Wednesday

18th Jan 2017

Opinion

Women in the EU: an untapped resource

  • Better childcare could help get numbers up (Photo: European Commission)

We are now 7 billion people living on this planet. But populations are not growing everywhere. Most of the affluent countries are expected to face severe demographic challenges due to ageing and shrinking workforces.

In Europe, the survival of social security - such as pensions, unemployment insurance, healthcare and education - will be one of this century's greatest tests.

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Raising the general retirement age and increasing immigration rates are sound policies, but will not be sufficient. Europe's demographic challenges can only be met successfully by radical reforms for gender equality that reduces the gap between men and women on the labour market.

Europe's demographic challenge could be summarized as "peak workforce."

Not only is Europe's workforce at its highest-ever level in terms of absolute numbers - according to projections by the United Nations, the so-called old-age dependency ratio is now also at its peak.

It means that Europe is not expected to see a larger number of persons in working-age per each senior than today's ratio. The question that we must ask is thus: how should Europe afford the future?

In less than 50 years, the share of persons in Europe aged 15-64 will fall by nearly 20 percent. Today in Europe there are four persons in working-age supporting every person aged 65 or older.

In 2025, the number will have fallen to three persons in working-age, and in 2050 it will be down to two.

This means that the number of potential workers supporting each senior citizen will be halved in less than 40 years. That people will live longer and healthier lives is marvellous, but this does also pose a huge demographic challenge for Europe. We should be much more worried about "peak workforce."

Many have argued that the challenges posed by ageing should be met by higher general retirement age and immigration rates.

This is necessary, but likely to be nowhere near sufficient. Peak workforce will demand of Europe more radical reforms that strengthen gender equality. Most importantly, we need to increase the labour force participation rate by helping women to enter the labour market.

The labour force participation amongst women is shamefully low today. The average in the EU is 76 percent for men and only 62 percent for women.

Although northern Europe has taken more steps towards gender equality than southern Europe, in general European women are almost 20 percent less likely to be active on the labour market than men.

Women should enter the labour market foremost for their own sake. The goal of gender equality is the liberty of the individual.

But it would be unwise to neglect the fact that women might just be one of the greatest, largely untapped, resources that Europe has. This fact was taken into account by the European Council when it concluded in June 2010 that the target employment rate for women and men should be equal at 75 percent.

Abolishing economic disincentives such as joint taxation would help women to enter the labour market.

So would increasing the availability and quality of childcare and care for the elderly.

The general retirement age should be gender neutral.

Moreover, the gender gap would shrink further if parents were encouraged to a more equal use of the paid parental leave, for example by adopting the Nordic model and earmark periods of leave to each parent so that it cannot be transferred to the other.

In Europe, there are currently 500 million people in working-age supporting 120 million senior citizens. But in less than four decades, there will be 410 million supporting close to 200 million seniors.

Meeting the demands following peak workforce is primarily a national responsibility. But this should also be a concern for the EU, as its member states' capabilities to fund public expenditures will have profound social and economic consequences for all European countries.

As a promoter of sound fiscal policy, the EU should make full use of its horizontal frameworks - such as the Europe 2020 Strategy - to pressure member states to implement some of the reforms necessary to face Europe’s the challenges of peak workforce.

Removing labour market barriers for women could just prove to be the most efficient ways for us to save social security. Europe cannot afford to have the world’s best educated housewives.

The writer is the Swedish minister for European Union affairs

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