Babies and Bosses: What lessons for governments?

OECD Directorate for Employment, Labour and Social Affairs

©Arnd Wiegmann/Reuters

Work and family constraints can lead to too few children and too little employment, affecting quality of life and economic performance. Yet many parents would like to go out to work more, while others would like to spend more time raising their children. What can policymakers do to help parents achieve a better work/family balance? The OECD’s Babies and Bosses series offers some lessons.
More and more parents in OECD countries face a balancing act between managing a family and a busy job. However, juggling babies and bosses is not just an issue for parents, but for government policy too. This is because a proper work/life balance of families helps achieve a range of goals, from well-being of parents and children to higher productivity. In other words, governments have an interest in assuring the provision of affordable childcare facilities where they are insufficient, and fostering a workplace culture that allows both parents to reconcile the tasks of going to work and bringing up their children.The emphasis of underlying policy objectives varies across OECD countries, and what constitutes a key issue in one country may be unimportant, or even out of bounds, in others. So while recent family policy debates in Japan or Korea discuss low fertility rates, British and Dutch policymakers barely touch what they widely consider to be a private family matter. Rather, increasing female/maternal access to employment has been the main driver of family-friendly policy development in the Netherlands, while in the UK concerns about child poverty have spurred policy reform since 1997, and helping parents in employment is often an effective way to reduce child poverty. Formal childcare and early education policy in Nordic countries is also shaped by quality and child development concerns, and by gender equity, an issue that also underpins Portuguese policy thinking.Looking back at recent history in work/family outcomes, two key trends emerge: since 1980 female labour force participation increased by almost 10 percentage points to around 60% on average across the OECD in 2006, while over the same period fertility rates fell from 2.1 to 1.6 children per woman. In many OECD countries parents have fewer children partly because of the difficulties of combining work and care commitments. However, with changing female aspirations the relationship between employment and fertility has also changed (see graph). Unlike in 1980, the countries with the highest female employment rates in 2005 were also among the OECD countries with the highest birth rates, giving the lie to the idea that greater employment opportunities for women must inevitably lead to lower fertility.The work and career aspirations of female workers may have evolved in recent years, but in many countries workplaces and policies still fail to fully support fathers and mothers in combining their work and family responsibilities. Looking across the OECD area, combining child rearing and being in employment is particularly difficult in southern and central European countries, such as Italy and Poland, but also Japan and Korea. Nordic countries and Australia, the Netherlands, New Zealand, the UK and the US have better outcomes, with their birth rates over 1.75 per woman and with two thirds of women in employment.Sometimes these better outcomes reflect parents making use of flexible workplace practices in countries such as Australia and the Netherlands, or else the comprehensive public support systems, such as parental leave, childcare and out-of-school hours care, as in Nordic countries. This policy approach is expensive, but brings dividends as it allows parents to realistically plan their work and family commitments. Then again, the cost to families and the economy of weak or ineffective family-friendly support is also large.One goal of policy nowadays is to free up mothers for work by getting fathers to spend more time with their young children. As long as women rather than men take time off work to provide care, employers will still see women as less career-oriented than men, and do less to invest in their career opportunities. In Japan and Korea, women are widely expected to leave regular employment for good at childbirth or marriage. Moreover, long working hours, commuting times and social customs make work and home care commitments difficult to square. Little surprise that, at 35 to 40% of male earnings, gender wage gaps in these countries are the widest in the OECD.So even if mothers find employment, they often end up in low-paid jobs that do not do justice to their skills and training. This is a clear waste of investment in human capital. Yet, Japan and Korea need mothers to return to quality employment for several reasons, including to overcome looming labour shortages and help pay for the fiscal costs of an ageing society. Employers, unions and the government will all have to work together to reduce the barriers to female employment, and improve their pay. One step would be to increase the role of performance-related pay, rather than basing pay on seniority, which penalises anyone who takes time out of their careers. Nor should greater access to part-time and flexible work be seen as detrimental to career progression.More generally across the OECD, if fathers were also to take leave to care for children on a comprehensive basis, this kind of gender inequity in employment would likely disappear. Many European countries already encourage fathers to spend more time with their children by legislating periods of paid paternal leave. Theapproach has had some success, though these short (2 to 4 week) periods hardly amount to a fundamental behavioural change. There is scope for improvement, as Iceland has shown: since the reform of paid parental leave in 2001, each parent in Iceland has had the right to a three-month leave period while parents can share another three-month leave entitlement. Although women still take the most days off, the effect of reform has been substantial: in 2000, the share of paternal leave days in all parental leave days in Iceland was only 3.3%, but as high as 33% in 2005.One point is clear from the evidence: childcare should not be allowed to become a barrier to work. True, parental childcare fees are often high, and in Ireland and the UK, the costs of childcare can be so high as to penalise second earners. Nordic countries invest heavily in childcare, but not many OECD governments are willing to commit the heavy public spending needed to sustain a comprehensive support system that keeps childcare fees low. Nevertheless, many other countries have started to develop their formal childcare support systems.The Babies and Bosses reviews advocate a mixture of financing tools, including direct subsidies towards capital investment in facilities and to assist providers in deprived and/or scarcely populated areas and for children with special needs. In addition, as in Australia and the Netherlands, the private sector can provide affordable good childcare with high coverage, thanks to assistance for parents, such as vouchers. Some regulation of providers is normally necessary to ensure quality, and any public funding of (private) providers should be strictly tied to compliance with agreed quality standards.Nor do childcare issues stop when children enter primary school. In theory, the cost of providing out-of-school hours (OSH) care for schoolchildren is much lower than for younger childcare because child-to-staff ratios for school-age groups mean proportionally lower costs for teachers/carers. Moreover, no new capital investment is required as existing school buildings can be used. This is what happens in Denmark and Sweden, the only countries with a comprehensive system. In other countries, such as France, OSH care happens on a case-by-case basis, and depends too much on the willingness of school management to play ball. Policymakers in other OECD countries should do more to develop such care and be more insistent in overcoming the traditional reluctance among educational authorities to allow schools to be used for this purpose. Tackling childcare is just one area for action, another is changing workplace practices. Most governments are understandably reluctant to be seen as interfering, but there is room to exert influence. Some countries have introduced legislation entitling employees to flexible workplace practices. For example, in the Netherlands employees of enterprises with 10 workers or more can change their working hours for whatever reason, unless the courts uphold employer objections. And in Sweden working parents are entitled to reduce working hours until their youngest child enters primary school. UK policymakers have granted parents with children under age six the right to request flexible working hours (which includes reduced working hours). The “right to ask” approach emphasises employer and employee dialogue and is flexible enough to focus on measures that satisfy both the workplace and the worker. Moreover, it covers low-income workers whose bargaining position is relatively weak. It is one of many examples that show that while the work/family balance in the first instance may be a matter for parents and employers, policymakers can indeed make a difference.ReferencesFor more detail and data, visit (2007), Babies and Bosses Reconciling Work and Family Life, A Synthesis of Findings for OECD Countries, Paris.OECD (2007), Benefits and Wages, OECD, Paris.OECD (2005), Babies and Bosses: Reconciling Work and Family Life, Vol. 4: Canada, Finland, Sweden and the United Kingdom, OECD, Paris.OECD (2004), Babies and Bosses: Reconciling Work and Family Life, Vol. 3: New Zealand, Portugal and Switzerland, OECD, Paris.OECD (2003), Babies and Bosses, Reconciling Work and Family Life, Vol. 2: Austria, Ireland and Japan, OECD, Paris.OECD (2002), Babies and Bosses: Reconciling Work and Family Life, Vol. 1: Australia, Denmark and the Netherlands, OECD, Paris.©OECD Observer No 264/265, December 2007-January 2008

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