24th Feb 2024


EU countries' tax-and-benefit systems penalise women

  • 93-percent of women looked after their under-age children on a daily basis - compared to 69-percent of men (Photo: Unsplash)
Listen to article

How tax-and-benefit systems are structured has a major impact on women's participation in the labour market.

The most immediate reasons are two-fold: there is insufficient recognition of childcare costs, and joint-taxation can negatively affect the second earner, who is in78 percent of cases female across the EU.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The first is easily understandable, since the burden of childcare is more often borne by women: 93 percent of women aged 25-49 looked after their under-age children on a daily basis, compared to 69 percent of men.

That is unpaid time investment, and one of the factors that led 30 percent of employed women in 2019 to only have a part-time job, compared with just eight percent of men.

In addition, the more children, the greater the gap between the employment rate of men and women. For women, having three children instead of one means a reduction in the employment rate of 14 percent, for men, just two percent.

But the second reason requires a little more explanation. Filing a joint tax-return has its benefits, but also its drawbacks, especially for women.

Why? Because their income, lower than their partner's in almost eight-out-of-ten households, would be subject to a higher marginal rate, in line with their partner's higher income. If they worked more or for better pay, second earners would lose about a third of that new income in taxes.

The 'inactivity trap'

When you add to this that they may also lose benefits by having higher wages or working longer hours and thus increase their tax rate, the option becomes less attractive and may even lead to the so-called 'inactivity trap' (when certain benefits make it more attractive to remain unemployed than in work).

In Lithuania, Denmark, Slovenia, Belgium, Germany, Luxembourg and Romania, the design of their national tax systems leads to the inactivity trap among second payers above 40 percent.

Parodixically, key EU policies are boosting inclusion or increased participation of women in the labour market, yet "gender issues in taxation are rarely considered", according to a 2017 study by the European Parliament's own policy department.

"National tax provisions creating employment barriers for secondary earners may violate the directive on equal treatment of men and women in matters of employment and occupation", the study found.

Although the EU's competences are limited in the area of national taxation, the parliament (which here only has a consultative role), issued a non-legislative resolution in 2019 calling on the commission to act within those limits and issue guidelines and recommendations for member states to eliminate tax-related gender biases.

The aim? To set out a strategy defining targets, indicators and institutional mechanisms to ensure gender equity in the tax and benefit systems of all member states.

The study also included a recommendation to strengthen policies that promote an equal intra-household distribution of paid and unpaid work.

According to an OECD report, most of this bias is implicit, not explicit, and can be reduced by introducing tax credits for working mothers, increasing the progressivity of the tax system, reducing disincentives for lower-wage earners to work, or expanding the tax base to include capital income.

That is a similar call to the line proposed last month by the EU Commission's high level group to future-proof the EU welfare state.

The parliament's study adds: "(Payable) tax credits for work-related childcare costs reduce the costs of taking up paid employment".

Underlying all these proposals is the area where most work is needed, labour taxation (analysing tax credits, allowances, social security contributions, inequalities, etc).

In line with the so-called EU pillars, equality should be enough of a driver for change, but there are also economic implications.

According to a European Institute for Gender Equality (EIGE) study, greater gender equality would create another 10.5 million jobs by 2050 within the EU, and would also lead to an 3.5 percent increase in GDP per capita, EUobserver reported.

"If national tax systems continue to feed and stimulate tax traps for secondary earners, substantial gender equality will never be realised", concluded the research 'Gender Equality and Taxation Policies in the EU'.

Women and frontline workers more often targeted at work

Women and frontline workers are most exposed to the risks of bullying, harassment, violence, verbal abuse or threat, resulting in burnout, exhaustion, anxiety and depression according to a study by Eurofound, an EU agency.

Leaving women behind in labour leads to economic loss

"It's important, especially in times of crisis, that we look at the benefits of gender equality," Carlien Scheele, the director of the European Institute for Gender Equality (EIGE) said, adding that losing women in the labour market is a "shame".


EU plan to let 17-year olds drive trucks is crazy

It's an astonishing proposition rooted in political interest rather than facts, with potentially dire consequences for all road users — especially for people who walk and cycle, warns the European Cycling Federation.

EU deal on new gig-workers rules unlikely before June elections

Another provisional agreement on improving working conditions for platform workers fall apart on Friday, as four member states decided not to support it — making the chances of a directive before the June European elections unlikely.

Latest News

  1. EU rewards Tusk's Poland on rule of law with €137bn
  2. UK-EU relations defrosting ahead of near-certain Labour win
  3. EU paid Russia €420-per-capita for fossil fuels since war began
  4. After two years of war, time to hit Putin's LNG exports
  5. Creating the conditions for just peace in Ukraine
  6. Energy and minerals disputes overshadow new EU-ACP pact
  7. Germany speeds up Georgia and Morocco asylum returns
  8. How Amazon lobbyists could be banned from EU Parliament

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us