Compass Money: Women Around the World Set Back by COVID-19’s Impact on Labor Participation

Less than half of women around the world participated in the labor force in 2020. (Brookings)

COVID-19 has caused women to leave the workforce in droves around the world. One study estimated that the pandemic could set back gender equality in the workplace—especially pertaining to leadership positions—nearly half a decade. Globally, existing gender labor inequalities have been exacerbated by the unprecedented financial issues caused by the pandemic. 

As a result of the COVID-19 pandemic, the female workplace participation rate in the U.S. has hit a 33-year low. Since February 2020, more than 2.3 million women have dropped out of the labor force, putting the female labor force participation rate at just 57 percent. In comparison, only 1.8 million men have left the workforce. A number of factors have contributed to this divergent decline in the U.S.

First, in the American economy, women account for a higher number of low-wage jobs. Twenty-eight million, or 46 percent, of American women work in low-wage occupations with a median earning of $10.93 per hour. The share of women in low-wage work is also higher among Black and Hispanic women, reflecting systemic racism in the economy. 

Furthermore, low-wage jobs were disproportionately the targets of layoffs during the pandemic. 39 percent of low-wage earning households reported a job loss in March 2020, at the beginning of the pandemic. The unemployment rate rose by 12 percent for women, but by less than 10 percent among men. This difference was even larger among lower levels of education, with non-college-educated men having an unemployment rate of 11 percent and non-college-educated women having an unemployment rate of 15 percent. 

Finally, one of the greatest factors in women leaving the American workforce has been childcare. Before the pandemic hit, women already provided a disproportionate amount of household labor in heterosexual partnerships. The pandemic exacerbated this imbalance with the closure of schools and daycare facilities. Childcare issues have negatively impacted female workers across the wage spectrum, not just low-wage earners. 

Women have faced greater labor issues as a result of the pandemic not only in the U.S. but also in Jordan. Much like in the U.S., the pandemic made already existing issues much worse for women. Jordan has the lowest female labor force participation rate of any country currently not at war. In 2020, its female labor force participation rate was just 17.1 percent. This number is significantly lower than that of its neighbors Saudi Arabia, Egypt, and the United Arab Emirates. While Jordanian women are highly educated and even seek advanced degrees at higher rates than men, labor laws in Jordan do not support flexible hours and other benefits needed to promote working women. There are also significant cultural barriers that exist in the country. Only one sector of the Jordanian economy is dominated by women: education. 

89 percent of all Jordanian companies fall under the category of micro-enterprises, which have five or fewer employees. Labor economists theorize that many Jordanian families do not want their daughters and wives working in a small business, interacting mostly with men, and working long hours because it is viewed as neither safe nor culturally acceptable.  

Jordanian labor laws lack protection for women against workplace sexual harassment and assault. Salma Nims, Secretary-General of the Jordanian National Commission for Women, said, “What we need is women’s economic autonomy, not just economic participation.” In the dissolution of a marriage, women do not receive an equal share of the financial assets because men are viewed as the primary income-earner under Jordanian law, regardless of the economic contribution of the woman. Such legal principles keep many Jordanian women out of the workforce. 

Essentially, in Jordan, “The barriers for working women are high, and the financial return at the moment is too low,” said Tuqa Nusairat, Atlantic Council Middle East Initiatives & Rafik Hariri Center Deputy Director.

India has also seen major gender disparities in the labor force exacerbated by the COVID-19 pandemic. Prior to the pandemic, just one-fifth of Indian women sought or had a paid job. Like in the U.S. and Jordan, school shutdowns have forced women to leave the workforce to tend to children. Instead of continuing their studies, training, or advancing their careers, young women are marrying. In India, women tend to drop out of the labor force upon marriage as a symbol of economic status and the husband’s ability to provide. With women getting married before joining the labor force, an entire generation of Indian women may see the female labor force participation rate sharply decline. 

While the government could intervene with policies to encourage female participation in the workforce, change seems unlikely. Just 11 percent of central government employees are women. Some reforms, like flexible employment, have helped in rural parts of the country, but more reforms are necessary to combat COVID-19’s effects on the workforce. 

The decline in the female labor force participation rate is a global phenomenon that will have far-reaching effects. Female representation in the workforce is important, not only for cultural reasons but for financial ones too. Countless studies have found that firms with higher female representation are more profitable. The labor of women will be an important ingredient in the global financial recovery.