Female participation in the workforce has been undermined – perhaps permanently – by the pandemic as many women struggle to balance additional childcare responsibilities with work commitments, US economist and chief executive of the Federal Reserve Bank of San Francisco Mary Daly has warned.
While the labour markets in the US and elsewhere have bounced back strongly, employment rates are still well below pre-Covid levels, and “a large fraction of the people who have left are females in their mid-career years”, Ms Daly said.
Far from using the pandemic to change their work-life balance, as some have speculated, many women are constrained from working because of the extra childcare and educational instruction brought on by the pandemic, she said.
Ms Daly was taking part in a "fireside chat" event with Central Bank of Ireland deputy governor Sharon Donnery to mark Nollaig na mBan.
The initial rise in unemployment triggered by the pandemic was larger for women than for men, prompting the term “she-cession”.
Labour force participation rates among women in the Republic have remained low by international standards despite rising wages and more career opportunities.
Ms Daly said Covid and central bank policies to stem the fallout from it may have inadvertently exacerbated income inequality. Rising asset values buoyed by accommodative monetary policy tend to favour the wealthy.
As one of the US Federal Reserve’s 18 top officials, Ms Daly is responsible for setting US interest rates, a hot topic of debate at the moment with inflation at a near 40-year high of 6.2 per cent in the US.
The Fed recently signalled it would accelerate the unwinding of bond buying, seen as a prelude to raising interest rates and an acknowledgement that the current bout of price growth may be more than transitory.
Tame inflation
Ms Daly said central banks had to balance policy measures to tame inflation with ones that facilitated growth and job-creation.
“If we act too aggressively to offset the high inflation that’s caused by these supply and demand imbalances we won’t actually do very much to solve the supply chain problems but we will bridle the economy in a way that will mean less job-creation down the road,” she said.
“We have, however, come to a point where it is clear the inflation numbers are rising across broader sets of sectors than those directly effected by the Covid disruption. We’re seeing this in wage growth,” Ms Daly added.
“I’m of the mind we will need to raise interest rates towards the end of this year in order to keep the economy in balance,” she said, while noting interest rates across the globe are very low and raising them a little is not the same as constraining the economy.
The event was moderated by economist Frances Ruane, the first female economist employed by the Central Bank of Ireland.
