Womenomics

Womenomics: Working Women A Dead Loss?

Written by Hilary Barnes

You may have heard about men complaining that their wives are a terrible burden on the household finances. Well, here is a new and absolutely serious take on the same problem from Professor Nina Smith, of Aarhus University in Denmark*.

When the labour market participation rate for women began to rise fast from the 1960s onwards in the rich European countries, it lifted a country’s GDP, which may not have been a main motive for politicians for encouraging the trend, but it helped these countries to book a nice-looking place in the per capita GDP statistics.

Until the 1960s most housewives performed unpaid labour looking after the children. A decade or so later “housewife” no longer figures in Denmark’s occupational statistics. They were now almost all doing paid labour, a great many of them doing the same job – looking after children, but now monetised.

The usual assumption was that this was a profitable proposition for society, but Professor Smith has thrown serious doubt on this.

Her work shows that in Denmark the life-time contribution in taxes paid by the average women is short of her costs to society by about €215,000. A man, on the other hand, makes a positive contribution of about €80,000.

These figures are for the Danish case only, of course, but the reasons for this outcome are such that there is be good reason to think that the pattern is probably repeated in other European welfare states.

Don’t be surprised if the next thing one hears is male politicians suggesting that Europe’s chronic budget deficit problems are all the fault of sending women to work!

Women, says Nina Smith, still need a bead winner, but it is no longer the man who fulfils that role: it is the welfare state – and how!

Seriously, though, Professor Smith has put her finger on something that faces society with a ticklish dilemma, one which might well start a furious debate.

There are many reason why women make a smaller contribution the common wealth than men. Few of them will be easy to change.

Counted in hours over a life time, women work less than men, partly because they still take the main burden of caring for children when they are small.

They are also paid less.

Many of them work part-time (particularly in the public sector), and many take a few years when they give priority to the family and do not work at all or or work very little.

At the other end of the age spectrum, women live longer and cost more in pensions and health care than the men they maried, who are likely to be older than they were, and they look after the men in their final years, but the welfare states is called in to take care of the widows when they are no longer able to look after themselves.

Generous maternity benefits, which in Scandinavia can mean that if a woman has, say, three children in fairly quick succession she can receive compensation for a period of perhaps four years without working (which infuriates employers, male or female, because they must by law keep the job open for the lady to come back to).

Professor Smith has calculated that it would help if Denmark were to introduce the system used in Iceland by which the mother and the father each get “maternity” compensation for three months. If the man does not take up the option, the compensation is not paid either to him or the mother.

In Denmark’s case, she says this could improve the sustainability of public finances by 1.7% points of GDP.

Maternity and “papa” leave is among one of many factors, affecting both male and female, which have sent the number of people of working age being supported by the welfare state from 5% of the population in 1960 to 19% today in the case of Denmark. The comparable figures for many other European countries show a similar tendency.

Another factor is that women now spend as much time completing their education as men, and do better than the men: 60% of those graduating from Danish universities are women.

This causes Nina Smith to remark that there is a huge wasted investment in educating women and then letting them stay at home to look after the children.

Looked at this in light, she says, they should be educated at schools for housekeeping and not at expensive universities (or, which she does not add, the less-well-educated men should look after the kids so the women can make full use of their qualifications).

One of the reason women are less well paid than men (there is a gap of about 20%) is that so many of the women work in the public sector (health, education, social care and administration) where part-time working is not frowned on by the employers, but pay is lower than in the private sector. On present trends the as much as 80% of the public sector labour force will be female within a decade or two.

A question not raised by Professor Smith, a working mother herself with three children (now adults), is that the more education women have the fewer children they produce, a world-wide phenomenom.

It shows clearly in Europe, where the birthrate in many countries is below the replacement rate or only reaches the replacement rate with the help of substantial immigration from developing countries.

One can imagine that on the anti-immigation populist right voices may be raised in favour of discouraging education for women.

Professor Smith’s workmay well hot up the war between the sexe to new heights.

*”Kvindernes økonomiske bidrag til velfærdsstaten“, Danish only, in Jubilee Essays publsihed by the Danish Economic Council – http://www.dors.dk