Development, 2010, 53(3), (381385) r 2010 Society for International Development 1011-6370/10 www.sidint.

org/development/

Dialogue

Financial Crises and the Impact on Women

JAYATI GHOSH

ABSTRACT Jayati Ghosh looks at the impact of the financial crises on women from several different entry points. KEYWORDS capitalism; real economy; labour; care economy; women; crisis

The nature of financial crises

A financial crisis is, in essence, a situation in which a group of economic agents have liabilities (such as debt) that they cannot repay, and this inability to pay then affects the financial viability of those holding these claims. National financial crises can result when depositors lose confidence in their banks and start a panicked rush to withdraw money, thereby starting a spiraling movement; they are created when the stock market collapses, especially after soaring to dramatic heights, or when a government defaults on a loan from external sources (Chandrasekhar, 2010). The proliferation of financial crises actually reflects the rise to dominance of finance, which in turn can be seen as part of a wider political economy process, a result of the attempt in developed capitalism to use the expanding role of finance in the economy or financialization (Epstein, 2005; Fine, 2008; Foster, 2010) to counter the inherent tendencies towards periods of slow economic growth or stagnation in mature capitalism. Financialization enables and encourages the greater frequency of speculative bubbles in which asset prices rise and create the illusion of greater wealth. This keeps effective demand growing, even when wage incomes are stagnating. At the same time, the dominance of finance also contributes to overall stagnationary tendencies that are concealed by the periodic bubbles that it generates (Patnaik, 2003).When finance is mobile across countries, it constrains the economic policies of nation states, making it harder to raise tax rates or run large government deficits because of fear of capital flight. This in turn means that governments find it harder to spend money that would directly and indirectly increase employment and economic activity in the system as a whole, and also makes it more difficult to pull the economy out of a slump through more government spending. It is no accident that the period of the rise to dominance of finance is also the period of the hegemony of neo-liberal ideology, which has pushed a shift in the nature of state involvement, away from attempting to provide social and economic rights of citizens to ensuring conditions of profitability for large capital, especially finance. Even though the
Development (2010) 53(3), 381385. doi:10.1057/dev.2010.64

Development 53(3): Dialogue

hegemony of finance is associated with greater instability and economic injustice, its political power and ability to affect state policies tend to be largely unconstrained, as the current global crisis shows. Periodic financial crises have marked the history of some regions such as Latin America for more than a century (Eichengreen and Lindert, 1992). They have become more widespread across the developing world since the early 1980s, especially in more financially open and deregulated developing economies. Financial liberalization has resulted in an increase in financial fragility in developing countries, making them prone to periodic financial and currency crises (Ghosh, 2005). In addition, the emergence of universal banks or financial supermarkets increases the degree of entanglement of banks with other financial companies like mutual funds, hedge funds and insurance companies, which in turn increases the possibility of domino effects of individual financial failures. The major financial crises of the recent past in the developing world ^ the 1982 Latin American debt crisis, the 1994 Mexican crisis, the Southeast Asian financial crisis of 1997^98, the 2001 Argentine crisis ^ can be described as resulting from under-regulated financial markets (Palma, 1998; Galbraith, 2010). The global financial crisis that started in 2008 was relatively novel in that it originated in the core of capitalism (specifically in the US) although its ramifications were rapidly felt across the world, even in developing countries that had tried to impose greater discipline upon their own domestic financial systems. This occurred first through declines in exports, since the US was the main source of demand for global exports. This led to job losses in export production and then in related sectors as the negative effects of those job losses were felt in domestic demand. Private capital flows became volatile and caused stock markets to fall and banks in developing countries to face problems. As tax revenues fell, governments were less able to spend more, and some even cut back on their expenditure, especially in critical areas like health, sanitation and nutrition. The period was also one of very great volatility in food and fuel prices, and the increases in these prices were 382 transmitted to developing countries, affecting the real incomes of most citizens. The main transmission mechanisms for the crisis to impact upon economies were: declines in exports, which affected export production and then domestic markets through negative multiplier effects; rapid shifts in capital flows, including both portfolio capital and external bank lending; exchange rate changes affecting domestic production and prices; the impact of extreme volatility in global food and fuel prices; and the fiscal constraints in many countries that led to cutbacks in important public expenditure affecting access to basic services and the quality of life. The last two mechanisms, volatility in food and fuel prices and cutbacks in public expenditure, are most important for the developing world. Decline in exports and exchange rate changes affect domestic production/markets and are linked to job losses, and capital flows place banks/financial institutions under severe constraints.

The gendered impact of financial crises

The effects of the crisis tend to be disproportionately distributed among the population, with certain vulnerable groups, including women and girls, much worse affected than more secure or privileged sections. Financial crises tend to deliver the most harm to those who had usually gained the least from the preceding boom, by reducing wages and chances of employment, destroying livelihoods and constraining public provision of essential goods and services. Gender discrimination tends to be intertwined with other forms of social and economic disparity, such that region, location, community, social category and occupation also typically determine the extent of deprivation of women and girls. Even so, there are critical differences in the impact of such crises on men and women, determined largely by the greater significance of women in social reproduction and the care economy as well as their greater involvement in more vulnerable forms of paid work. The impact of financial crises on women can therefore be considered in terms of their roles as paid workers, unpaid workers, members of households, citizens with rights and individuals with needs, wants and aspirations.

Ghosh: Financial Crisis and Women

Unemployment
The most immediate direct impact of the crisis is usually on employment. Where exports are hit and more women are involved in export-oriented production, it is only to be expected that women will be disproportionately affected. But usually the impact extends beyond this. During the Asian financial crisis of 1997^98, female workers were the first to be laid off even in non-exporting sectors, because of the job segregation that put them in the low paying and more flexible activities unlike the more diversified and relatively more secure occupations of male workers. For example, women were laid off at seven times the rate of men in South Korea in 1998^99 (Seguino, 2009), and evidence from the crisis of 2008^09 also points to a similar tendency in other Asian countries (Chibber et al., 2009). Wages are hit for a number of reasons. The pressure on employers to compete in an increasingly hostile environment gets associated with attempts to reduce labour costs by driving down wages and forcing remaining workers to work for longer hours, often for less pay. This is made easier by the expansion of open unemployment. Two other categories of female workers deserve special mention: female cultivators and women working in the informal sector and as home-based workers. ultimately rebounded on the farmers themselves. The associated increase in debt (often to private moneylenders) then became a major drag on the viability of cultivation. All these difficulties are heightened in the case of female farmers, because in many countries especially in the developing world, lack of land titles and other recognition has tended to deprive them of benefits such as access to institutional credit, extension services and subsidized inputs. They therefore tend to have higher costs of cultivation than their male counterparts, and less state protection; they are also likely to be deprived of the benefits of any crisis relief packages in the absence of specific measures.

Informal work
Women in informal work are especially badly affected in periods of crisis. As opportunities for paid employment dwindle, in many countries female workers turn to home-based subcontracting activities, or work in very small units that do not even constitute manufactories, often on piece rate basis and usually very poorly paid and without any known non-wage benefits, substituted to some extent. This was evident in all the countries that suffered from the Asian crisis (Ghosh and Chandrasekhar, 2009) and was repeated during the 2008^09 recession, as the economic downswing tends to be directly reflected in both declining orders or contracts and falling rates of remuneration. There is typically also a decline in access to credit for self-employed women, as the meagre institutional credit that they could earlier access tends to dry up and non-institutional sources of credit become more precarious, difficult and expensive. This causes costs to increase even as small producers are forced to reduce prices of their goods and services in order to compete in increasingly adverse market conditions. Floro and Dymski (2000) have shown how financial crises can change gender relations through intrahousehold adjustments.

Farming sector
In the developing world as a whole, the majority of female workers are in farming, either as cultivators or agricultural workers. The impact of the crisis on agriculture is often much more severe than is recognized, also because the patterns of late capitalist development since the last two decades of the 20th century have been associated with more or less continuous agrarian crisis. Such crises were related to public policies from the early 1990s onwards that systematically reduced the protection afforded to farmers and exposed them to import competition and market volatility. Trade liberalization meant that farmers had to operate in a highly uncertain and volatile international environment. Volatile crop prices also generated misleading price signals, causing large and often undesirable shifts in cropping pattern, which

Migrant workers
Female migrant workers have been growing in quantitative importance throughout the past 383

Development 53(3): Dialogue

half-century, both within and across borders, and for both short-term and long-term periods. Crises have less of a direct impact on female migrant workers than men, because of the gendered nature of migration, especially cross-border migration. Male migrants go in dominantly for employment in manufacturing and construction sectors, while female migrants are concentrated in the service sectors, such as the care economy broadly defined (including activities such as nursing and domestic work) and entertainment. Thus, job losses in the North during the 2008^09 crisis were concentrated in construction, financial services and manufacturing, all dominated by male workers. By contrast, female migrants workers incomes are more stable over the cycle and do not immediately rise or fall to the same extent (Ghosh, 2009). However, migrant workers are often targeted in periods of heightened economic instability, when local residents feel that they are taking away jobs in a difficult labour market. revenues that affect fiscal deficits. Quite often, especially in the developing world, adjustment is then sought to be forced by measures such as fiscal austerity and cutting back on public spending. This typically involves raising using charges for public health, sanitation and education services and on utilities providing energy and transport. The withdrawal or reduction of access to such public services usually puts a greater burden on unpaid labour within the household, which is typically performed by women.

The girl child

The same processes also affect women as members of households and as citizens, often depriving them of what may be seen as fundamental socioeconomic rights. As incomes fall, access to food becomes more difficult, and in many countries this means that, within the household, women and girls are relatively more deprived. This has been exacerbated in the most recent crisis by the global volatility of fuel and food prices, which has caused substantial increases in food prices in many countries. Higher user charges for health and education often result in reduction or denial of access to women and girls. In most post-crisis situations, as well as the most recent one, there have been reports of withdrawal of girls from school and reduced access to medical care, including for reproductive health (Chibber et al., 2009; King and Sweetman, 2010). Initial analyses (WHO, 2009; UN, 2010) suggest that the financial crisis and the associated cutbacks on public health expenditure and rise in food prices have all impacted adversely on the health of women and children, especially infants.

Informal sector and the care economy

The unpaid labour of women is directly and indirectly affected by financial crisis. The extent of unpaid work and the conditions of such work are crucially affected by the state of physical and social infrastructure, access to natural resources such as water and fuel and to basic public services such as health and care services. This is why unpaid work typically tends to be more and involve greater drudgery in poor developing countries where infrastructure is relatively undeveloped and public services are limited and inadequate. In times of crisis it is the care economy and social reproduction in general, which often acts as a socio-economic buffer (Elson, 1995). This occurs for several reasons. As household incomes decline, families are forced into different survival strategies, including the use of womens labour to provide necessities sold in the market. Financial crises tend very quickly to become fiscal crises of the state, either because of the large bailouts that governments are forced to undertake to save major financial firms and other corporate entities, 384 or because periods of recession involve lower tax

Insecurity
It is also important to consider the impact on the physical security of women, through increased tendency to gender-based violence and domestic violence as worsening material conditions combine with a sense of helplessness among men, who then look for outlets for their anger and frustration. The increase in violence and insecurity of women in periods of economic crisis has been well documented (UN-Habitat, 2008).

Ghosh: Financial Crisis and Women

References Chandrasekhar, C.P. (2010) Financial Crises, in Kaushik Basu (ed.) Concise Oxford Companion to Economics in India, New Delhi: Oxford University Press. Chibber, Ajay, Jayati Ghosh and Thangavel Palanivel (2009) The Global Financial Crisis and the Asia-Pacific Region, Colombo: UNDP. Eichengreen, Barry and Peter H. Lindert (eds.) (1992) The International Debt Crisis in Historical Perspective, Cambridge, MA: MIT Press. Elson, Diane (1995) Male Bias in the Development Process, Manchester: Manchester University Press. Epstein, Gerald A. (ed.) (2005) Financialization and the World Economy, UK: Edward Elgar Publications. Fine, Ben (2008) Looking at the Crisis through Marx: Or is it the other way about?, in Steven Kates (ed.) The Meltdown of the World Economy: Alternative perspectives on the global financial crisis, pp 51^64, Northampton, MA: Edward Elgar. Floro, Maria and Gary Dymski (2000) Financial Crises, Gender and Power: An analytical framework, World Development 28(7):1269^83. Foster, John Bellamy (2010) The Age of Monopoly Finance Capital, Monthly Review 61: 9. Ghosh, Jayati (2005) The Social and Economic Effects of Financial Liberalisation: A primer for developing countries, DESA Working Paper, United Nations: NewYork, http://www.un.org/esa/desa/papers/2005/wp4_2005.pdf. Ghosh, Jayati (2009) Migration and Gender Empowerment: Recent trends and emerging issues, Human Development Background Paper, UNDP: NewYork. Ghosh, Jayati and C.P. Chandrasekhar (2009) After Crisis ^ Adjustment, recovery and fragility in East Asia, New Delhi: Tulika Books. King, Richard and Caroline Sweetman (2010) Gender Perspectives on the Global Economic Crisis, Oxford: Oxfam International. Palma, Gabriel (1998) Three and a Half Cycles of Mania, Panic, and [Asymmetric] Crash: East Asia and Latin America compared, Cambridge Journal of Economics 22:789^808. Patnaik, Prabhat (2003) The Retreat to Unfreedom: Essays on the emerging world order, New Delhi: Tulika. Seguino, Stephanie (2009) The Global Economic Crisis and Women, Presentation to UN Commission on Status of Women, 53rd Session, 3^15 March 2009, NewYork. United Nations (2010) Rethinking Poverty: Report on the world social situation, NewYork, NY: UN. United Nations ^ Human Settlements Programme (2008) The Global Assessment on Womens Safety, Nairobi: UN-HABITAT. WHO (2009) Women and Health:Todays evidence, tomorrows agenda, Geneva: WHO.

385