The gender wealth gap is a persistent issue. Despite progress in many areas, women continue to face significant barriers to financial independence.
The whitepaper by Advance and KPMG, "The Million Francs Gap," sheds light on the stark reality: Swiss women, on average, accumulate one million francs less in wealth compared to their male counterparts over a lifetime. This gap is not just a number; it represents missed opportunities, unfulfilled dreams, and a lack of financial security for many women.
The Root Causes
Several factors contribute to this gap, including the gender pay gap, career interruptions due to caregiving responsibilities, and a lack of financial literacy. According to the World Economic Forum, women earn 37% less than men globally.
This wage disparity, compounded over time, significantly impacts women's ability to save and invest for the future.
Gender Pay Gap
The gender pay gap is one of the most significant contributors to the wealth disparity. Women often earn less than men for the same roles, which affects their ability to save and invest. The report highlights that women in Switzerland earn 43% less than men over their careers. This disparity is not just a result of lower wages but also due to career interruptions, part-time work, and the types of jobs women typically occupy. Women are often overrepresented in lower-paid positions while men dominate higher-paying roles.
Career Interruptions
Women are more likely to take career breaks for caregiving responsibilities, which can hinder their career progression and reduce their lifetime earnings. A short career break can have lasting consequences. For instance, taking just one year off work can result in a permanent 3% salary reduction. For those who take a break of 5-6 years, the financial hit can be as much as a million francs by the end of their working life.Â
These interruptions not only affect immediate income but also long-term financial growth and retirement savings.
The Burden of Unpaid Work
Another significant factor contributing to the income gap is unpaid work. Women in Switzerland perform 60% of the estimated CHF 434.2 billion worth of unpaid work, which includes household chores and caregiving responsibilities. This unpaid labor not only affects their immediate earnings but also their long-term financial security.
The OECDÂ also reports that women spend, on average, 2.5 times more time on unpaid care work than men. This disparity in unpaid labor significantly impacts women's ability to participate fully in the workforce and advance their careers.
Financial Literacy
Financial literacy is crucial for making informed decisions about saving, investing, and managing money. However, studies show that women score lower on financial literacy tests and are more likely to answer "I don't know" to financial questions. This lack of confidence can prevent women from taking control of their finances and investing in their future.
Gender Segregation in the Workforce
Women are more likely to work in sectors that are traditionally lower-paid, such as healthcare, education, and social services. In contrast, men are more prevalent in higher-paying industries like finance, technology, and engineering.
In Switzerland, only 18% of women work in technical roles, compared to 30% of men. This segregation contributes to the overall gender pay gap and limits women's earning potential.
Actionable Strategies to Close the Gap
Invest Early and Wisely: Start investing as soon as possible. Compound interest is a powerful tool that can significantly grow your wealth over time. See how you can work with us in building your wealth and making your hard-earned money work for you. Schedule a FREE 15-minute 1:1 call with Cristina.
Negotiate Your Salary: Don't shy away from negotiating your salary. Research shows that women are less likely to negotiate their pay compared to men, which contributes to the gender pay gap. Equip yourself with the right questions and data to confidently negotiate your worth.
Diversify Your Income Streams: Relying on a single source of income can be risky. Explore side hustles, freelance opportunities, or passive income streams to boost your financial security.
Seek Professional Guidance: Financial advisors can provide valuable insights tailored to your unique situation. However, it's crucial to choose an advisor who understands your needs. Our guide, "Questions To Ask Your Service Provider," ensures you get the most value out of your investment in any service.
"When women do better, economies do better."
Conclusion
The "Million Francs Gap" report is a wake-up call to the persistent issue of employment inequality in Switzerland. By understanding the financial implications of career interruptions and advocating for systemic changes, we can work towards a more equitable future for all.
Let’s bridge the gap and create a world where everyone has the opportunity to achieve financial independence and security.
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