The primary policy context for this report is the recent Communication ‘Modernising Social Protection for More and Better Jobs – a comprehensive approach to making work pay’ (COM, 842 final). In turn, this Communication has been developed in relation to the Broad Economic Policy Guidelines (2003-05) Guideline 8: ‘making work pay through incentives to enhance work attachment’. The key challenge identified by this Communication is how to promote more effective work incentives while maintaining the goal of providing a high level of social protection:
‘As part of the policy agenda for the modernisation of the European social model, social protection systems need to be adapted in the framework of an active welfare state to ensure that work pays while securing their social goals such as fighting poverty and social exclusion. However, these objectives are not in contradiction with each other: the best safeguard against social exclusion is a job as it was stated in the Lisbon conclusions’. (p.3)
The various elements to the ‘making work pay’ agenda for modernising social protection systems are distilled into seven related recommendations made to Member States which are summarised in Box 1. The discussion in this report relates to Recommendations 1-4, which together identify the need to remove financial disincentives and barriers in social protection systems, the relevance of addressing certain non-financial incentives, and the importance of examining the articulation of different policy areas.
The first and central objective of this policy agenda is to enhance the financial incentives for entering or remaining in employment vis-à-vis income from social protection schemes for the non-employed (Recommendation 1). Here the concern is to remove ‘unemployment traps’ and ‘poverty traps’ by reducing the high marginal effective tax rates (METRs) which emerge from the interaction of the structures of the tax, benefit and wage systems and which are particularly acute for low-paid workers with families to support. This is picked up in the second recommendation, which emphasises the importance of a co-ordinated and comprehensive approach to policy design and implementation across different elements of the social protection system in conjunction with broader economic and employment objectives (Recommendation 2). This second recommendation is expressed explicitly in relation to reinforcing the first recommendation concerning financial incentives, but the principles of logic suggest that this also implies a co-ordinated approach with the other recommendations, including the importance of enhancing non-financial incentives, in particular access to care facilities and the quality of work available (Recommendation 3), as well as tighter job search requirements as a condition of benefit receipt (Recommendation 4).
Thus the focus of ‘making work pay’ through social protection reform is upon promoting labour supply through tax/benefit reform, in conjunction with the expansion of care facilities and attention to enhancing some of the non-financial aspects of the quality of work. The demand-side problems of the economy which make it difficult for some groups to enter or remain in employment – such as job shortages, low wages, discrimination – are left for debate in other policy arenas, although the Communication does note that minimum wage systems have a role to play in ‘making work pay’ (pp.9-10).
Box 1. The Communication’s ‘making work pay’ policy recommendations
The Communication ‘Modernising Social Protection for More and Better Jobs – a comprehensive approach to making work pay’ makes seven related recommendations as regards ‘the contribution that social protection policies can make to promoting workability and employability’.
Recommendations 1 to 4 provide the focus which guides this report:
To modernise social protection systems (i.e. tax and benefits) by removing barriers and disincentives to work in order to make work more attractive and so encourage people to enter or remain in employment, including reducing the tax burden on low-paid workers.
To examine the interrelationship of objectives in policy areas such as taxation, social security systems and income-dependent benefit schemes when implementing policies to make work more attractive. To develop a comprehensive and co-ordinated strategy of social, economic, employment and budgetary objectives, and develop a closer co-ordination between the relevant agencies and bodies responsible for implementing interrelated reforms.
To consider non-financial incentives in conjunction with financial incentives; in particular the provision of adequate (affordable and high quality) care facilities and the quality of work (flexible working hours, training, job security, social protection coverage).
To pay particular attention to the interaction between passive benefit schemes and active measures in relation to job searches and training, while ensuring that stricter conditionality does not put particularly disadvantaged people at serious risk of poverty and social exclusion.
The other recommendations are:
To develop more thorough and systematic evaluations of the cost-effectiveness of benefit schemes in relation to the benefits for both the individual and the society as a whole.
To focus attention on promoting labour market mobility (including transitions from part-time to full-time work, mobility into self-employment, gradual retirement, and movement from undeclared work into regular employment) through financial incentive support schemes, training and legislative measures.
To ensure that supplementary social protection schemes are designed in ways that do not hinder workers in their mobility and career advancement.
Source: COM (2003), 842 final
In relation to Recommendations 1-4, the Communication identifies three types of tax/benefit reform measures which various Member States have introduced to reduce labour supply financial disincentives, and five issues in relation to promoting employment integration through work-family reconciliation:
Tax/benefit reforms to promote work incentives
(i) Employment incentives: including tighter criteria and job search requirements for receipt of unemployment insurance/assistance benefits; in-work [employment conditional] tax credits and benefits.
(ii) Combination of benefit entitlement with earnings from employment: partial unemployment benefit or assistance, minimum income guarantees, lump sum payments to encourage business start-up.
(iii) More favourable social security and tax treatment for employees.
Work-family reconciliation issues for promoting work incentives
(iv) The withdrawal of family supplements for children or spouses paid to the unemployed can create financial disincentives for taking employment.
(v) Benefits which are means-tested on family rather than individual income can have a negative impact on work incentives for both the claimant and their spouse/partner.
(vi) Subsidised or publicly provided childcare in conjunction with leave provisions for temporary withdrawal from work make it easier for men and women to combine employment with their family responsibilities. The labour supply of the low-paid is particularly sensitive to childcare costs, and the lack of affordable and suitable childcare poses particular problems for lone parents (most are women).
(vii) Labour market ‘re-entry’ programmes for those returning to the labour market after a family-related absences can promote employability.
(viii) Long periods of family-related leave can increase the difficulties and uncertainties for women trying to return to employment, particularly for those with insecure employment status, or low skills and low pay.
The objective of this report is to develop the gender perspective to this labour supply debate in two ways. Firstly, through a review of some key recent national policy reforms to social protection systems and related labour market programmes which are designed to integrate low-income groups into employment and where the policy objectives relate to the theme of ‘making work pay’, largely through a focus on enhancing the financial attractiveness of employment relative to benefit receipt. In this discussion we consider whether gender mainstreaming of the policy occurred, and what gender impact these reforms might be expected to have (see Box 2 for definitions).
Box 2. Key definitions: Gender Mainstreaming and Gender Impact Assessment
Gender mainstreaming (GM) is the integration of a gender perspective into every stage of policy processes (design, implementation, monitoring and evaluation) with a view to promoting equality between women and men. Gender impact assessment (GIA) is the analytical tool for mainstreaming gender into a policy. The key questions asked depend upon the policy area in question, but the objective is:
• To identify the gender gaps and trends in men and women’s relative situations
• Analyse the impact of the policy on men and women in particular and in particular groups
• GIA requires relevant statistics and indicators, disaggregated by sex and highlighting gender gaps.
Secondly, we turn to the wider incentives and barriers that are faced by those – still largely women – who take on the primary care role in households with young children, with a particular emphasis on the situation of mothers in low-income households (tax and benefits, active labour market policies, childcare, etc.). This focus on policies in relation to parenthood and women’s employment is because this is a pivotal event in the working life: most women still become mothers at some stage in their lives (despite falling fertility rates), and it is still the onset of motherhood which is a trigger for a reduction in women’s employment through reduced working hours or labour market exits1. By contrast the impact of fatherhood on employment patterns is more modest: the employment rates and working hours of employed men hardly vary according to fatherhood. If anything the tendency is that employed fathers work slightly longer hours than other employed men of similar ages in many countries (Anxo and Boulin, 2005; Ellingsæter, 1990; Moss and Deven, 1999). Where fatherhood can depress work incentives is for men in ‘workless’ households where a ‘benefit trap’ can be created if the only jobs on offer are low-paid and there is a high effective tax rate created by the income-related withdrawal of child-related benefits.
Motherhood may be a key factor associated with a number of potential labour market barriers and disincentives, but it is clearly not the only one. In most countries the risks of labour market exclusion are higher for particular social groups, such as young or older workers, the disabled, the Roma population, certain ethnic minority or immigrant groups, those who are homeless or have experienced domestic violence, and so forth. Often the risks for these social groups are differentiated by gender, for example among young people unemployment rates are higher for men in some countries, while among ethnic minorities women typically have lower employment rates than men. However, the example of ethnic minority women in Britain shows how the articulation of ethnicity and gender can produce complex lines of differentiation: activity and employment rates are particularly low for some groups of Asian women in Britain, while the rates for some groups of Afro-Caribbean women exceed those of white BritishPage 46 women, and overall part-time work is largely the preserve of white British women (Dale and Holdsworth, 1998). Thus, while we focus here on parenthood as a key element of the gender differentiation in society which is rooted in the different household-based ‘care’ roles which have emerged historically, other social policy and labour market measures are needed to reduce the multi-faceted way in which gender inequalities are reproduced through processes of discrimination, violence and other means of social exclusion. These issues are put to one side for future work.
Box 3 presents a summary of the main types of gender impact issues that emerge when gender mainstreaming the ‘making work pay’ debate.
Box 3. Gender mainstreaming the ‘making work pay’ debate – the Gender Impact Assessment (GIA) issues
1) Reforming social protection systems (i.e. tax and benefits) to remove barriers and financial disincentives in order to make the financial returns from employment more attractive
Key GIA issues:
• Effective incentives for the male partner or ‘first earner’ may conflict with effective incentives for the ‘second earner’ (e.g. aggregated instead of individualised taxation and benefit assessment).
• Childcare costs influence the effective incentives for mothers in dual-parent and lone parent households.
• When eligibility for unemployment benefits (insurance and assistance) is reformed to restrict eligibility and to increase job search requirements this may disproportionately penalise women. Firstly, because in many countries women’s work histories are more discontinuous than those of men’s (they are more exposed to temporary or insecure job conditions, they are more likely to have interrupted employment for family reasons). Secondly, women with care responsibilities may be less able to qualify as ‘job-seekers’ where suitable care services are unavailable. Thirdly, where women have a partner they may be defined as a dependent rather than accorded equal treatment as a ‘job-seeker’.
2) Reforming active labour market measures in connection with benefit reform for the non-employed
Key GIA issues:
• Where eligibility for different schemes rests on receipt of a particular unemployment benefit (insurance and/or assistance), women may be disproportionately excluded because of their higher risk of ineligibility for these benefits (explained above) and because a higher proportion may be attempting to return to the labour market following an absence for child-raising or other care responsibilities.
• Lone parents – most of whom are women – may face particular difficulties of access to these measures.
• Some target groups may not be predominantly of one sex, yet an explicit acknowledgement of their gender might be relevant for policy design. For example, among older or disabled persons there may be gender differences in work histories, employment opportunities and family responsibilities.
3) The importance of considering non-financial incentives in conjunction with financial ones, in particular the provision of adequate (affordable and high quality) care facilities, and the quality of work (flexible working hours, training, job security, social protection coverage)
Key GIA issues:
• Women’s employment is more constrained than men’s by inadequate care facilities because current gender roles ascribe women as the primary caregivers in society.
• Gender segregated employment means that the quality of work open to men and women may differ. On one hand, women’s jobs are typically lower paid, more insecure and poorer quality. On the other hand, in countries with a large private service sector there may be more job openings for women than men due to gender segregated job search and recruitment processes.
4) The importance of examining the interrelationship of different policy areas.
Efforts to ‘make work pay’ directed at increased labour supply incentives require attention to other policy areas, where the gender impact also needs to be addressed in order to enhance policy efficacy. Examples of gender issues include:
• Policies to tackle low pay (e.g. minimum wage) may be more effective at ‘making work pay’ than benefit reform by enhancing the work incentives of both the ‘main’ and any ‘second’ earner in households by reducing ‘unemployment’ and ‘poverty’ traps. The gender dimension is that women are more exposed to low pay in the labour market than are men, and their low pay is concentrated in particular private service sectors, and in some countries certain care-related jobs in the public sector are also low-paid (e.g. childcare, home help and residential workers for the elderly, cleaning).
Box 3. Gender mainstreaming the ‘making work pay’ debate – the Gender Impact Assessment (GIA) issues (cont.)
• Policies which focus on ending child poverty by targeting support to children may increase women’s access to economic resources but may reduce their integration into employment over the lifecourse if they are not co-ordinated with other measures, thus undermining ‘making work pay’ policy objectives. For example benefits targeted on non-employed mothers with young children may encourage lengthy exits and establish obstacles to re-entry which may be particularly acute for women with low-earnings prospects.
• Policies which focus on reducing poverty and social exclusion of ethnic minorities, recent immigrants or the Roma population may neglect gender differences or make inaccurate assumptions. For example, employment rates are often much lower for women than for men among many immigrant and ethnic minority groups. However, there are also differences between ethnic groups which may be overlooked, for example in the UK, Afro-Caribbean women have higher full-time employment rates than White women, while the employment rates vary markedly between Asian women according to country of origin.
This synthesis report is based on the reports prepared by the 30 national experts in the EGGSIE network. The national experts for the 10 new Member States were asked to make a smaller contribution to this piece of work because they had the additional task of preparing an evaluation of the gender mainstreaming of the first National Action Plans on Social Inclusion submitted by their governments (see Fagan and Hebson, 2004 for a comparative review and a full list of the NAP evaluation reports by the 10 national experts). The research design is summarised in Box 4, and the detail of the work programme is presented in Appendix 1.
Box 4. The research design for the national reports
The national reports were prepared to a standard work programme organised into two parts. For the first part, 20 national experts – the 15 pre-2004 Member States and the 5 non-EU countries – were asked to prepare an overview and evaluation of the focus of a recent ‘making work pay’ policy debate or reform in their country from a gender perspective. To do this they were asked to address a series of questions. For the second part of the national reports all 30 national experts were asked to complete a series of questions presented in a tabular template which focus on the policy framework in relation to ‘making work pay’ by supporting employment for those with care responsibilities for children. The detail of the questions posed in the work programme is summarised in Appendix 1.
In Section 1 of the report we review some of the recent reforms or policy debates in relation to ‘making work pay’ from a gender perspective. In Section 2 we review maternity and parental leave provisions in relation to the employment integration of mothers and fathers. The impact of parental leave or extended labour market absence for childcare on eligibility for active labour market measures and other training provisions is discussed in Section 3. The development of childcare services as a key social infrastructure for supporting parents’ employment is reviewed in Section 4. Conclusions are drawn in Section 5, which also raises demand-side considerations about job quality and henceemployment sustainability for the main care (typically mothers) in low-income households.
 Women who remain childless follow labour market participation profiles which more closely resemble those of men, but as women they are still subject to labour market discrimination, which in part can be attributed to their ascribed social role whereby they are expected to have children and or take on other caring roles in their lives.