David Arana
Startup Contributor

Gender Equity: Pending Issue in the Business Sector

By David Arana | Mon, 11/16/2020 - 05:00

On Oct. 21, the National Institute of Statistics and Geography (INEGI) revealed, through its famous National Survey of Occupation and Employment (ENOE), how the recovery is going in terms of occupation. To put the current situation in perspective, in just a few months, the pandemic eliminated more than 12 million jobs in our country, according to official figures. 

While the circumstances remain unsatisfactory, there are clear signs of recovery. Employment is one them. One example is the trade sector, a segment that in the first quarter of the year, according to our estimates, had revenue decreases of up to 44 percent.  

Even with the social and commercial reopening, although the recovery is still slow, ENOE details that over 600,000 merchants have returned to their activities from September to date. The important data is that, from September to date, the total number of employees in small family or local enterprises has increased from 19.6 million to 20.2 million, representing the reintegration of 626,645 people.

This is undoubtedly great news, but these figures actually reveal an even more worrying sign that has been overlooked for years: gender inequality. Let's check out the figures.

In mentioning how many jobs were recovered, INEGI is clear, but what kinds of job are they? Most of them come from the informal sector; that is, thousands of people with no social protection, benefits or fixed income (the same situation that, when the pandemic began, placed millions of families in uncertainty).

But speaking only of gender equality, the INEGI figures provide, indirectly, information that should concern all of us. The fact is that women are mostly employed in the commercial sector; 4.8 million men were employed in the sector at the end of September, compared to 5.1 million women.

So, we have a sector where the majority lives in informality and where that majority are women. It is easy to deduce that the combination of these two factors exacerbates the problem that most women (70% of the total economically active) live in total uncertainty or, in other words, live day to day.

That's the problem, but what about the solution? That reality is not only reflected in the trade sector, but in many other industries where millions of Mexicans live without any kind of protection. Depending on the case, this could be the trigger to decide to start our own business in search of a better life. 

This is where the main question of this column comes from: when we want to start a business, do we all have the same possibilities? 

We have already seen how women are at a disadvantage in the labor sector but a point rarely analyzed is the disparity that exists in the business sector and how women there also face significant challenges.

According to our Unstoppable Entrepreneurs: Bridging the Gender Gap in Business study, of the 2.6 million people who decided to start a company in the country in 2019, just over 500,000 were women.

Analyzing the past three years, our data shows that with minimal changes, this trend has prevailed, with just a 0.53 percent drop from 2018 to 2020 in the number of women who owned a business.

On the subject of why women don't undertake as much as men do, the Women's Entrepreneurship Report 2019 (GEM) details that in Latin America, the working day of women entrepreneurs tends to be less than that of men because of the social/economic system that forces women to divide their time between running their businesses and their families. 

Regarding the reasons for opening a business, the National Women's Institute (Inmujeres) details that in Mexico, businesses founded by women are - mostly - the result of the search for options to meet the needs of the home. 

This last fact reinforces the idea that women entrepreneurs in the region continue to suffer from a significant gender gap and makes it clear that for many women, the reasons for starting a business respond to a need for survival, rather than from the model for men that reflects growth, innovation or personal challenge. 

2020 also posed a real challenge for established women entrepreneurs, since companies led by women have been the most affected by the pandemic.

Our Fintech Konfío observed the behavior of income in 2019, a year in which growth was reflected for both men and women, with women benefiting the most with almost 44 percent growth over the previous year. However, comparing 2019 against 2020, one can see how the pandemic brought a significant decrease in income for both genders, with women being the most affected, seeing a fall of more than 15 percent.

Analyzing income by region, Konfío found that women in the west have been most affected with -60 percent in income versus 2019. The northern region showed the smallest drop in income registered by women's businesses (-35.4 percent), followed by the center (-40.6 percent), the south (-46.3 percent) and the lowlands (-50 percent).

These figures are only a small part of the study, but they serve to map part of the context experienced every day by millions of women who face significant disadvantages in the world of work. As they move into the business sector, they continue in the same situation.

One of the most important challenges faced by women business owners is access to financing to boost their businesses.

The World Bank indicates that 70 percent of SMEs in the hands of women in developing countries, such as Mexico, are excluded by traditional banking or do not receive financial services under adequate conditions to meet their needs. As a result, businesses owned by women tend to have an annual credit deficit of about $300 billion.

This figure is contrasted by the fact that financing women entrepreneurs in Mexico represents an opportunity of $6.502 billion dollars (according to the IFC). 

There is no denying that women in Mexico are committed to their businesses and, therefore, need financial services that provide them more security. To achieve this, it is necessary to increase the access or attraction of women to credit and make adjustments by simplifying the financing processes.

Access to credit is only one of many obstacles that women entrepreneurs experience daily in our country. Without a doubt, it is necessary to analyze in detail the current scenario in terms of gender equity in order to propose real solutions that allow men and women to develop under equal opportunities and thus fuel not only their personal growth but that of the country in general. 

It has been demonstrated that women tend to have stronger businesses, tend to use financing more wisely and even have projects with greater vision for the future. Imagine if all this potential were truly supported and encouraged. Without a doubt, our country could leave 2020 behind and think of better times.  

Photo by:   David Arana