritime transport sector produces around three percent of global GHG emissions and an estimated 15 percent of the world’s air pollution annually. The International Maritime Organization’s (IMO) Initial Strategy on the Reduction of GHG Emissions from Ships mandates that shipping’s GHG emissions be reduced by at least 50% below 2008 levels by 2050, and to be fully phased out as quickly as possible within this century.

Zero-carbon fuels will need to represent at least five percent of the bunker fuel mix by 2030 to put shipping on a GHG trajectory consistent with the Initial IMO GHG Strategy, as well as the Paris Agreement’s temperature goals, ” said Binyam Reja, World Bank Acting Global Director for Transport. “This means they need to be scaled up rapidly. These reports will be critical to help accelerate their targeted development and deployment.”

“It is vital that we address the impacts of maritime transport on ocean health, which is at the heart of the Bank’s transition to a Blue Economy. These reports offer policymakers useful tools to achieve a triple win – a healthier ocean, improved air quality and reduced GHG emissions,” said Karin Kemper, Global Director for Environment, Natural Resources and the Blue Economy.

The research makes the case that strategic policy interventions are needed to hasten the sector’s energy transition and seize opportunities for wider economic, energy, and industrial development in developing countries. For instance, the introduction of a meaningful carbon price would create a level playing field for the development and utilization of zero-carbon bunker fuels. Revenue generated by such a market-based measure can help support developing countries in their energy transitions and accelerate crucial research, development, and deployment of these fuels. Business should also focus on “no-regret” options, such as increased energy efficiency and maximum fuel flexibility. Constructive collaboration between industry stakeholders and policymakers, both at the IMO and on a national/regional level, can also create greater certainty on the availability, pricing, and timing of zero-carbon bunker fuels which can further boost their rapid uptake from 2030.

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COVID-19 spending helped to lift foreign aid to an all-time high in 2020

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Photo: MINUSCA

Foreign aid from official donors rose to an all-time high of USD 161.2 billion in 2020, up 3.5% in real terms from 2019, boosted by additional spending mobilised to help developing countries grappling with the COVID-19 crisis, according to preliminary data collected by the OECD.

Within total Official Development Assistance (ODA) provided by members of the OECD’s Development Assistance Committee in 2020, initial estimates indicate that DAC countries spent USD 12 billion on COVID-19 related activities. Some of this was new spending and some was redirected from existing development programmes, according to an OECD survey carried out in April and May 2020. Most providers said they would not discontinue programmes already in place.

Total ODA equated to around 1% of the amount countries have mobilised over the past year in economic stimulus measures to help their own societies recover from the COVID crisis. Meanwhile the global vaccine distribution facility COVAX remains severely underfunded, OECD Secretary-General Angel Gurría said during a virtual presentation of the aid data.

“Governments globally have provided 16 trillion dollars’ worth of COVID stimulus measures yet we have only mobilised 1% of this amount to help developing countries cope with a crisis that is unprecedented in our lifetimes,” Mr Gurría said. “This crisis is a major test for multilateralism and for the very concept of foreign aid. We need to make a much greater effort to help developing countries with vaccine distribution, with hospital services and to support the world’s most vulnerable people’s incomes and livelihoods tobuild a truly global recovery.”

Foreign aid rose in a year that saw all other major flows of income for developing countries – trade, foreign direct investment and remittances – decline due to the pandemic, and domestic resources under increased pressure. Total external private finance to developing countries fell 13% in 2020 and trade volumes declined by 8.5%. (See the OECD’s Global Outlook on Financing for Sustainable Development 2021.)

The rise in 2020 ODA was also affected, however, by an increase in loans by some donors. Of gross bilateral ODA, 22% was in the form of loans and equity investments, up from around 17% in previous years, with the rest provided as grants.

The 2020 ODA total is equivalent to 0.32% of DAC donors’ combined gross national income, up from 0.30% in 2019 but below a target of 0.7% ODA to GNI. Part of the rise in the ratio was due to the fact that GNI fell in most DAC countries. Six DAC members – Denmark, Germany, Luxembourg, Norway, Sweden and the United Kingdom – met or exceeded the 0.7% target. Among non-DAC donors, whose assistance to developing countries is not included in the ODA total, Turkey provided aid equivalent to 1.12% of its GNI.

ODA rose in 16 DAC countries, with some substantially increasing their aid budgets to help developing countries respond to the pandemic. The largest increases were in Canada, Finland, France, Germany, Hungary, Iceland, Norway, the Slovak Republic, Sweden and Switzerland. ODA fell in 13 countries, most notably in Australia, Greece, Italy, Korea, Luxembourg, Portugal and the United Kingdom. G7 donors provided 76% of total ODA and DAC-EU countries 45%. ODA provided by EU Institutions jumped by 25.4% in real terms as they mobilised funds for COVID-19 related activities and increased sovereign lending by 136% over 2019. 

Short-term support to help with the COVID-19 crisis focused on health systems, humanitarian aid and food security, according to the OECD survey. Aid providers indicated they would focus in the medium-term on making diagnostics and vaccines available to countries in need, as well as offering support to address the economic and social repercussions of the pandemic.

“At the outset of the pandemic, DAC donors said that they would strive to protect ODA volumes. I am grateful and proud to say that they have done that and more. Donor countries have stepped up to support developing countries struggling with the health and economic fallout of COVID-19, even as their own economies and societies have been battered,” said DAC Chair Susanna Moorehead. “The next few years will be tough and the finance we provide must work harder than ever. If we really are going to build forward better and greener, we must focus on the most vulnerable countries and the most vulnerable people in them, especially women and girls.”

Bilateral ODA to Africa and least-developed countries rose by 4.1% and 1.8% respectively. Humanitarian aid rose by 6%. Excluding aid spent on hosting refugees within donor countries – which was down 9.5% from 2019 to USD 9.0 billion and mainly concerned Canada, Iceland and the Netherlands – ODA rose by 4.4% in real terms in 2020.

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