Latin America: Global Gender Wealth Equity Index

Family support

Although women in Latin America are often more highly educated than men¹, there is still a persistent stereotype that men are responsible for working and women are the primary caregivers in the home. This is reinforced by the different parental leaves granted by local social security systems (between three and four months for women, and between five and 15 days for men), which favor women assuming the caregiving role.

In addition, although local laws usually require employers to provide childcare or reimburse childcare expenses, the pay gap between genders, social pressure and the fact that many women work in the informal labor market which prevents access to childcare benefits, lead women to exit the workforce to fulfil childcare responsibilities (at least until children enter school). There are exceptions among the affluent, where the employ of nannies can help women quickly reintegrate into the labor force.

Caregiving extends beyond children; in Latin America, parents are usually in the care of their adult children, particularly if the family cannot afford the cost of nursing homes or an external caregiver at home. In these situations, women are also seen as the main caregiver.

All these factors influence women to work intermittently, part-time, or in the informal market, postponing their professional and salary growth and, consequently, reducing their accumulated wealth at retirement.

Career

Despite improvements shown in recent years – in part due to government regulations that attempt to enshrine equal labor and social rights between genders² – the gender stereotypes, access to childcare and the different parental leave structures, as noted above, have caused severe setbacks in women's careers in the region, leading to significant pay and career gaps.

These factors have contributed to two consequences in the labor market: a minor presence of women at managerial levels (with the exception of Colombia, where gender parity is closer); and disproportionately more women than men in informal positions, working part-time or performing home duties.

For frontline operational roles, our analysis found that Argentina has the largest gender wealth inequity in the region. For these roles, all wealth is derived from social security benefits, and given salary for both genders falls below the social security salary ceiling, there is no mechanism to limit the wealth accumulated by men on higher salaries relative to women.

For professional and senior expert and leadership roles (where women usually experience slower career progression than men), the largest gender wealth inequity is seen in Brazil. Alarmingly, for two countries in the region – Mexico and Brazil – women in senior expert and leadership roles are only expected to accumulate around half the wealth that men have at retirement. This is primarily driven by the significant gender pay gaps. Our study indicates that Colombia is the only country in Latin America amongst those included in our analysis where the percentage distribution of women in senior expert and leadership roles reaches double digits.

Finally, the post-pandemic inflationary environment impacts mostly informal economic sectors, where women have the majority presence.

Life events

Marriage contracts or prenuptial agreements are not common in the region. Nevertheless, except for the more affluent, women do not necessarily receive an equitable division of assets on divorce.

Similar to other regions, our modeling illustrates that divorce and widowhood has little incremental impact on women’s accumulated wealth relative to men, as both men and women are faced with higher expenses impacting their savings. However, in some cases, these events require women to fully resume their professional careers (if not otherwise in employment), which is typically more difficult in comparison with men.

Financial

Financial literacy is a significant determinant of wealth at retirement, as this influences investment decisions and resultant capital accumulation. In Latin America, there is still a social perception that financial decisions generally rest with men and financial literacy for working women tends to be lower³.

In addition, women’s retirement ages are typically lower than men, providing another impediment to wealth accumulation. Consequently, women accumulate less wealth through state, mandatory and employer-sponsored retirement benefits than men.

In particular, with regard to company-sponsored retirement plans (where a reasonably developed market exists in Brazil, and prevalence is rising in Argentina and Mexico), benefits are mostly oriented to managerial levels (this also applies for the few supplemental retirement plans that exist in Chile and Colombia), where women still have a minor presence.

A further point of difference between the worst (Argentina) and best (Chile) performing countries in the region is women’s relative financial literacy. Women in Argentina have relatively low financial literacy among all countries included in the analysis, whereas financial literacy for women in Chile is much higher. This results in a better expected return on invested wealth for women in Chile relative to men than Argentina, further reducing the wealth gap.