In response to the 2008 global financial crisis, European governments enacted austerity measures which negatively impact those most vulnerable in society, especially women, minority groups, and disabled people. Public sector jobs, public services, and welfare benefits were all cut dramatically, which impacts the aforementioned vulnerable groups disproportionately due to their reliance on these social safety nets [9].
The repercussions of austerity are well-illustrated in the UK: the government enacted significant social security reforms while cutting benefits and tax credits, including the Child Benefit, Child Tax Credit, and Working Tax Credit. Because women receive a larger proportion of benefits and tax credits relating to children, they were disproportionately harmed by these cuts [3]. The graph below indicates that women lost a larger proportion of net individual income than men. The results are even more harrowing from an intersectional approach; for the poorest third of households in the UK, Asian women lost around 19% of their net income on average, Black women lost around 14% of their net income on average, and white women lost around 11% of their net income on average, from 2010 to 2020 due to austerity measures [9].
The inequitable impact austerity has had on vulnerable groups' socioeconomic security has been reported for years, but policymakers continue to push for these inimical measures even in the wake of COVID-19. 84% of the International Monetary Funds' (IMF) COVID-19 loans encourage or require developing countries to adopt stricter austerity measures—impacted countries include Ecuador, Angola, Nigeria, El Salvador, Lesotho, Tunisia, and Costa Rica [8].
Due to the resurgence of austerity measures in the past year, this article will demonstrate how this policy approach exacerbates inequality.
Crisis and Response
Following the 2008 global financial crisis, there were unsustainably high unemployment levels and a persistent employment gap between men and women in Europe. The recessions' initial impact was referred to as a "mancession" due to the decline in demand of male-dominated industries such as manufacturing, construction, and financial sectors, where most jobs were lost [2].
As the crisis continued, a range of industries were affected via the private sector, which led to job cuts, wage freezes, and increased job insecurity for both men and women. Women's unemployment levels rose faster than men's and continued to rise in many countries even after men's unemployment had peaked [2]. This, in part, may be due to the tendency of employers to fire women first when jobs are scarce, an effect of the male breadwinner bias [6].
Europe's policy response focused overwhelmingly on enacting austerity measures, which focus on fiscal containment and debt reduction rather than promoting growth and job creation [2].
Why are Women Disproportionately Affected by Austerity?
As reported in 2012, 69% of public sector workers were women in the EU, and public sector job cuts were a key feature of austerity policies. The public sector employs more women due to its more flexible and secure employment, better career development opportunities, as well as the added bonus of a lower gender pay gap in this sector [3].
Austerity called for massive expenditure cuts to public services, which are used predominantly by women. This is in part due to childbirth and greater longevity, along with the fact that women use more of the medical services that are, for the most part, publicly provided in Europe [3].
Women are more dependent on public services cut by austerity because women are more likely to be poorer than men. Women's greater risk of poverty is partly due to their greater involvement in care, along with their more frequent breaks in employment and periods of part-time work. These differences in earnings and other employment benefits follow women into retirement, meaning they are more sensitive to measures that reduced pensions' value and tightened eligibility criteria [3].
Women are more likely to replace the services cut by austerity, again making them more susceptible to these policies' negative impacts. Women's lives are more intimately connected with social reproduction and tend to be less integrated into the labor market due to gender norms in society [3].
Impact on Minority Groups and Disabled People
It is imperative to note that these rollbacks to the social welfare state disproportionately affect minorities, predominantly minority and migrant women, and people with disabilities. These demographic groups were already in a precarious and inequitable economic position before the crisis, and austerity measures only made it more severe [5].
The unemployment rate for minority women increased during austerity because women of color are more likely to work in the public sector or be subcontracted to the state. Public service cuts also disproportionately affect minority groups—before the crisis, the poverty rate for minorities (40%) was double that of the UK's white population [4]. This reduction of access, due to austerity, to public services and jobs only heightens minority groups' proximity to poverty.
The UK targeted disabled people so unethically with their austerity agenda that the United Nations described it as a violation of human rights, and a “catastrophe”. In 2013-14, sanctions against disabled people and the chronically ill rose 580%. As a result, The Center for Welfare Reform found that disabled people have endured nine times the average burden of austerity cuts, and the figure rises to 19 times for the severely disabled. The abolition of the disability allowance, introduction of the 'bedroom tax', and 'fit for work' tests all inhibit the independence of disabled people along with their well-being [10].
A New Approach to Policy Making
The lack of success of austerity policies in Europe and the fact that these policies disproportionately affect women, minority groups, and disabled people make it clear that a new approach is needed that considers these perspectives.
To understand the differential impact policies could have on demographic groups, policymakers need to look at all inequalities: in employment rates, poverty rates, earnings, hourly wage rates, skill levels, wealth levels, homeownership rates, and employment incentives. Variables less associated with economics but highly related to the economy's function and output must also be assessed, such as time spent on unpaid work, the gender distribution of caring labor, and gender roles and opportunities [3]. This approach is crucial to mitigate the worsening effects of inequalities and ensure that policies are chosen to ameliorate these effects.
The Added Impact of COVID-19
Understanding the effects of austerity is especially urgent due to the unbalanced burden the COVID-19 economic crisis has had on women, minority groups, and disabled people.
UN Women published daunting statistics that show how women are bearing the brunt of this pandemic recession [11]:
48 percent of all employed women in the world work in sectors hardest hit by COVID-19, including food service, retail, and entertainment
58 percent of all employed women in the world work in informal employment and informal workers lost an average of 60 percent of their income in the first month of the pandemic
80 percent of domestic workers are women, and 72 percent of domestic workers have lost their jobs during the pandemic.
70 percent of health workers and first responders are women, and the gender pay gap in the health sector (28 percent) is higher than the overall gender pay gap (16 percent).
This disproportionate impact goes even further for people of color and disabled people. Researchers have found that the pandemic may particularly harm marginalized populations who have less access to socioeconomic resources and supportive social networks.
Disabled people find it harder to access critical medical supplies and report higher levels of social isolation. Additionally, political rhetoric around rationing medical care has intensified discriminatory attitudes toward disabled people [1]. In America, the COVID-19 death rate for Black people is 3.6 times higher than white people. This trend reflects the systemic racism present in the public health system and the workforce: Black Americans are more likely to have comorbidities and a face-to-face occupation, increasing their risk of contracting the virus [7].
This inequitable economic burden augmented by austerity must be solved with the swiftness and seriousness that would inevitably occur if it was shouldered by men. A gender and race-sensitive, people-centered policy approach could unlock countries' full growth potential while creating a more compassionate society, along with more jobs for both men and women.
References:
1. American Psychological Association. (2020, May 6). How COVID-19 impacts people with disabilities. American Psychological Association. https://www.apa.org/topics/covid-19/research-disabilities
2. Bargawi, H., & Cozzi, G. (2017). Engendering Economic Recovery: Modeling Alternatives to Austerity in Europe. Feminist Economics, 23(4), 225-249
3. Bargawi, H., Cozzi, G., & Himmelweit, S. (Eds.). (2017). Economics and Austerity in Europe: Gender Impacts and Sustainable Alternatives. Routledge.
4. Emejulu, A., & Bassel, L. (2015, October 2). Minority women, austerity and activism. Race & Class, 57(2).
5. Emejulu, A., & Bassel, L. (n.d.). Women of Colour’s Anti-Austerity Activism: They cut, we bleed. Pluto Press.
6. Kushi, S., & McManus, I. P. (2017, August). Gendered Costs of Austerity: The Effects of the Great Recession and Government Policies on Employment across the OECD. International Labor Review.
7. Maciolek, A. (2020, December 21). COVID-19, economic mobility, racial justice, and the middle class. Brookings Institution. https://www.brookings.edu/blog/up-front/2020/12/21/covid-19-economic-mobility-racial-justice-and-the-middle-class/
8. Oxfam International. (2020, October 12). IMF paves way for new era of austerity post-COVID-19. Oxfam International. https://www.oxfam.org/en/press-releases/imf-paves-way-new-era-austerity-post-covid-19
9. Reis, S. (2018, February). The Impact of Austerity on Women in the UK. Women's Budget Group.
10. Roberts, Y. (2019, June 18). Crippled: Austerity and the Demonisation of Disabled People by Frances Ryan – review. The Guardian.
11. UN Women. (2020, September 16). COVID-19 and its economic toll on women: The story behind the numbers. Retrieved November 18, 2020, from https://www.unwomen.org/en/news/stories/2020/9/feature-covid-19-economic-impacts-oN-women
Lucie Prewitt is a masters student in economics at American University and is apart of the Program on Gender Analysis in Economics. She is also a graduate assistant at the Kogod School of Business. You can find her on Twitter at @lucie_writes or contact her via email at lucieprewitt@gmail.com.
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