We all know that Europe faces a looming demographic crisis of existential proportions—not a single country on the European continent claims a fertility rate at or above replacement rate (2.1). As a result, aging populations and shrinking workforces will contribute to unsustainable social spending and stunted economic growth. Now more than ever, these countries need a solution to overcome the problems that accompany industrial modernization. Beyond implementing short-term economic fixes and relaxing immigration quotas, enacting policies that reduce the economic gender gap is a common-sense solution.
Comprehensive solutions to Europe’s demographic crisis are few and far between. Purely economic solutions involve increasing worker productivity, instating longer hours, or encouraging lengthier careers; however, these measures defy practical and cultural constraints. Laborers in Europe already work in environments with the best technology and education, while longer hours and late retirement align poorly with traditional European cultural values.
Another solution involves increased immigration (predominantly from Africa and the Middle East) to address shrinking workforces. In Germany, Fachkraeftemangel—the shortage of skilled labor—is a sizeable problem, as the government struggles to handle an aging population. Increased immigration is proposed to fill empty jobs, thereby providing an economic boost. However, countries like Germany, Poland, and Italy (which currently are experiencing the fastest population losses) tend to be the least welcoming toward foreigners. Switzerland’s recent referendum to limit immigration using quotas demonstrates this historical trend.
One potential solution attempts to boost the fertility rate itself and address labor shortages at the same time. Successful, talented women often must choose between raising a child and career advancement. The effect on the state is twofold: some women contribute to the overall fertility decline by delaying or giving up childrearing, whereas others retreat from the workplace for good, thereby reducing economic growth. Certain policies that focus on reducing the economic gender gap could not only increase female participation in the workforce, but also provide a boost to fertility rates. A state that learns to utilize the talents, ideas, and leadership of all its educated women will enjoy greater economic growth and fertility rates closer to replacement. This prosperity occurs if, and only if, female-friendly policies are enacted that remove the burden of choosing between working and childrearing.
According to the 2013 Global Gender Gap Report, a study conducted by the World Economic Forum (WEF), Nordic countries serve as an encouraging model for other countries in this regard. On average, these Nordic countries enjoy higher fertility rates and higher female participation in the workforce. European countries like Germany—in need of both of these qualities—could learn from their northern neighbors.
The largest Nordic country, Sweden, is a case in point. Beyond Swedish's gender-neutral pronouns, Sweden seeks gender equality via its Discrimination Ombudsman, a government agency which enforces equal rights and anti-discrimination laws. A 2012 government report found that Swedish pay differentials between men and women had been reduced to 6 percent, one of the lowest in the world.
Sweden’s auspicious demographic position (thus far) is due to policies including parental leave, childcare and other forms of parental insurance that encourage dual-earner families. Parental leave in Sweden lasts 480 days from when a child is born or adopted and covers 80 percent of salaries, capped at $137 a day. The parental leave period lasts 16 months, intended to be split evenly between mothers and fathers. Childcare is heavily subsidized before Swedish primary school; preschool is free for children between 3 and 6 years old for up to 15 hours a week. Parents’ fees cover about 8 percent of preschool costs, while public funding covers the rest. Pregnancy benefits allow expectant mothers to take time off work in occupations considered dangerous during pregnancy, while collective-bargaining agreements between employers and employees provide expanded benefits.
Public spending on these measures is not cheap, amounting to 3.2 percent of GDP in 2011, whereas the EU average was 2.3 percent. But a country like Germany is as likely a candidate as any to follow in Sweden’s footsteps; its tax revenue-to-GDP ratio hovers around 40, just behind the Nordic countries (mid-to-upper 40s). The 2013 WEF study credited European countries for their high commitment to female education at all levels; however, valuable female talent in the workplace is squandered when women must choose between career advancement and childrearing. Those countries facing labor shortages may consider appropriate female-friendly policies to alleviate their current demographic and economic pressures.
Photo: Flore de Préneuf/World Bank (cc).
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Not-So-Strange Bedfellows: Gender Equality and Economics
March 3, 2014
We all know that Europe faces a looming demographic crisis of existential proportions—not a single country on the European continent claims a fertility rate at or above replacement rate (2.1). As a result, aging populations and shrinking workforces will contribute to unsustainable social spending and stunted economic growth. Now more than ever, these countries need a solution to overcome the problems that accompany industrial modernization. Beyond implementing short-term economic fixes and relaxing immigration quotas, enacting policies that reduce the economic gender gap is a common-sense solution.
Comprehensive solutions to Europe’s demographic crisis are few and far between. Purely economic solutions involve increasing worker productivity, instating longer hours, or encouraging lengthier careers; however, these measures defy practical and cultural constraints. Laborers in Europe already work in environments with the best technology and education, while longer hours and late retirement align poorly with traditional European cultural values.
Another solution involves increased immigration (predominantly from Africa and the Middle East) to address shrinking workforces. In Germany, Fachkraeftemangel—the shortage of skilled labor—is a sizeable problem, as the government struggles to handle an aging population. Increased immigration is proposed to fill empty jobs, thereby providing an economic boost. However, countries like Germany, Poland, and Italy (which currently are experiencing the fastest population losses) tend to be the least welcoming toward foreigners. Switzerland’s recent referendum to limit immigration using quotas demonstrates this historical trend.
One potential solution attempts to boost the fertility rate itself and address labor shortages at the same time. Successful, talented women often must choose between raising a child and career advancement. The effect on the state is twofold: some women contribute to the overall fertility decline by delaying or giving up childrearing, whereas others retreat from the workplace for good, thereby reducing economic growth. Certain policies that focus on reducing the economic gender gap could not only increase female participation in the workforce, but also provide a boost to fertility rates. A state that learns to utilize the talents, ideas, and leadership of all its educated women will enjoy greater economic growth and fertility rates closer to replacement. This prosperity occurs if, and only if, female-friendly policies are enacted that remove the burden of choosing between working and childrearing.
According to the 2013 Global Gender Gap Report, a study conducted by the World Economic Forum (WEF), Nordic countries serve as an encouraging model for other countries in this regard. On average, these Nordic countries enjoy higher fertility rates and higher female participation in the workforce. European countries like Germany—in need of both of these qualities—could learn from their northern neighbors.
The largest Nordic country, Sweden, is a case in point. Beyond Swedish's gender-neutral pronouns, Sweden seeks gender equality via its Discrimination Ombudsman, a government agency which enforces equal rights and anti-discrimination laws. A 2012 government report found that Swedish pay differentials between men and women had been reduced to 6 percent, one of the lowest in the world.
Sweden’s auspicious demographic position (thus far) is due to policies including parental leave, childcare and other forms of parental insurance that encourage dual-earner families. Parental leave in Sweden lasts 480 days from when a child is born or adopted and covers 80 percent of salaries, capped at $137 a day. The parental leave period lasts 16 months, intended to be split evenly between mothers and fathers. Childcare is heavily subsidized before Swedish primary school; preschool is free for children between 3 and 6 years old for up to 15 hours a week. Parents’ fees cover about 8 percent of preschool costs, while public funding covers the rest. Pregnancy benefits allow expectant mothers to take time off work in occupations considered dangerous during pregnancy, while collective-bargaining agreements between employers and employees provide expanded benefits.
Public spending on these measures is not cheap, amounting to 3.2 percent of GDP in 2011, whereas the EU average was 2.3 percent. But a country like Germany is as likely a candidate as any to follow in Sweden’s footsteps; its tax revenue-to-GDP ratio hovers around 40, just behind the Nordic countries (mid-to-upper 40s). The 2013 WEF study credited European countries for their high commitment to female education at all levels; however, valuable female talent in the workplace is squandered when women must choose between career advancement and childrearing. Those countries facing labor shortages may consider appropriate female-friendly policies to alleviate their current demographic and economic pressures.
Photo: Flore de Préneuf/World Bank (cc).
