The New Feminism: Investing for an Impact
Switzerland is often marketed as a cosmopolitan alpine nation, on par with France's Paris or England's London when it comes to fashion, wealth and international standing. But did you know that it wasn't until 1971 that Swiss women won the right to vote and stand for election? Or that Swiss women received equality in marriage until 1985? Before this, women were not allowed to open bank accounts or have jobs without their husbands' consent. In fact, the traditional view of women as homemakers was part of Swiss Civil Law until 1988.
Luckily, Swiss Civil law was further modernized to grant women the same financial freedom and property ownership rights as their male counterparts. Recent reforms to inheritance laws have also attempted to account for modern living situations. For instance, spouses and registered partners of the deceased become automatic heirs (however, cohabitees do not).
Double Punches to the Gut: Pay Gap and Pension Gap
Despite these accomplishments, even in Switzerland, women on average earn nearly 20% less than men. This means that Swiss-based companies pay women in the Swiss workforce approximately CHF 1512 less per month than their male counterparts.
According to the Federal Office for Gender Equality, 45.5% of this pay gap is unexplainable and the Swiss government concludes that this wage difference is discriminatory.
In addition, federal statistics also reveal a gender pay gap at the start of men’s and women’s professional careers here in Switzerland. The starting pay for jobs that are considered to be typically male in Switzerland is CHF 200 higher per month than jobs that are generally deemed female. Furthermore, the unexplained pay gap is around 7% or CHF 280 per month for entry-level positions.
Not only do women face a significant pay gap in Switzerland, but also a significant retirement pension gap. In Switzerland, the pension scheme (known as the three pillars) is set up as follows: the first and second pillars cover about 60% to 70% of one’s income. The 3rd pillar is intended to close the gap and helps one enjoy the accustomed standard of living after retirement. The 3rd pillar is voluntary and provides for tax-qualified provisions.
For women working part-time, at multiple low-income jobs or not at all, the first and second pillars may hardly cover their pensions at all. According to the Gender Pension Gap study, published in July 2016 by the Federal Social Insurance Office, women’s pensions in Switzerland were 37% less than men, just below the European average. This is the equivalent to around CHF20,000 less a year.
In recent decades, the pension system has undergone various adjustments to narrow the gender pension gap. One example is the introduction of pension equalization in the second pillar: in case of a divorce, for example, pension entitlements in the pension fund are balanced out between the two partners, primarily benefiting women who were hardly or not at all employed during the marriage (similar to splitting of state pensions). However, the pension gap between the sexes will continue to narrow in future even without this additional measure.
Despite this, in figures from 2017, the most recently available, the median pensions were CHF2301 for men and CHF1221 for women. These female retirees are among the best off financially. The Federal Council also estimates that one third of women do not receive a pension at all. Considering that the average cost of living in Switzerland for a single person is around CHF1467 without rental costs (!), this measly sum is hardly enough for anyone to rely on as provided by the first and second pillars.
Further, the effects of the COVID-19 pandemic has exacerbated these inequalities. The rate of unemployment increased across all OECD countries in 2020, with women losing their jobs far more quickly than men. The COVID-19 pandemic is also increasing the multiple burdens on women from work, unpaid childcare, caring duties and housework. This surge in caring responsibilities has led to more women than men dropping out of the labour force entirely, making it likely that these women will leave the job market permanently as the situation continues or worsens. In Switzerland, this causes women to lose out on their payments into the second pillar as mentioned above. Negative implications to achieve gender equality are imminent, while stunting economic growth.
Invest as a Countermeasure
While significant strides have been made here in Switzerland to address the pay gap and the pension gap, these measures are not yet enough. With all these gaps women face (in addition to pay and pension gaps, there's the gender work achievement gap, a gender debt gap, a gender funding gap, a gender expense gap, the unpaid labor gap and so on), it would be foolish to wait for politics to catch up to real life. Instead, I posit that investing is the single most feminist act a woman can do to counteract these gaps.
First, feminism does *not* mean hating men -- instead, it points out systems and actions that benefit men only and sabotages women+, and criticizes those. And that doesn't mean that just because a man benefits from something that is inherently bad. But it does mean that such benefits should be widespread and benefit women+ as well. Financial feminism is advocating for financial equality for all genders and races.
Second, money is the great equalizer: opportunities, career, lifestyles and choices are limited if one doesn't have financial independence. Maximizing the money that we do have to create the security of an emergency fund is a step in the right direction. And then, investing that money into tax-advantaged pension accounts and other investment accounts to increase your wealth is the next step.
Some might argue that financial feminism is an individually focused narrative and doesn't move the needle for all women+. One woman hitting a $1,000,000 net worth does not erase the wage gap for all women. One woman becoming a CEO of a Fortune 500 company does not eliminate the bias women face in the workplace. Although I agree with this sentiment, I also believe that one has to start somewhere. One woman investing for herself, becoming a financial feminist role model to her daughters and the women around her, can be the catalyst that strengthens the movement of financial equality, even from a very localized level.
Taking full advantage of the right to open bank accounts and investment accounts to maximize our wealth is the single most feminist act we can do here in Europe because it gets us on the path of financial independence and financial freedom DESPITE the inequalities still in place, even in such a place as Switzerland. It is the most proactive act a woman can do for herself and other women, while politics and society lag behind in their half-hearted attempts at equality.
Become a financial ally
The concept of personal money investing can be scaled from the immediate individual narrative to a wider radius of impact. Invest your francs or dollars and shop at local, women-run businesses and other businesses that adhere to ESG guidelines. Invest your money with managers such as Marmot and Yova, where gender lens investing is writ large.
Do your banking at women-created and women-led banks such as Ellevest (US), Starling Bank (UK) and Fea Money (Switzerland), where you're getting advice from other women who can appreciate your unique pressures and life cycles.
Support (for free!) financial feminists, individuals, causes and other groups that are creating content and making their voices heard to highlight financial feminism, financial equity and related causes via social media. Like their posts and profiles, comment on their posts, and share their posts.
Talk about money with your work, friends, family and kids and teach them to be financial feminists. If you're in a position to make things better for women at your workplace, speak up and advocate and help your company close its own gender pay gap. Ask specifically about what your leadership is doing to advance racial justice and address unconscious bias in the workplace.
For women, investing for themselves to achieve financial independence is an act of feminism, because it is directly using money as an equalizer. Despite the various gaps women face in the workplace, at home and in politics, using the money that we do have to invest, whether through ETFs, index funds, shopping and supporting women-led businesses eventually strengthens the movement towards financial equality.
This blog post is a collaboration with Marmot Finance, Switzerland's #1 female wealth platform.