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Gender Equality efforts in Europe have stalled. Can better Consumer Protections get it moving again?

Gender Equality on most measured outcomes has stalled in the EU. Is one way to get it moving again better consumer protection and inclusion regulations?

The European Institute for Gender Equality’s (EIGE) recent 2022 Gender Equality Index (GEI) report revealed EU Member States are, on the whole, moving toward gender equality, but at a snail’s pace of only 0.6 points on the GEI per year.

In many key areas however, Member States’ progress has dramatically slowed, stalled or even slipped backwards. If it weren’t for long-term efforts to increase women’s representation in social, economic and political decision-making bodies, the EU’s overall rate of progress would have been at a standstill.

At the present rate, the average EU resident won’t enjoy equality in the areas of representation, education, use of time, employment, finances and health until 2084.

Policymakers across the EU need to ask themselves – where do we begin in order to get back on track? A focus on improving consumer protections is one key place to start.

What causes gender inequality?

The factors contributing to gender inequality are complex, and they vary between and within Member States, urban and rural areas, age groups and other social identity groups.

However, a cascade of research finds that at the root of gender inequality there is an unequal distribution in the provision of human care – care that is crucial to the functioning of societies and the productive economy as we know it. Tied to this imbalance is a lack of accessible and affordable formal care services for children and dependent adults as well an absence of labour and tax policies to support the equal distribution of unpaid care work.

Other factors at the heart of gender inequality include gender stereotypes and norms, weak social protections, the low status given to jobs predominantly held by women and a lack of consideration for the impact on both men and women – in all their diversity – during the policymaking process.

The economic impact of gender inequality

Finance Watch Gender Equality efforts in Europe have stalled. Can better Consumer Protections get it moving again?

Despite the EU being home to countries which have prioritised greater equality outcomes, it is startling such significant gaps remain.

According to the EIGE gender equality index, the most progress was made in representation, but that score remains the lowest of all measured areas. Further to this, the lack of women in decision-making positions for financial institutions, large corporations, political and social bodies remains a major concern.

Representation, however, is just one piece of the gender equality puzzle and doesn’t say much about the lived experience of over half of the population.

Despite women in the EU being more likely to pursue and earn their bachelors or masters degree, employed women earn 14% less than men on average and enter retirement with a pension 25% smaller (EIGE). Women make up the majority of people employed in undervalued jobs or sectors.

Not surprisingly then, women in the EU are also more likely to be living in poverty (64.6 million women, 57.6 million men) or to be at risk of poverty and social exclusion (50,848,000 women, 44,530,000 men).

Minding the gap in financial regulation – focusing on consumer protection and inclusion

Finance Watch Gender Equality efforts in Europe have stalled. Can better Consumer Protections get it moving again?

Two key areas where financial regulation can contribute to closing gender equality gaps – or at least improve the financial well-being of those who are negatively impacted by it – are the realms of financial inclusion and consumer protection.

In order for individuals to be financially, and therefore socially, included, they must have legal, physical and financial access to the financial tools and services needed to lead a normal life. Access to these services are needed to enable individuals to secure gainful employment, acquire decent housing, access suitable healthcare and to retire with dignity.

In the European context, this basic package of financial services and tools includes cash, a basic payment account, savings account, an adequate and safe third pillar pension, health, home, motor and personal liability insurances.

Vulnerable consumers such as women, however, currently experience difficulties in accessing these key financial services resulting in financial and social exclusion. One of the key reasons for this are financial barriers, i.e. financial services are often too expensive for vulnerable consumers.

In addition, when they do have access to financial services, vulnerable groups such as women often face consumer protection risks such as mis-selling of unsuitable financial services which can result in financial detriment for the consumer.

Consumer protection from undue harm becomes increasingly important in the current cost of living crisis, as budgets become tighter and people increasingly turn to financial services such as consumer credit to purchase basic necessities. Increasing financial literacy is often promoted as a solution to protect vulnerable consumers from financial harm in the use of credit and other products.

Finance Watch Gender Equality efforts in Europe have stalled. Can better Consumer Protections get it moving again?

However, financial literacy has been found to have a limited impact on preventing over-indebtedness and mis-selling of financial services. The idea that risk is mitigated by increasing financial literacy is both a simplification of the issue and for the majority of consumers not true.

It can rather result in increased overconfidence and risk taking such as creating false expectations of how the product performs and little actual understanding of an individual product. This is particularly true of existing adult users.

The most effective way forward, rather, is for policymakers and supervisors to ensure that service providers and products are adequately regulated to ensure that mis-selling is avoided and products are available and accessible that are suitable for all members of society – regardless of their income.

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