Key takeaways

• Asia's gender pension income inequity stems from a variety of socioeconomic factors that differ across markets.
• Female labour force participation and pay generally lag those of men, a situation exacerbated by the COVID-19 pandemic.
• While solutions require local insight and observation, we believe there are concrete steps the public and private sectors can take to help bridge the gap.

1 Identifying the causes for income and pension inequality

Gender income gaps exist almost everywhere in the world and tend to be the result of broader inequalities that affect women throughout their life courses.

In labour markets, for example, women participate less and for a shorter time than men, on average. When they do participate, they tend to earn lower wages and face more career interruptions—usually after childbirth and/or to care for dependents—than men. Women are also overrepresented in informal and precarious work or work in industries that pay relatively lower wages, such as caregiving and service sector jobs. They’re also underrepresented in industries that pay relatively higher wages, such as science and technology jobs.

Moreover, because employer-related pension schemes are usually based on regular payroll contributions, women are likely to have contributed less—and less frequently—to their pension compared with men. This results in markedly lower retirement income. But the inequalities that women face begin well before they enter the workforce and continue long after their working lives have ended.

The cumulative, lifelong disadvantages faced by women

In 2018, the United Nations Development Programme published a report and experimented with presenting data that demonstrated how gender issues accumulate over the course of a lifetime, with a view to breaking patterns of inequalities that include those men and women tend to face over the course of childhood and youth, adulthood, and older age. As the report noted, “This perspective provides a more holistic view of how gender disparities accumulate through life, helps to identify bottlenecks to progress, and highlights the need for comprehensive intervention strategies.” (Bonini & Hsu, 2018)

2 Contextualising structural inequalities in Asia

Employment discontinues with marriage and childbearing

Such embedded inequalities mean that, globally, women have a lower probability to access formal employment and are likely to have considerably shorter careers than their male counterparts. When women do work, they tend to earn less and are less likely to have opportunities for business expansion or career progression. According to the World Bank, the global labour force participation rate for women is 46% compared with 72% for men. This statistic varies in our four Asian markets—Hong Kong, Indonesia, Malaysia, and Taiwan—that represent a diverse Asia, but in every case it's still lower than that of men.

Another significant factor that frequently impedes women’s accumulation of retirement wealth is the stop-start nature of their working lives. Typically, working age participants can expect to experience a gradual increase in income throughout their working lives. But for women in particular, having children creates career interruptions that have lifelong implications for their financial well-being. As one study noted, women tend to find themselves faced with the challenge of building their career and raising their family at the same life stage. Having children frequently means women must put their career on hold—often indefinitely. Women also tend to earn a reduced income after giving birth, resulting in lower lifetime earnings and a slower accumulation of pension benefits.

Women tend to find themselves faced with the challenge of building their career and raising their family at the same life stage.

The impact of marriage and childbearing on women’s labour participation is significant and widely observed in all four of our key markets. For example, a qualitative study in Indonesia (Diahhadi, 2014) found that marriage and the onset of motherhood have been positively associated with the risk of leaving employment. In particular, the effect of entering marriage on employment exit is stronger for women in low-level occupations and those with junior and senior secondary levels of education. In aged markets such as Hong Kong, approximately 65% of women who ever married (includes now married, widowed, divorced/separated) are active in the labour market, while up to 96% of their male counterparts are still employed or actively seeking work.³

Taiwan is another aged market that shows how marital status affects men and women differently in terms of labour participation. Women have significantly lower labour participant rates than men across all marital status groups. Also, the difference in labour participation rates among males across the different marital status groups was relatively small, which may imply a disparity in the impact of marriage on women and men in terms of labour participation.

Pay disparities interrupt wealth accumulation in Malaysia

In a 2021 analysis of gender-based income disparities in Malaysia, one study noted that women’s participation in the Malaysian labour market has increased significantly in recent years. Even so, the female labour force participation rate is still at a low level when compared with the male labour force participation rate. The same study also noted that because women earn a lower income throughout their careers, wealth accumulation is harder for women, even though men and women do similar jobs.

Gender pay disparities persist in Indonesia despite the enhancement of education for women
Although in Indonesia more women workers have a college or university degree compared with male workers, higher education hasn’t succeeded in narrowing income disparities between genders. According to UN Women, women in Indonesia earn 23% less (Rp 2,454,023, monthly, equivalent to US$160) than their male counterparts (Rp 3,184,084, monthly, equivalent to US$208). Additionally, higher-paying jobs are dominated by men. While the average wage for both sexes is higher in urban areas of Indonesia, the benefits of urbanisation, in terms of higher monthly wages, also tend to benefit male workers more than female workers.

Gender-specific risks extend to greater care needs in later life among women

We’ve noted the impact that marriage and childbearing can have on women’s wealth accumulation, but what about other family responsibilities? And do gender-based health issues—such as women outliving men or having shorter healthy life expectancy—create greater challenges for women to fulfil their care needs?  

An example from Taiwan shows how gender inequality can result in later-life disparities. In 2020, the average healthy life expectancy of Taiwanese people was 84.7 years for women and 78.1 years for men, meaning women outlive men by 6 to 7 years. However, living longer doesn’t mean living longer and healthier. In fact, the average unhealthy life expectancy was 9.39 years for women and 7.64 years for men. In most of our observed markets, although women tend to live longer than men, they have higher morbidity rates and suffer from a diminished quality of life. It’s unsurprising, therefore, that in Taiwan, statistics show that more women than men are using long-term care services.

Caregiving for older adults is also a predominantly women-centred issue and another reason for economic gender disparity. For example, in Hong Kong, caregiving responsibilities are largely shouldered by women, which often results in women dropping out of the workforce and facing increased care costs without income.

Inequality is a life course-perpetuating problem; therefore, to break up consistent patterns of inequality, we need to consider how failing to address causes early on can lead to lifelong and life-changing deprivations. For example, children who lack access to education early in life may be forced to resort to informal work or suffer periods of unemployment, which can lead to the disruption of wealth accumulation and an impoverished old age. Older people may also suffer from illnesses or disabilities brought on by lack of preventive healthcare or medicine or from injuries sustained by physical labour, which could also add to the burden on their retirement income as it decumulates.

The impact of COVID-19

Beyond more structural issues, the COVID-19 pandemic has had a disproportionally negative effect on women from a health, well-being, and financial perspective. According to the “Global Gender Gap Report 2021,” issued by the World Economic Forum, “The hardest hit sectors by lockdowns and rapid digitalisation are those where women are more frequently employed. Combined with the additional pressures of providing care in the home, the crisis has halted progress toward gender parity in several economies and industries.” According to International Labour Union statistics, COVID-19 caused women’s employment in Asia and the Pacific to decrease by 3.8%, whereas men’s employment fell just 2.9%.

For example, after Indonesian workers were sent home during the pandemic, its Chamber of Commerce and Industry predicted layoffs would result in 6.4 million jobs being lost. Indonesia’s garment industry employs 2.1 million workers, of which women make up 80% of the total workforce.

The sharp rise in poverty caused by the pandemic is believed to have had a larger impact on women and female-led households. World Bank research also suggests 74% of female-headed households received less or no payment during the pandemic, and significant numbers of migrant workers returned home after losing their income.

3 Enhancing gender pension protection

Public policy intervention

As demonstrated, gender inequality is deeply embedded across many aspects of society, and at every life stage. While much still needs to be done, local governments are attempting to address gender income inequality through enhanced governance and proactive fiscal measures.

In Indonesia, some of the economic and social disadvantages faced by women are now being addressed by gender-responsive budgeting that's attempted to confront some of the reasons for structural inequality. In 2018, Indonesia introduced its National Strategy on Acceleration of Gender Mainstreaming through Gender Responsive Planning and Budgeting, which was updated in 2021 to align with the UN's Sustainable Development Goals (SDGs). There has also been a strong focus on women’s empowerment at local government levels.

In Malaysia, the Malaysia Gender Gap Index⁴ has been introduced to examine male/female disparities across four key categories: economic participation and opportunity, educational attainment, health and survival, and political empowerment. Malaysia has also been appointed as a focal point for a UN initiative to develop training on gender statistics.

Public policy can also influence pension take-up through different channels. Indeed, government-sponsored or industry-driven incentives could also play a role in levelling the playing field for pension income protection. Despite the numerous challenges facing women, some Asian governments are adopting innovative policies to initiate more women into the workforce and to also return after childbirth.

"Despite the numerous challenges facing women, some Asian governments are adopting innovative policies to initiate more women into the workforce and to also return after childbirth."

Malaysia has prioritised the issue by implementing several initiatives aimed at increasing the percentage of women with jobs; for example, in 2019, the Career Comeback programme offered annual individual tax exemptions for women aged 30 to 50 who reentered the workforce after at least a two-year hiatus. In addition, the Malaysian government added subsidies for women and employees: Women who reentered the workforce would receive RM 500 a month for two years, while employers would receive RM 300 over the same period. These policies were renewed until 2023 under the 2020 budget. Although still in its early stages, initial results have been positive. Since the subsidies were introduced, 855 women have returned to work, with 323 employers recruiting career-break women since 2015.

We would also be keen to see employers of our four target markets—and the rest of Asia—implement pay transparency tools. Pay transparency and wage mapping policies are a promising way of highlighting structural wage gaps within organisations. At present, 18 out of 38 of the OECD members have introduced legislation that demands regular gender wage gap reporting by private sector employers (OECD, 2021). Their introduction has been successful in encouraging employers to address pay inequality, equipping employees with the information needed to help fight pay discrimination and helping governments and institutions to identify and establish best practices.

Private sector initiatives

The gig economy is also opening new avenues for women. In Malaysia, the percentage of self-employed women nearly doubled from 11.6% in 2010 to 19.5% in 2020, an indication that the gig economy may be increasing women’s participation in the labour force, even if such jobs are unlikely to include pension benefits. In Indonesia, initial survey evidence has suggested robust participation by women in gig economy industries, particularly among younger workers.

While gig work offers opportunities, it also poses challenges, particularly for the safety and well-being of female employees; some companies are introducing new policies to address these concerns. Grab, one of the largest online apps in Southeast Asia, offers ride-hailing as well as food and product delivery services across emerging Asia. It has also introduced new policies to help boost women employment and assuage their concerns over safety after earlier missteps. In Indonesia, women have the option to deliver goods and food rather than passengers. Grab has also installed CCTV on motorbikes in Malaysia to increase safety precautions. Some companies have also created women-only passenger services, such as LadyJek, to ensure female employees feel safer in their roles.

Manulife Investment Management's experience

While the gender gap in women’s earnings and pension savings is structural, public policy incentives coupled with new digital corporate innovations can help bridge the gap, as our experience and data illustrate.

• In Hong Kong, the government announced a tax-deductible voluntary contribution scheme in 2019 to help individuals supplement their mandatory corporate contributions. The policy has seen a notable uptake, particularly among women. According to Manulife Investment Management data, women have been significant participants in the new voluntary scheme, particularly among those in their late 30s to middle age, a critical time to accrue long-term savings for retirement; therefore, providing targeted tax incentives appears to be one way to address the issue.
• The use of digital tools to engage investors and personalize the experience is another means to build engagement. In 2019, Manulife Investment Management launched a digital, one-stop investing platform for funds in Hong Kong; we’ve also launched regionally in Malaysia, Indonesia, and the Philippines. In Hong Kong, our data shows significant online participation and management of investments by women investors, particularly among investors over 35, during times of increased volatility. In Malaysia, the initial uptake of investment and digital tools is popular among younger women in their 20s and 30s. While there could be many reasons for the divergent demographics seen in the two markets, such as the age structure of the markets, the availability and literacy of using internet tools could also help to explain the diversity of its use in Asia.
• Finally, our experience shows the importance of investor education and literacy at all levels. While better pay and greater savings are necessary, increased education and empowerment for women investors to understand their unique circumstances and long-term investing goals can come through numerous sources: insurance agents, wealth managers, and digital content. To serve a diverse Asia, a multichannel approach is needed.
  

"While better pay and greater savings are necessary, increased education and empowerment for women investors to understand their unique circumstances and long-term investing goals can come through numerous sources: insurance agents, wealth managers, and digital content. To serve a diverse Asia, a multichannel approach is needed."

A long road ahead
It’s indisputable that gender income and pension income disparities aren’t caused by a single factor; rather, they’re influenced by a complex and interconnected set of issues. This is true of Asia as much as across the rest of the world. As a result, the drive towards gender parity won’t happen overnight but will involve extensive structural reform across many aspects of society, including education, employment law and practices, and government involvement in regulation and oversight.

Gender gaps exist at all life stages; therefore, policy attention must be directed towards all stages. However, to attain the UN's Sustainable Development Goal 5: “Achieve gender equality and empower all women and girls,” particular attention must be placed on childhood education for both gender and in the choices available to young working women—especially when making financial decisions that will help them to secure their future and improve their retirement prospects.

While achieving gender-responsive reform might sound overwhelming, reforming pensions is a good place to start. Effective action that protects women’s right to be employed—ensuring they have an income that supports them through old age—has the potential to make a demonstrable difference in lifting women out of the lifecycle of inequality.

1 Towards Improved Retirement Savings Outcomes for Women, OECD Publishing, Paris, March 2021, https://doi.org/10.1787/f7b48808-en. 2 Manulife Investment Management engages the Sau Po Centre on Ageing at the University of Hong Kong in the capacity of consultant (consultancy fee incurred) for certain thought leadership projects.  3 Hong Kong Census and Statistics Department, 2021, and Legislative Council of Hong Kong, 2019). 4 MGGI was produced according to the methodology of the Global Gender Gap Index (GGI), published by the World Economic Forum using data available at the Department of Statistics, Malaysia.