are we doing enough to increase women's workforce participation rates?

In recent years, more women than men have been entering the Australian workforce. This is something that we should celebrate – enabling women who want to work, to work. According to the Women’s Workforce Participation Strategy website of the Australian Government “Increasing women’s workforce participation leads to better living standards for individuals and families, improves the bottom line of businesses and is a significant driver of national economic growth.”

Supporting the participation of women in the workforce has the potential to add up to $25 billion to the Australian economy. As Michaelia Cash, Minister for Women and Employment, discusses in her ministerial statement published on the same website: “Supporting women to participate in the workforce is an economic and social priority for the Turnbull Government … Boosting women’s workforce participation is essential to… securing Australia’s future prosperity. Harnessing the power of our most important asset — the human capital of all 24 million Australians — will allow our children and grandchildren to capitalise on the opportunities of the 21st century economy.”

So, how are we fairing with respect to increasing the ability of women to participate in the labour force? Are we making this a reality for women with the correct policies in place to support them or do we still have some way to go?

In a recent talk organised by the Economic Society of Australia, Professor Guyonne Kalb from the University of Melbourne’s Institute of Applied Economics and Social Research and Director of its Labour Economics and Social Policy Program, posed and addressed these very questions.

As a renowned Labour Economist she is interested in, and an expert on, labour supply decisions – the decisions about the hours that people are able and willing to work at a given wage – and their impact on broader life outcomes of individuals and families.

In attempting to find answers, she touched on interesting Australian (and global) gender issues that define the level to which women’s workforce participation can indeed be increased and therefore not only influence female labour supply but women’s superannuation savings. Currently in Australia, women retire on average with 47% less super than men.

Employment, according to Kalb, provides opportunities, financial independence, purpose, and improved well-being. However, it can also create stress and take over what is often an already busy life for many women. Work-life balance is known to contribute significantly to our overall life satisfaction which in return has a positive impact on our work participation and performance. The opposite is true when we don’t achieve work-life balance. This affects us all but is particularly relevant to families with children as this is probably the cohort where imbalances are particularly difficult to ignore according to the academic.

“This is not or should not be a female issue, but women are most likely to respond to work-life imbalances by reducing paid work or completely exiting paid work, and therefore tend to suffer financial consequences of this later in life,” Kalb points out. Plenty of research results published – amongst other institutions by the Diversity Council of Australia – show this indeed to be the case.

In Australia it is usually mothers who are the primary caregivers of children. In a recent study conducted by Professor Janeen Baxter, Director of the Institute for Social Science Research at the University of Queensland, the traditional belief that it is ‘best’ for mothers to care for young children was remarkably widespread and the country’s ‘male breadwinner culture’ much more dominant than in many other comparable nations.

"You can get the impression that in 2018 we are very egalitarian, especially when you look at things like the number of girls going into higher education and changes to women in sport," Baxter told journalist Matt Wade in an interview about the so called motherhood penalty published in the Sydney Morning Herald. According to the Diversity Council Australia this motherhood penalty hits Australian mothers particularly hard – costing them a loss of approximately 17% in lifetime earnings. Add to this the current Australian gender pay gap of 19%, and a bleak picture emerges of the enormous negative impact having and raising children can have on women’s ability to accumulate superannuation.

Many Australian mothers who are the primary carers, are on a quest to find a job that enables them to balance their roles of caring for their children – not to mention other family members who need care – with their job obligations. Factors that determine when and how they return to work. If they can return that is.

Kalb identified a range of government interventions that intentionally or unintentionally influence female job seekers – the female labour supply so to speak. These include:

  • The income tax system
  • The social security system
  • Family payments
  • Childcare subsidies
  • Childcare provision/availability

Let’s take childcare availability for example: vacant spots can be very limited in areas with high job density like city centres. In general, more spaces are usually available in suburbia. However, this means longer travel time for women working in the city centre. Consequently, to meet pick up times dictated by childcare centres, kindergartens or schools, mothers with smaller children tend to look for part time jobs or lower paying, less secure jobs close to home.

Many accept jobs below their level of qualification and lower paying than the previous jobs they have held. As Kalb explains: “Once out of the labour force, it is in generally difficult to re-enter or re-entering occurs at a lower level.” Besides, family commitments might often not allow female carers to take on better paid overtime hours or extra shifts which adds to increasing the pay gap between men and women.

“This can change the course of a person’s life,” says Kalb and draws attention to the fact that lower participation in the workforce also converts into a lower level of super which, particularly, but not only, effects divorced or widowed women. They are more likely to retire in poverty and depend on the age pension as their main or only source of income, the academic explained and added that, as women tend to live longer than men this further compounds the effect of lower levels of retirement savings.

Kalb highlights that all of this comes at a high personal cost, but also at a high societal cost and points out: “That should provide a lot of motivation to provide better incentives for families to participate in the labour market.”

Which then leads to the question, are we doing enough in Australia? Kalb, a Dutch born Labour Economist, undertook an international comparison of OECD countries to shed more light on the current Australian situation: when it comes to maternal employment rates for women who have at least one child between 0 and 14 years, Sweden scores the best rate with over 80% of women employed. Australia ranks below the average of the OECD countries. “Not at the bottom”, Guyonne Kalb was happy to say. “But not at all at the top. We have changed a lot, but there is a lot of room to move further.”

Australia does however rank at the very bottom when it comes to expenditure on paid parental leave. We do better when it comes to public spending on childcare for pre-school aged children, defined as children in the 4-5-year-old bracket.

The Melbourne University professor doubts however if the expenditure on pre-school childcare is serving the purpose of enabling females to re-join the labour-force as important as this expenditure might be. “Spending the money then may be too late,” she suggests and asks: what happens to a mother in relation to the job market up to the age of 4? Where is the support that is needed in the early years when a mother has a baby?”

“If you are away for four years you are not very likely to be working for the same employer you worked for when you left the labour market. Returning to work when your child is one, has the positive effect that you keep your job under the same conditions as before you left to have the baby.”

In her opinion, a relatively short paid parental leave period is an effective tool to increase time spent at home in the first few months after a child is born, but also a beneficial way to maintain the relationship with the employer over the longer term which means that the skills and the ‘human capital’ are retained.

Women in Super advocates for the introduction of superannuation on paid (and unpaid) parental leave as part of the Make Super Fair campaign. As Sandra Buckley, Executive Officer, Women in Super, says, continuing to receive superannuation payments while on parental leave is important to counteract the growing gender super gap and give women a chance to grow their super while they take time out of the workforce to care for children. Parental leave is the only form of leave that is not eligible for compulsory Superannuation Guarantee payments. Many of our largest companies, including profit to member superannuation funds, pay the Superannuation Guarantee on parental leave. We encourage all companies to do so and call on the government to introduce the Superannuation Guarantee payments on the government Paid Parental Leave Scheme. Not only would this be the right thing to do, it would also send an important message that women’s workforce participation is valued.

Kalb points out that paid parental leave is a great starting point but it only benefits mothers for the first year after the birth of a child. As we all know, caring is not a one-year responsibility and other strategies need to be developed to build on this. For example, the provision of high-quality, affordable and accessible childcare which would enable both parents to return to work.

Making flexible workplaces the norm would also help as would including more part-time opportunities at higher levels, access to family leave or extra annual leave to cover school holidays for both women and men to balance work and caring responsibilities. These would help to decrease the financial vulnerability of women and as many studies suggest, would increase the wellbeing of women and men. Such policies, if put in place, coupled with a societal and cultural change to how we view caring roles, would lower the dependence on income support thus reducing the cost to society.

As Michaelia Cash states “The ultimate objective of this Strategy is to enable women, men and families to have the freedom to make choices that best suit their individual circumstances.”

A noble objective and one which we should be prioritising if we truly wish to enable women to enter and remain in the labour force. We know that single women over 50 are the fastest growing cohort of homelessness and one third of women retire with no superannuation. We need to change these statistics and being paid adequate superannuation before, while and after caring for children or other family members must be a priority. If Australia continues to have a ‘male breadwinning’ focused culture, women’s unpaid contributions to Australia’s society are ignored and our superannuation system and superannuation laws continue to be “systemically biased against women” as economist Warwick Smith says, it is not a choice but a must to #makesuperfair so all Australians – men and women – can retire with dignity and not face homelessness or poverty in retirement.

If you would like to read more about Professor Guyonne Kalb’s research, please click here.

#makesuperfair

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