Why is gender equality one of Switzerland's biggest opportunities?

Switzerland has somewhat lost its edge as leading financial market place and has a unique opportunity to win that edge back: Gender Equality. This might sound surprising, but when we size up the economic and financial consequences of gender inequality, the magnitude of the opportunity becomes very palpable indeed.

Let’s start with pay gaps: simulations show that a 10% pay gap can lead to a wealth gap of approximately 40% over a life time. And a 20% pay gap can lead to a wealth gap of 85%. This means that women literally risk running out of money before they run out of life - and pension funds are unlikely to be able to cover the needs of an ageing population. 

The Swiss pay gap stands at 19% between male and female full time employees, according to the Federal Office of Statistics. This means that closing pay gaps is not just a question of fairness; it can be a massive boost for the economy overall. Our concern should not be the cost of closing pay gaps today, but rather the opportunity of more consumption, more savings, more economic growth, more fiscal revenues and more pension fund contributions in the future. 

Secondly, let’s look at saving and investing. Research shows that women tend to invest more conservatively than men - and this is not genetical. It is largely because women have less and don’t want to risk losing the little they have. Yet, even with little savings, sitting on cash or fixed income is not a good strategy. Even just diversifying into other asset classes with higher yields could easily allow to boost returns over the years. Compounding over a decade at 1% or at 3% or at 5% makes a massive difference. Concretely: compounding 100k at 1% for 10 years results in 110’462 CHF, at 3% 134’392 CHF, at 5% 162’890 CHF. 

So does this mean every woman should take more risk? No. But it does mean that women - and men too - need to be financially literate and feel empowered to take control of their financial futures. Taking consciously as much risk as needed to meet your financial goals is better than not taking any risks because you don’t know how to navigate the financial landscape. And “not taking risks” is the best way to destroy wealth in a negative rate environment. So by investing well, there is much upside to be gained over the cycle. The overall economic opportunity for our country is proportionally high.

This brings me to my third point: financial literacy in Switzerland is at 57%, versus >70% in top scoring countries, according to Standard & Poor’s Global Financial Literacy Survey. And the trend is not encouraging. UBS research (Own your worth, 2019) shows that that the involvement of millennial women in long term financial decision taking is lower than for the previous generation. In my view, we need to put financial literacy firmly back on the education agenda and make it a top priority in schools at ALL ages, from primary through university. We cannot afford the collateral damage and missed economic opportunity of a lack of financial know-how. This is not a nice to have, it is an imperative in light of increasing longevity. And it is the biggest growth opportunity the economy faces. 

Fourth, let’s not forget that financial equality in Switzerland is still very young. It’s been barely 30 years since married women are allowed to open bank accounts without the consent of their husbands. This implies that the financial empowerment of women is still young and consequently their ability to be role models for the next generations still needs strengthening. UBS research shows that while 80% of daily household financial decisions are taken by women, only 23% take the lead on long term financial decisions. 8 in 10 women believe their partners are more about money than they do. Though with a literacy score of 57% in Switzerland, I would argue that this is more of an optimistic illusion than a reality. 

Fifth: we have no other option. While we are heralding medical advancements and the fact that the youngest generations may live beyond 105 years, my only thought is: how will they have enough money to sustain themselves over such a long life span? Combine longevity with a gig economy and you have a recipe for old age poverty on an epic scale. Younger generations today are at even higher risk than the generations before them of not saving enough for their retirement. We simply cannot afford to wait any longer to tackle the financial implications of longevity. 

So in summary, Switzerland has the unique opportunity to put finance back into the DNA of its people. Becoming the number one country in financial literacy and in economic gender equality could, at a very low cost, be an economic growth opportunity second to none for our country. And putting Switzerland firmly back on the map as leading financial market place will benefit businesses across all sectors. 

I am hopeful we can build on our 150 years of heritage in private banking to create a world class financial literacy program for all schools that benefits everyone - regardless of which career path they chose in life. This basic skill set is key to empower the next generations to take control of their financial futures and would be a flagship competency of all employees and entrepreneurs in our country. Combine gender equality and financial literacy, and add sustainability to the equation, and you have a winning formula for the future.