How to close the post-pandemic pay gap

Staci West 01/09/2020 in X Millennials

It’s a big week in our house: my husband is going back to work (as are the children in his class). After six months of virtual learning, followed by the summer holidays, they will once again be face to face – which is great. But, more importantly, it also means I have peace and quiet again in the house, without kids yelling for my husband’s attention via Zoom or, more recently, FIFA in the background

While I’m happy to hear my own thoughts again, I’m also fortunate that, despite how strange 2020 has turned out, we both still have our jobs. This isn’t the case for many, and the Coronavirus has been particularly damaging to women, setting back some careers by decades. Not only have they been more likely than men to lose their job or be put on furlough, they’re also more likely to have been picking up the majority of household chores too.

Globally, 75%* of unpaid work is done by women. While housework time is almost equal between single men and women, as soon as they start to cohabit, women’s housework time goes up, while a cohabiting man’s goes down* – regardless of their employment status. During lockdown, women have also taken on a greater amount of childcare, on top of household duties, further increasing the disparity.

Experts have predicted that the pandemic and subsequent economic fallout could delay the closing of the gender pay gap – the difference between average male and female earnings – by 30 years. The hit to their pensions will also be significant: they’ll be an estimated £12,000 poorer in retirement.

“Work is interfering with my enjoyment of working from home.” — Anonymous

So, what can women do to help close the pay gap and leave themselves in a better financial position? Investing earlier in life, investing more money and taking more risk are three mutually inclusive solutions.

Three funds to help close the £12,000 gap

Federated Hermes Global Emerging Markets SMID Equity

This is a concentrated fund, focusing on small and medium-sized companies across global emerging markets – so it’s one of the riskier Elite Rated funds, but has the potential for excellent long-term returns. The mangers have identified certain themes that will drive future growth in the asset class, including 5G, the digitalisation of the economy and improving financial requirements for the burgeoning lower middle class.

Scottish Mortgage Investment Trust

This trust typically holds between 50 and 100 companies from around the world, which are united by their strong growth prospects. The trust recently updated its policy to allow for more investments in unlisted, or private firms, giving investors access to companies earlier in their development. The managers focus on long-term potential of businesses and have an excellent track record of picking stocks.

Pictet Global Environmental Opportunities

This global equity fund has identified nine environmental challenges including but not limited to: climate change, ocean acidification, biodiversity and freshwater use, and all companies in which it invests must operate within a safe operating space for each of these nine areas, as well as actively contribute to solving these challenges. The fund uses the Planetary Boundaries framework when chooses companies to invest in, giving the fund a unique thematic approach to sustainability.

*Source: Invisible Women: Exposing Data Bias in a World Designed for Men, Caroline Criado Perez 2018

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