By Yong Jing Teow and Shivangi Jain
The fourth annual update of the PwC Women in Work Index (WIW) indicates a continued strong performance by the Nordic countries, with Iceland, Norway and Sweden maintaining their positions as the top three performing countries. Our Index combines five key indicators of female economic empowerment: the equality of earnings with men; the proportion of women in work, both in absolute terms and relative to men; the female unemployment rate; and the proportion of women in full-time employment.
Figure 1: PwC’s Women in Work Index
Source: PwC analysis using data from OECD and Eurostat
As Figure 1 shows, other OECD countries have also made significant improvements in their performance: Hungary most notably has achieved the biggest year-on-year improvement jumping from 24th to 19th position due to a significant narrowing of the wage gap, a rise in female labour force participation and a fall in unemployment. UK’s improvement in performance in terms of empowering the female workforce is also noteworthy; it has moved up in the ranks from 21st position out of 33 OECD countries, a position it has held for the past 2 years, to 16th position in 2014. This improvement in the UK’s performance has largely been driven by a narrowing of the gender pay gap and a significant reduction in the female unemployment rate due to the stronger economic growth in recent years.
At the other end of the spectrum, Australia has continued to fall in the ranks from 10th to 17th position in 2013 and to 20th position in 2014, struggling to make any improvements in its performance across the component indicators of the index. Netherlands has also seen a significant fall in its position from 18th to 23rd with a worsening performance across all indicators. Korea, Greece and Mexico remain at the bottom of the index.
While overall gains have been made across the OECD to improve female economic empowerment, it is clear that there is more to be done; our findings indicate that women are still paid $83 for every $100 her male counterpart earns on average across the OECD, while underemployment also remains a pressing issue.
There is much more that businesses and governments can do to fully leverage female talent. The Nordic countries offer some useful policy lessons for the rest of the OECD. Their success has been made possible by a combination of family-friendly policies and cultural changes that acknowledge the right of each individual to work and support themselves, and to balance their career and family life. These include generous parental leave allowances, strong social safety nets, access to affordable childcare, as well as legislative protection against discrimination.
For instance, Sweden and Norway introduced shared parental leave as early as in the 1970s, with the view of increasingly involving fathers in childcare and household work. In Sweden, parents are currently entitled to share 480 days of paid parental leave when a child is born or adopted. Each parent has a “use-it-or-lose-it” entitlement of 2 months paid leave. Swedish parents also get significant support from the state in the form of family benefits for children. This support amounts to 3.1% of GDP compared to 2.2% for the EU on average.
Another factor supporting women returning to work following motherhood is the availability of affordable and quality childcare. In Sweden, public childcare operates on a whole-day basis. Pre-school is free for children between three and six for up to 15 hours a week. Childcare fees are also means-tested, as fees are proportional to parents’ income and inversely proportional to the number of children in the family.
The availability of state support means that the costs of returning to work for mothers are significantly lower. Including state support, childcare-related costs in the Nordic countries account for around 5-10% of household income, compared to almost a third of household income in the UK. As a result, the Nordic countries have one of the highest female labour force participation rates in the OECD, and the smallest gaps in the employment rate between women who have children and those who don’t.
Although these policies come at a cost of higher taxes, female employment has brought about significant economic benefits, as well as made it possible for parents to combine both work and family life. Our findings highlight the huge prize on offer; according to our research, improving female employment across the OECD to match Sweden’s performance could yield a boost to overall OECD GDP of almost US$5 trillion. While progress is being made, there is still a long way to go in creating a truly diverse and equal workplace through addressing the underlying structural factors in the labour market which discourage women from entering and have direct repercussions for business and the performance of the economy as a whole. With such significant opportunities to increase GDP in the world’s leading economies (see Figure 2), government and businesses really do need to work together and develop policies which support more women returning to work and which drive forward the gender agenda.
Figure 2: Estimated increase in GDP from increasing female employment rates to Swedish levels:
Source: PwC analysis using data from OECD, Eurostat
For details on our analysis and full report, please go to our website: pwc.co.uk/womeninwork