Women in the workplace: it’s not just about parental leave

Nearly a year ago, our first deep dive on women and work – Equality starts at home: paternity leave – identified the availability of sufficient parental leave as critical to boosting female participation in the workforce.

Our new follow-up study – Beyond Leave Policies: incentives for women in the workforce – has identified three other areas in which governments and companies can do more.

These three measures will help ensure that more women, especially ethnic minorities and those who are most financially vulnerable, are able to work (and are not penalised for doing so).

These three measures will help ensure that more women, especially ethnic minorities and those who are most financially vulnerable, are able to work

What can governments and companies do?

1) Policymakers should review the tax barriers women face in the form of average and marginal tax rates.

While policymakers have made progress in reducing average tax burdens on single parents, second earners – who tend to be women in dual-income households – still face high tax burdens in most Organisation for Economic Co-operation and Development (OECD) economies.

Marginal taxes – the taxes you pay on additional income earned – are important. In some economies, the marginal tax rate faced by single-parent households is high – nearing 100%. This acts as a disincentive to move from part-time to full-time work, effectively capping single mothers’ career prospects.

Chart 1

Source: OECD, 2019

Joint-tax filing systems need to be reassessed as evidence suggests that tax systems that offer separate filing – at an individual rather than household level – can be more favourable for women’s participation in the workforce.

2) Governments can ensure more equal access to quality childcare.

Women with children are more likely to leave the workforce or reduce hours worked due to the cost and availability of high-quality childcare.

In the US, childcare costs are a particular challenge for Black, Hispanic and low-income households. The quality of childcare in a convenient location is more likely to be a barrier for women in wealthier and white households.

Childcare costs are particularly high in the UK and Japan, but they’re expensive in most OECD countries – accounting for nearly 20% of women’s earnings.

Chart 2

Source: OECD, 2019

Research has found that more direct government assistance, such as full-time state childcare provision and subsidies earmarked for childcare, are associated with higher labour force participation.

3) Companies can support their staff to return to work after parental leave by plugging childcare gaps where government policy is insufficient.

Most companies can do more to provide paid caregivers leave and childcare subsidies to address the time and cost pressures that many women face.

Firms can also consider providing backup or on-site childcare services that are partially, or fully, subsidised by the company.

That said, while caregivers leave might provide temporary relief for many women, it can also reinforce gender stereotypes because, on average, women take on much greater caregiver responsibilities.

Childcare subsidies and provision, although costly, seem more likely to reduce the requirement for women to sacrifice their careers to care for their families.

And finally…

The latest research shows that around 82% of single women who live alone participate in the labour market, compared to only 64% of women who live with a partner, and less than 50% of women living with a partner and children.

These figures are even starker when compared with the participation rates for men. Some 90% of single men living alone participate in the workforce. This number rises to 94% for men who live with a partner and around 96% for men with a partner and children.

While a portion of these gaps in workforce participation can be explained by individual and family preferences, there is strong evidence that government and corporate policies play a significant role in perpetuating unequal access to work.

In our latest research on this issue, we identify the problems and lay down a challenge to all governments and companies to do more to lower these barriers.

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