On day one of #ThePerfectStorm, our series lifting the lid on the spiralling debt crisis, we explore why more and more young women are declaring themselves insolvent
It is over 50 years since the Equal Pay Act, but for the sixth successive year female debt and insolvency has risen faster than in any other demographic group, whilst amongst men, numbers have dropped. According to experts, in the last decade the state has offloaded the public debt onto individuals, and it is women who disproportionally now carry this burden, with a third of young women permanently in debt.
More than half the UK’s indebted population are women, and those under the age of 40 are particularly likely to be in debt. Continuing pay inequality, unfair burdens of care, financial abuse and gender discrimination combine to make younger women particularly vulnerable. In short, this rise of debt amongst young women is a pressing feminist issue.
Despite legislative change and four waves of feminism, traditional gender care roles stubbornly persist. The failure of the government’s shared parental leave initiative in 2015 is indicative enough of this – a mere two per cent of families took advantage of the scheme.
The financial implications of women being the main carer for their children is clear in the numbers of single mothers seeking debt advice. According to Step Change, the UKs leading debt charity, “Many people that encounter debt are single parents, and of course the majority we see and help are women.” The charity reported in 2018 that 21.5 per cent of their new clients were single parents, though only 6 per cent of UK households are single-parented.
In fact, 90 per cent of single parents in the UK are women, and the effects of this upon their finances and career patterns is dramatic. Joanne, 32, has three kids and balances childcare whilst working 30 hours a week in a pub – the father doesn’t contribute anything financially and she lives month by month, with her debts mounting. “My eldest often has to take over childcare duties, without her I don’t know how I could even work.”
New research has shown over a third of single mothers are in debt due to their former partners refusing to pay maintenance costs for their child. Charities such as The Young Women’s Trust (YWT) are a rare lifeline helping young mothers out of this vicious cycle of debt.
Due to the burden of motherhood, women are far more likely to have gaps in their employment and to work part-time hours to fit around childcare. Dr Mary Ann Stephenson, the director of the Women’s Budget Group (WBG), says austerity measures have disproportionally hit women with children as so many benefits relating to childcare have been cut.
To make matters worse, there is a persistent and large pay gap between full-time and part-time workers, of which women make up the majority. “The issue there is why women are working fewer hours, which is due to their caring responsibilities and the additional unpaid work they are doing,” Stephenson says.
According to the Fawcett Society, each year a mother is absent from work, her future wages fall by four per cent. Around the time of last year’s election, YWT campaigned for measures to ease the debt burden upon women by providing easier and cheaper childcare options. Their survey conducted on women below the age of 30 found women with caring responsibilities were in the top tier of those facing severe financial difficulties, with 11 per cent of young mothers taking part in the survey having used a food bank that year.
Of course, it isn’t just young women who are chained to caring roles and finding themselves in debt as a result. The recent rise of insolvencies amongst women over the age of 65 is equally the consequence of archaic care structures in society. “We’ve had a massive crisis in social care; when public services are withdrawn, women tend to make up the gap,” Stephenson says.
In the last decade, women have suffered 86 per cent of the burden to changes in taxes and the benefit system. “By 2021-22, 59 per cent of the cumulative social security cuts will have come from women’s purses,” the WBG and Runnymede concluded in their recent report. A reinvestment in these social services is imperative in reversing the increase in young women’s debts. “We need a decent social security system, we need to redistribute care between women and men, so men can do more and women can do less,” Stephenson says.
One area of austerity significantly impacted is funding to domestic abuse refuges, leaving many vulnerable women with nowhere to turn. Over half of the victims of physical and sexual abuse also suffer financial abuse and coercion. A report by the Co-Operative and Refuge found one in 10 women said a partner had written debts in their name.
Financial coercion within abusive relationships drains women of their resources and often makes escape impossible. Women, particularly young women, are far more likely to suffer economic abuse compared to men. Charities and campaigners are pushing to introduce a Violence against Women and Girls bill that will ensure funding in this area to protect women from economic abuse.
But the real problem is the difficulty in detecting this kind of abuse. “What we do know is women’s names are being put on loan agreements by their partners, and then they are made liable for that debt,” Stephenson says. There is a failure to understand what financial abuse means, yet even after leaving an abusive relationship, the economic consequences can be just as haunting for women as physical abuse.
The pièce de résistance of women’s economic oppression is the continuing unequal earnings gap. The money taboo means many women are not even aware they’re earning below their male peers, and only two fifths of women who ask for a pay rise end up getting one. Working age women on average earn 43 per cent less than working age men, and as of last year, the gender pay gap among full-time employees stands at 8.9 per cent, no significant change from 2018. The impact of this is clear – research by the British Household Panel Survey revealed female graduates on average take 16 years to pay off their student debt, compared to the average male graduate, who take 11 years to repay.
As Virginia Woof wrote in 1928, having money and a room of one’s own is so important, and has been a central tenet of feminist demands since the first wave. The increasing gender gap in debt and insolvency proves there is certainly still a way to go.