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Greater inclusion of women in labor market could increase growth

Study shows that low female presence in labor force affects economy

09/28/2022

Janaína Feijó — Foto: Divulgação

Janaína Feijó — Foto: Divulgação

The low presence of women in the labor market, compared to men, means that the labor force in the country today is below its potential. A survey carried out by Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre-FGV) shows that if all women of working age joined the labor market, there would be productivity gains for a certain period and higher GDP growth. The study points out that the gender disparity occurs not only in the participation rate, but also in income, and exists among the better-paid occupations as well.

The women’s participation rate in the labor market went to 53.2% in the second quarter of 2022 from 51% in the second quarter of 2012, according to microdata from the Continuous National Household Sample Survey (Pnad) of the Brazilian Institute of Geography and Statistics (IBGE). The men’s rate went to 72.6% from 74.2% in the period. Before the Covid-19 pandemic, the participation rate was 54.3% for women and 72.7% for men.

According to economist Janaína Feijó, author of a survey on gender differences in the labor market, the female participation rate had been growing consistently, and the male participation was showing stability and declining. “Between 2014 and 2019, this difference, which used to be about 20 percentage points, was falling. The pandemic came and affected mainly women. As the economy picked up, men’s trajectory returned to its trend, but women’s did not.”

In addition to having lower participation in the labor market, women are also more excluded from it. Since 2012, the unemployment rate for women has been higher than that of men, and since 2019 this difference has widened. In the second quarter, the female unemployment rate was at 11.6% (5.5 million), while the male rate reached 7.5% (4.6 million). During the pandemic, the female unemployment rate peaked at 18%, adds Ms. Feijó.

She argues that a largest female participation rate would give a boost to the economy’s productivity and contribute to growth. “This is a strategic variable. Getting more women into the labor market tends to generate positive effects on the economy,” she said.

According to calculations by economist Fernando de Holanda Barbosa Filho, with FGV/Ibre, the reduction of the participation gap between men and women in the labor market could add up to 0.3 percentage points of growth to the GDP over 20 years.

“This can, over time, compensate for the lower growth in the economically active population that we will have because of the demographic transition,” he said.

He adds that many experts compare Brazil to Italy in terms of demographics. “And, taking that into account, they find it difficult for female and male participation rates to converge, because this difference still persists in Italy.”

Researcher Fernando Veloso points out that several studies show an important contribution of the female labor force to U.S. productivity and cites a study by researchers Tiago Cavalcanti, Letícia Fernandes, Laísa Rachter and Cézar Santos showing productivity gains with the fall of barriers to female participation in the labor market. They state that 36% of productivity gains between 1970 and 2010 in Brazil can be attributed to greater female participation.

Besides the unequal proportion of men and women in the market, the survey by Ms. Feijó shows that there is a considerable income difference between men and women, relatively stable over the last 10 years. Currently, men receive an average of R$2,917, while women get R$2,292.

The gender income gap went to 24.7% today from 31.5% in 2012. When a more precise measurement is made, in which variables such as same educational level, race, census area, activity sector, and whether the job is formal or not, the difference is even greater, going to 34.1% from 42.8%.

The discrepancy persists even at higher educational levels. “This means that they are being penalized more. Even with more education, they have lower salaries than men,” said Ms. Feijó.

When the education and socioeconomic level variables are combined, the difference increases in the higher income strata. Among workers who have completed university between 24 and 60 years old, the income distribution is more asymmetric in the richer strata. In the group of the poorest 10%, women account for 72.7% of salaries paid, and men for 27.3%. In the group of the richest 10%, the picture is inverted: women represent 33.1% of the wages paid, and men, 66.9%.

This is reflected in the universe of occupations that pay the most, in which women are also underrepresented, the study shows. Among general directors and managers, 71% are men who earn about R$17,269, and 29% are women who earn R$15,302.

Of the program and application developers and analysts, 82% are men who earn R$7,902 and 18% are women with average salaries of R$6,300. There is more balance among managers in administration and services (50% and 50%) and physicians (51% men and 49% women). Even in these positions, the salaries paid to men are usually higher.

“The Consolidation of Labor Laws prohibits different remuneration [when] performing the same job, the same function, with the same qualification. But what we observe is that there is an illegal practice that is difficult to control because people generally don’t know how much the other person earns,” said Ligia Fabris, a professor at FGV’s Law School in Rio de Janeiro.

She argued that in the private as well as the public sector, men generally rise up faster than women, in the phenomenon known as the “glass ceiling,” that is, an invisible obstacle that is not in the law or in the company’s bylaws.

“Women find it difficult to get into the job market, which shows up in the lower participation rate than men. When they offer their labor force, they face greater difficulty, which shows up in the higher unemployment rate than men,” said Ms. Feijó.

“Once in the market, even with productive attributes equal to men, they tend to have lower pay. And if we look at income by income distribution, we see that they are underrepresented in the higher strata and in positions that pay more. It’s a whole context that shows how the situation of women in the labor market is more delicate.”

*By Marsílea Gombata — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Labor market reflects racial inequality in country

The Brazilian labor market is another segment of society that reflects racial inequality. Unemployment is higher among blacks (16.3%) and brown people (15%) than among whites (10.8%), according to data for 2021 from IBGE’s Continuous National Household Sample Survey (Pnad). The informality rate is also higher for blacks (52.9% for brown people and 49.4% for blacks) than for whites (43.8%).

The index measures the proportion of informal jobs in relation to the total number of jobs. In income, the gap is clearer: the average income of a black worker was R$1,907 in 2021 – only 57% of that of a white worker (R$3,310).

For specialists, the differences reflect, besides situations of discrimination, a previous trajectory of unequal opportunities according to race and social origin, especially in education. It is in this context that they highlight the role of racial quotas for universities — whose law is 10 years old — as one of the instruments to try to mitigate the problem.

The percentage of black and brown students between the ages of 18 and 24 in public universities, which was 32% in 2001, rose to 40% in 2012 and then to 52% in 2021, according to an estimate by Luiz Augusto Campos, a professor at the State University of Rio de Janeiro (Uerj).

Education explains a good part of the income difference between whites and blacks in the labor market, says Ipea researcher Rafael Guerreiro Osório, although there are regional influences, by occupation and type of activity.

Boards of directors

In the early 2000s, Wellington Silva was in company boards and never met any other black executive. More than 20 years later, discussions about racial diversity in the business world have increased, driven mainly by the adoption of ESG (environmental, social and governance) metrics in investment analysis. In practice, however, the evolution is very small.

Currently, some boards include members like Denísio Liberato (Neoenergia), Rachel Maia (Vale, BB and CVC), Fausto Augusto de Souza (Copel) and W. Don Cornwell (Natura). These black people represent a tiny slice of the more than 3,500 seats in Brazilian public companies considering board members, chief executive officers and chief financial officers.

Carlos Portugal Gouvêa, a professor at the University of São Paulo (USP), decided to conduct an unprecedented survey to map this situation. The research indicated that the chance of a white person to occupy some of the best paid jobs in the country is 58 times greater than that of person of color.

The study, conducted between January and May 2021, investigated the racial profile of the top management of companies listed on B3, the Brazilian stock exchange, by analyzing photos published on the internet. In all, 442 companies and 3,561 positions were surveyed. In this first stage, seven potential black and 28 brown board members were identified. Among CFOs and CEOs, it was noted that one CFO could be considered black. Among brown officers, the survey identified three CEOs and one CFO.

Afterwards, the racial information was submitted to the companies themselves for validation, and 69 of them (15.61% of the total) answered back. This new set, which represented 727 positions, showed that 712 of them were occupied by white people, nine were yellow, and six were brown. No black person was identified in this second stage among all the positions.

“We need much higher percentages for the numbers to become representative,” said Mr. Gouvêa, who, in addition to teaching at USP’s Law School, is the founder of law firm PGLaw. If racial diversity remains low, there is a risk of “tokenism,” when symbolic inclusion occurs with the aim of making superficial concessions to minority groups.

There is a mismatch between those who have the decision-making power in companies and the rest of society, which can be dangerous for companies, the professor warned. “It is important not to turn the subject into a marketing event. The idea of the diverse board is to offer new perspectives on the functioning of the company itself and for its own business plan,” says Mr. Gouvêa.

Cristina Pinho — Foto: Leo Pinheiro/Valor
Cristina Pinho — Foto: Leo Pinheiro/Valor

There are still barriers and cultural biases for the ascension of women and black people in the executive career, an important step for those who wish to join a board of directors, said Cristina Pinho, a member of the board of Ocyan, a private company. The rise to a position like this also depends on interpersonal relationships. “The nomination of white women comes from white men, who predominate on the boards. Where are the black men? They are not on the boards. That gear feeds on itself.”

Specific programs for the inclusion of blacks in top management positions in companies are still rare, said Cássio Rufino, a partner at MZ Consult. He is the chief operating and investor relations officer at the company that offers market solutions in IR. “Finding a white man among ‘farialimers’ is much easier,” he compares, citing the executives who work on Avenida Faria Lima, the corporate address of several companies in São Paulo.

When he attends trade shows and meetings with investor relations professionals, Mr. Rufino sees himself, more often than not, as the only black person present. These events bring together many analysts, managers and executives, who may in the future become CFOs or CEOs.

Large companies have a responsibility to be influencers for small ones, said Rachel Maia, board member and founder of RM Consulting. “Companies are looking for referrals for greater plurality.”

“I couldn’t even imagine that I would be able to do a college degree in engineering. My intention was to finish the technical course and work in Curitiba,” said Fausto Augusto de Souza, employee representative on Copel’s board of directors. Elected in 2021, he was the only black person among the candidates. The executive, who lived in the interior of the state of Paraná, studied electrical engineering after joining the company and then took a master’s degree. Now Mr. Souza is looking to expand his specialization and become an independent board member in the future.

Source: Valor International

https://valorinternational.globo.com

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Low education puts youngsters in bottom of labor market

Poverty, inequity and the potential of Brazil's public schools | Financial Times

Four of the ten occupations that employ young people the most in the country have low schooling requirements – less than eight years at school. The account considers the number of young people in relation to the total number of workers in a given activity. A similar situation is seen also among the activities with the highest absolute number of workers between 15 and 29 years: four of the top 10 have incomplete elementary school as their most frequent schooling.

The information is in a survey carried out exclusively for Valor by consultancy IDados, based on microdata from the Continuous National Household Sample Survey (Pnad Contínua) for the fourth quarter of 2021, the most recent for the indicator.

Among the activities that appear in the study are pedal- or arm-driven vehicle drivers, call center workers, domestic service workers in general, and elementary building construction workers.

This picture can be seen at a moment in which there is an advance in the level of education of young Brazilians. For the sake of comparison, 14.9% of Brazilian workers between 15 and 29 years already have completed higher education, and only part of them would be old enough to do so.

Adding the 12% of those who have incomplete education, the portion with higher education exceeds a quarter of the workers in this age group (26.9%). In addition, 42.9% have completed high school. The share of those who have only completed elementary school, on the other hand, is much lower, at 17.2%.

The data suggest, according to specialists, that young people enter the market in occupations that contribute little to their professional development and that there is also a mismatch between the advancement of the level of education of young people and the opportunities offered by the labor market.

“There are many young people with a college degree (complete or incomplete) in this age group of 15 to 29 years. However, the occupations that employ young people the most generally require less than this, such as complete high school or even incomplete elementary school. This suggests that there may be a mismatch between the young people’s education and the qualification required for the occupation,” said Bruno Ottoni, a professor at the State University of Rio de Janeiro (UERJ) and a lead researcher of the labor market at consulting firm IDados.

The economist, who led the study, said that, far from criticizing the occupations that appear at the top of the list that most employ young people, it is necessary to evaluate that many are activities that give few opportunities for development for young people, compromising the professional future.

“All work is worthy, but the question is what kind of work the market is managing to offer our young people. Are they jobs where they see long-term prospects? Are they jobs where they will be able to take advantage of their education? Our young people are in occupations that are great from a job standpoint, but in general don’t offer long-term career prospects,” he said. “We have more qualified young people, but there is a structural characteristic of the Brazilian labor market that today is not managing to generate better jobs for these young people.”

Along with lower educational requirements, the profile of the occupations presented in the study is also lower paid and more unstable, said Stélio Coêlho Lombardi Filho, a professor with the School of Economics at the Federal University of Bahia (UFBA). Young people typically have less experience and end up having to take jobs with lower requirements, usually in sectors such as services and commerce, as well as administrative support, he said.

“With the resumption of the economic activities, young people have managed to find available jobs. But these occupations, in general, have a lot of instability and high turnover, low qualification requirements and low wages,” said Mr. Lombardi Filho, who is also a researcher at UFBA’s Economy of Labor research group. “These young people often manage to overcome the barrier of the first job, but almost always they are in a situation of instability that prevents them from making the transition to adulthood, from having the autonomy to raise a family.”

Despite they usually face greater obstacles to enter the job market due to lack of experience, young people tend to suffer more in moments of crisis such as the current one. Companies tend to take less risk and, therefore, avoid hiring professionals who require higher investments in training, Mr. Lombardi Filho recalled. The professor mentions the so-called “scar effect” — which usually marks the professional trajectory of those who entered the market in moments of crisis.

“This outlook of the occupations that most employ young people reflects not only the bad moment of the economy as a whole, but also the fact that young people are already a very sensitive group in the labor market. They form a group with a higher turnover rate, they have higher unemployment rates, lower salaries, and are more in the informal market. And they accept it, especially because they need to gain experience,” said Solange Ledi Gonçalves, a professor at the São Paulo State University (Unesp).

In her view, there is currently a higher mismatch between the level of education of young people and the qualification of the positions available in the job market, which compromises the capacity of professional growth of young people, as scientific papers on the subject found.

“Papers show that, by accepting a job that is not compatible with their level of education, the young person may have more difficulty in growing in the job market later on, and this can impact their career progression. For example, if you have a higher education, but started working at McDonald’s, you may have more difficulty after getting a junior analyst position, which is more consistent with higher education, because you spent that time there,” she said.

Source: Valor International

https://valorinternational.globo.com

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