The financial crisis: Women's empowerment and governmental responsibility

by Ms. Vigdís Finnbogadóttir former President of Iceland

The international financial crisis broke on the shores of Iceland like a massive tidal wave on 6 October 2008. The blow to the nation's psyche, producing a state of collective shock, still lingers, even if Icelanders have yet to feel the brunt of the catastrophe. The shock is, however, not only due to financial distress or societal insecurity. Icelanders are used to hardships in a land in which both farming and fishing are precarious enterprises. Having only become an “affluent” country in the wake of World War II, Icelanders have battled poverty, deprivation and famine through most of their history. What really makes the Icelander's blood boil is the fact that (quite literally) a handful of banking and retail “entrepreneurs” not only went on a debt-financed global spending spree but also took it upon themselves to tarnish the good name of Iceland and its people as well as its relations with other countries.

The political class also failed during these trying times. Signs of an impending collapse and, as it turned out, accurate warnings from experts and institutions, were ignored or suppressed. This complacency raised serious questions about the integrity of the political system – especially the parties, which were financed in part by the companies that brought Iceland to the point of near-bankruptcy – and democratic accountability. Indeed, what not least accounted for public disillusionment was that ideas and representations of Iceland – as reproduced in images and myths abroad – were used and abused to promote a globalized financial adventurism.

In the aftermath of the crash, commentators were quick to point to the different roles played by men and women in it. The financial bubble was created almost exclusively by men, specifically young males, hooked on excessive risk-taking. Hence, it should not come as a surprise that it has been suggested that the financial collapse would not have taken place – or would, at least, not have been as severe – if women had been at the helm. Women are usually more “economical” in their conduct, being used to thrift and caring for others. Indeed, recent surveys (e.g. Creditinfo Iceland) have consistently shown that businesses are less likely to run into debt and more likely to make money, if they are run by women.

The struggle for gender equality has been a driving force in the development of Icelandic society and political life. As a result, Iceland has one of the highest rates of employment of women, close to 80 per cent, while, at the same time, the country's birth rate ranks among the highest in Europe: 2.1 children per woman. The government has responded to this development by providing childcare for pre-school children, legal rights for parents to return to their jobs after childbirth and a generous parental leave system. The Icelandic parental leave scheme, which was established in 2000, is in many ways unique and has received international attention and great interest from various governments in Europe.

The liberation of women through their participation in the labour market is a key explanation for the rapid economic development in Iceland in the second half of the 20th century. In 1975, Icelandic women made international headlines when they went on a one-day strike to underline their contribution to society. Ninety per cent of Icelandic women refused to work, cook or look after children during that day. More than 25,000 women descended on Reykjavík city center to celebrate in speeches, song and performances. Five years later, I was elected the first woman President of Iceland.

Despite these manifestations of women's empowerment, the great effort on the part of women in the making of the Icelandic economy has not been duly rewarded. During the years of high economic growth and unprecedented (albeit deceptive) financial prosperity, the gender pay gap actually increased and women were less likely to occupy positions of power. From these facts, there are important lessons to be learned. First, they confirm what has been long known: that progress in matters of equality, in Iceland as well as in other countries, will not come about by itself. Governments and non-governmental organizations need to be pressured to take action in support of gender equality. Second, the current crisis should not be used as an excuse for inaction in this field. On the contrary, as it is put on the United Nations Human Rights website, “If anything, the financial crisis should be seen as an urgent reason to speed up the advancement of women's rights, and not as a reason to postpone fundamental legislative and policy improvements and implementation until financially calmer times”.

This goes for the developed countries as much as the developing ones. The crisis clearly shows that Western societies, not excluding the Nordic countries that have up to now been praised for their stand on equality and human rights issues, need to address its consequences through critical introspection. The Western discourse on “failing States” and “state-building”– in the “Third World” needs to be reconciled with the need to take into account economic and societal failings and “reconstruction” in Western countries, such as Iceland. What is required is a transnational dialogue, not a monologue, on “reconstruction” following a systemic collapse. A Gender Training Programme GET at the University of Iceland promises to be an important venue for the learning process. It has been formally launched on 19 June 2009 on the eve of an international conference on Security Council resolution 1325 on Women, Peace and Security held at the University of Iceland. The Training Programme will be conducted by the University of Iceland under the auspices of its Research Institute on Gender Equality and Diversity and financed by the Icelandic Research Council and the Ministry for Foreign Affairs in Iceland (as part of its commitments to gender equality and international development cooperation). The overall objective of GET is to promote peace-building, reconstruction, and economic and social welfare in developing and post-conflict countries by promoting gender equality, women's empowerment and participation in decision-making at all levels.

Politics in Iceland, and elsewhere, must undergo drastic changes: the order of the day is transparency and honesty. In spite of the dire situation, there is always hope that, in the end, some redemptive good will come out of the collapse in Iceland, such as constitutional reforms, the renewal of the democratic institutional order, and the re-affirmation of gender equality. A sign of recovery may well be found in the guise of the new Prime Minister, Jóhanna Sigurdardóttir, who was voted into office last April. She is known for being a solid, hardworking and honourable person. A nation of seafarers knows instinctively that women are capable of running societies. I learned during my presidency that this is something that men are as much aware of as women. Women in Icelandic history, wives of seamen, were in their own right “ministers” of sorts – house makers, architects, teachers – and responsible for the family's finances and the children's education. And in the current situation, men and women must work together to find ways to reconstruct public trust in our society and our financial and political system.

IPU President Dr. Theo-Ben Gurirab

The global financial crisis affects women and men differently

At the close of the Parliamentary Conference on the Global Economic Crisis, which brought together nearly 400 legislators from 80 parliaments in Geneva in May 2009, IPU President Dr. Theo-Ben Gurirab declared that “legislators need to recognize that the global financial crisis affects women and men differently, with women being the hardest hit”.

The crisis will at a minimum consolidate entrenched inequalities, but most likely exacerbate them, pushing women even further into poverty. Women are a driving force of our economies - formally and informally - and the solutions to this crisis must therefore build on their potential, recognize their contributions and promote gender equality, underscored the IPU President.

“In parliament we must make sure that the policies and programmes that are developed to address the current crisis take into account gender equality and political participation by women and apply tools such as gender-sensitive budgeting”, stressed President Gurirab, who is also the Speaker of the National Assembly of Namibia.

Ms. Barbara Prammer, Speaker of the Austrian Parliament

Poverty worldwide has a female face

The Speaker of the Austrian Parliament, Ms. Barbara Prammer, one of the panellists at the Conference, shares the analysis of the IPU President. She told The World of Parliaments that “when poverty is on the rise, women are the first to be affected”, recalling that women account for a significant portion of the millions of poor people in the world.

Most of the social security systems are connected to or centred on employment. When women's incomes are low or they lose their jobs, they face real problems. Sometimes it is a question of life or death for them. The marginalization of women is acute in both the developed and the developing countries, said Ms. Prammer.

The Speaker of the Austrian Parliament pointed out that the discussions on the economic crisis “are very male dominated and this is a mistake. We are very few women parliamentarians present here and we should lobby for women's issues, because the backlash can come very quickly”.

When asked how women could convince their male colleagues to give more space to women in finding solutions to the financial crisis, she responded: “My colleagues understand that in an economic crisis, the situation of men and women is connected. Men also lose their jobs, but poverty is a problem that affects more women in general. This is why men and women have to work in partnership”, stressed Ms. Prammer.

The economic crisis will also be on the agenda of the Fifth Meeting of Women Speakers of Parliament, which Ms. Prammer will be hosting in July in Vienna. “Each time we come together, at the national or multilateral level, we speak about the crisis. The Vienna meeting will focus on the theme of violence against women, but we have to be aware of the fact that violence and poverty are interconnected. We should exchange the experiences we have in the different regions of the world and discuss strategies and enhanced cooperation among us”.

Ms. Prammer is convinced that women in the developing countries will feel the real pinch of the crisis. “There is a big question mark concerning the Millennium Development Goals in times of crisis, and women will suffer a lot. Poverty worldwide has a female face. Developed countries will not cut their aid to developing countries, but development is slowing down in my country, as it is everywhere. This is not a good thing, but it is the reality of the situation”.

Ms. Sabina Orellana Cruz, Bolivian legislator

“The economic crisis will trigger a food crisis”

Ms. Sabina Orellana Cruz, a member of the Bolivian Chamber of Deputies, shares the view that the financial crisis has an impact on the economy of the poorest countries. ”In Bolivia, the economic crisis greatly affects the poor, especially indigenous women. This is the case of all indigenous populations in all countries.

“In Bolivia, the crisis is also affecting outlying urban areas and the situation will get worse in another year or two because the economic crisis will trigger a food crisis. Ms. Cruz added that “countries have to find joint solutions because they will not be able to overcome the crisis if they act on their own. We will all have to work together because if men and women complement each other in the family, they should also complement each other in politics, where it is important for women to express their views, so that alongside men, they can contribute to making a better life for all”.

Ms. Tioulong Saumura, Cambodian MP

The financial crisis: The Cambodian case

Ms. Tioulong Saumura, a member of the Parliament of Cambodia, agrees that the economic crisis affects women in particular, which are the poorest and most vulnerable sectors of society in both rich and poor countries. “Women are generally marginalized in economic systems of production and in political executive systems. The poor countries are the most affected in general and women will be driven even deeper into poverty because of the crisis”.

She said that the Conference in Geneva would provide men and women parliamentarians with an opportunity to reflect together on structural issues. “Governments will attend to the most urgent things first in an attempt to save the big corporations and the banking and financial systems, but that represents only a minority of the population rather than the majority of people,” she said. It should be recalled that among the people who benefit from these banking systems, there are very few women, even more so in the poor countries. We parliamentarians are lucky in that we can step back and reflect on the situation. No doubt measures will have to be taken immediately to overcome the crisis, but there is also an opportunity to be seized to make fundamental structural and long-term changes so that we can strike a balance between rich and poor countries, men and women, and among the beneficiaries of economic growth”.

Ms. Saumura expressed the hope that men and women parliamentarians would play an active role in that kind of meeting “because the IPU offers an ideal forum for parliamentarians the world over to work together to find long-term solutions to common problems, with greater cooperation between rich and poor countries, the North and the South and men and women.

She explained that in Cambodia, “the banking system is not very well developed; there are no hedge funds or derivatives, and certainly not any stock exchange. In Cambodia, the crisis was not financial. However, it is feeling the full contagion effect of the crisis, which started off as a financial one and then became economic”. The whole world today is suffering from the credit crunch and a lack of liquidity to finance economic activity. ”My country's textile sector is a large garment producer. The other sector which contributes to Cambodia's GNP is tourism, which means that we are suffering from the drop in trade activity and the fall in purchasing power of our export markets. Demand for clothes has shrunk in Europe and North America, which are our main clients. The same applies for tourist arrivals, which have plunged sharply since the crisis began because people with less purchasing power are trying to cut down their expenses and foreign travel”.

Cambodia is starting to be affected in economic terms by the consequences of the crisis. “I often say that for people living in rich countries, the economic crisis means buying fewer clothes or taking shorter holidays, but in poor countries it means one less meal for the underprivileged who, as it was, could only afford one meal a day. This crisis could therefore be disastrous in terms of health and the social services in general”, she concluded.

Ms. Fathen Ben Amor, First Vice-President of the IPU Coordinating Committee of Women Parliamentarians

“Parliaments should adapt their laws in light of the economic crisis”

One month before the Geneva Parliamentary Conference on the Global Economic Crisis, this topic was the subject of an emergency item adopted at the 120th IPU Assembly in Addis Ababa. Legislators adopted a resolution calling on all parliaments and governments to make it a priority to eradicate poverty and social injustice as well as their root causes in Africa and other developing countries and to devise ways of mitigating the social, political and economic consequences of the global financial crisis, particularly regarding the developing countries.

Although some have claimed that the developing countries are better weathering the economic crisis than the developed ones, Ms. Fathen Ben Amor, a Tunisian member of parliament and First Vice-President of the IPU Coordinating Committee of Women Parliamentarians, considers that the developing countries are just as affected by the crisis, in particular women.

“The majority of job-seekers are women, who, in addition, have to be content with unstable jobs. They need more money to feed their family, and therefore need to work more, to the detriment of their health”, added Ms. Ben Amor.

Following the example of a number of women parliamentarians in other countries, she has called for laws to be passed aimed at protecting women and encouraging them to develop projects. “A survey on the participation of Arab women in the economy shows that women prefer jobs in the public sector. As the public sector offers fewer recruitment possibilities, we have to encourage women to go to the private sector, to develop projects and to provide themselves with jobs”. Education should not be neglected though, and women should be encouraged to get a better education and show greater solidarity. “Young women, who will be the workers of tomorrow, will be the agents of change and development” predicted Ms. Ben Amor, warning that “given the current situation, women risk being left by the wayside”.

The Tunisian parliamentarian explained that, “in places where work means men and women being paid equal pay for equal work, we encourage women to work through microcredits and equal opportunity. If a male and a female candidate have the same competences, it is the woman who should be hired to encourage female employment. That goes hand in hand with secondary education and professional training, without forgetting women farmers. We are also trying to ensure that the decision-making posts are allocated to reflect the fact that 60 per cent of undergraduates are female”.

When asked if women could set an example of how to weather the crisis, Ms. Ben-Amor replied with a resolute “yes”. In her opinion, “women are more prudent, they borrow smaller amounts of money and they pay pack quickly the loans they have been granted. Parliaments must adapt their laws taking into account the new order created by the financial risis. They have to think globally and act locally. Parliaments must be the relay between the executive and the electorate”.

Ms. Ben Amor insists that although it might be true that in the short term the developing countries may be less affected by the crisis than the developed ones, “the financial and economic crisis spares no one. The fact that the rich countries are the most affected means that international aid to poor countries will drop. In the medium and long term, that will have repercussions for the developing countries. It's a vicious circle”.