France is almost at a standstill over modest pension reforms. Germany is grappling with widespread labour shortages. All over Europe’s biggest economies, an ageing population is shrinking the workforce.
The issues are legion but across the continent, one policy could help businesses and governments alike ease the problems of a tight labour market: boosting women’s employment.
Within the EU, only 68 per cent of women aged between 20 and 64 are in work – 10 percentage points less than the proportion for men, according to OECD data. The UK figures are similar.
The economic benefits of closing the gap are clear. The European Commission estimates it costs the EU €370bn a year. The OECD thinks Germany would gain 9 per cent of gross domestic product if as many women were employed as men, while Italy’s economy could expand by as much as 14 per cent.
Yet childcare remains expensive and in short supply, while tax systems in certain member states make it advantageous for women to stay home. Despite some progress, gender biases remain common — particularly in parts of eastern and southern Europe.
With Europe’s working age population already shrinking, unemployment at record lows and strong wage growth sparking concern that high inflation will linger, the case for governments to act is becoming ever more urgent.
“European countries have much to gain from untapping the potential of women’s equitable participation in the labour market,” said Chidi King, chief of the International Labour Organization’s gender, equality, diversity and inclusion branch. “It would provide a much-needed boost for economies facing multiple crises, including population ageing, labour shortages, cost-of-living and geopolitical crises.”
Willem Adema, senior economist in the OECD Social Policy Division, argues that countries must not only raise retirement ages but also bring unrepresented groups into the labour force. “Women are one of those groups,” he said.
Boosting the participation of women has the added benefit of boosting productivity. “Younger women are much more likely, on average to have achieved a high level of educational attainment compared to young men,” said Adema.
Europe is already the world’s oldest continent and UN data shows that by 2040, there will be nearly 50mn fewer people of working age. At the same time there will be 45mn more people aged over 65. That means fewer workers will need to generate more tax revenues to pay for rising health and pension costs.
There has been an improvement in recent years. In Germany, for instance, it is no longer frowned upon for women with young children to go to work. But, even there and in the UK — where women’s employment rates have also increased markedly — there is still a 7 percentage point gap.
Katharina Wrohlich, professor of public finance, gender and family economics at the University of Potsdam, noted that almost half of German women were employed part-time. Wrohlich said this was partly due to Germany’s taxation system, in which couples are taxed jointly, and a shortage of childcare facilities with adequate opening hours.
Most agree that a lack of adequate childcare provision is an important reason for the gap. “Better access to high quality, and cheaper, daycare is an important factor in boosting female participation rates,” said Claudia Olivetti, professor of economics at Dartmouth College.
Half of families in the UK with both parents at work said they struggled to find term-time childcare that fitted in with their working hours, according to a government survey. In the EU, 18 per cent of women of working age who are not looking for jobs say the reason is that they are looking after children. The proportion for men was only 2 per cent.
However, others stress that closing the gap will involve more than childcare provision alone.
“Policies need to prioritise breaking down deeply ingrained structural barriers and discrimination in the world of work,” said King. “Governments must address the unequal sharing of care responsibilities, unequal pay for work of equal value, gender-based violence and harassment and outdated social and cultural norms.”
