Page 15 - Issue12-English

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|P A G E 14 I Is ss su ue e 1 12 2- October 2019

Wage On The Decision to

Gender Gap LowerThe Interest Rate

in The US.

rd
Salma Bayoumi, 2nd Level, Economics *Mohamed Fawzi, 3 Level, Economics

One of the massive problems that face the middle class in the Interest rate is defined as the cost of borrowing expressed as percentage of the
United States, which forms nearly half of the American society, is principal amount. From a consumer’s perspective, an individual may have excess of

the wage gender gap.For example, if there is a man and a woman a certain amount and would be willing to lend it to take a rate of return. From a
working at the same establishment for the same hours and doing the producer’s perspective, a producer might want capital to start a business, expansion,
or introduce a new product. This capital would be financed by borrowing and the
same job, so if the man gets one dollar the woman will get only 80
cents. In average she gets 80% of a man wage; however the gap is producer would be charged an interest to serve as the cost of borrowing. Therefore,
investors or producers are looking for low interest rates. This is exactly what
wider for women of color. happened in Egypt in July where the interest rate plummeted to 14.25%. According
Men are afraid of being fired and replaced with women because to economics, this is something good where the cost of borrowing to investors will
there is no doubt that the owners of companies want to reduce be less.
expenses, although 72 million of the American women and their Low interest rates definitely, would mean a lower cost of borrowing for investors
families are suffering as they can’t afford their children’s expenses, certainly. However, it’s worth noting that since the interest rate in Egypt was high so
or even their own expenses, because there are many women who foreign investors and even local find that investment in government bonds and bills
depend on themselves and they are completely independent. to be more attractive thaninvestments in production or manufacturing. According
one of the members of the council of the central bank of Egypt during a
Now we have to ask ourselves a question, is this conversation with Al Arabiya news agency, the current total amount of investments
discrimination legal?Definitely not.In 1963, the American from hot money sum up to a total amount of 19 billion dollars out of the total
Congress passed The Equal Pay Act and it was the first step to investments in Egypt’s GDP 2019. By lowering the interest rate, foreigners will no
solve this problem as it provides paying equal wages for both men longer find the Egyptian market attractive for investment and thus at the closest

and women who are in the same position at the same company. chance, foreigners might stop investing in Egypt and invest in other emerging
This act was not only solving women’s problem but also it was the markets. Furthermore, Egyptian consumers will no longer find the certificates of
key of financial security of many American families. deposits to be satisfactory enough and they might rather choose to invest their
money in purchasing gold, real estate, or even might cause the dollarization to come
Unfortunately, this act couldn’t solve the problem as it lacked back. It was always a problem in Egypt, that citizens find the most suitable
tools that women could use if they are facing this problem, and investment is purchasing US dollars and this might lead to the re-creation of black
also lacked tools the executive authority could use to markets again. This will depreciate the value of the Egyptian pound. I believe that
intervene.This crisis continued until the American Congress the governor of the central bank Mr. Tarek Amer took a long time before taking the
passed the Paycheck Fairness Act in March 2019. This act was decision to lower the interest rate because of the above reasons.
made to strengthen the Equal Pay Act as it provides women with Comparison between some interest rates of Egypt compared to world
tools that they can use to take their rights. Egypt Turkey Argentina
14.25% 19.75% 58%
Surprisingly while voting on this bill in the Senate; only 7 Source: Bloomberg
Republicans were in favor of this bill but 187 of them weren’t,
however all of the Democratic senators voted ay and supported the I’ve chosen Turkey and Argentina since they are emerging markets just like Egypt.
bill until it became a law.How could a senator representing the According to Bloomberg, Turkey’s interest rate is 19.75% and Argentina’s 58%.
American people who believe in equality between men and Argentina’s government might be intending to raise it more which makes Argentina
women be against a law that supports this equality!However currently one of the most attractive markets in the world. I’ve even witnessed some
investment banks in Egypt that are planning to purchase government bonds and treasury
people are happy after this law passed, there is no evidence of the bills in Turkey and Argentina rather than investing in Egypt. To sum up, I don’t think
resolution of this problem,all they have is such promises. that we should decrease the interest rate further in Egypt.

|P A G E 14 I Is ss su ue e 1 12 2- October 2019 ELITE