WASHINGTON, Nov. 9, 2008 -- Here's the problem: People are living longer and young people are having fewer children, especially in the world's industrialized economies. These trends threaten to shrink the supply of skilled labor, restrain economic growth and, ultimately, lower living standards in the developed world. Only one person can save us from a future of slow decline: Mom.
A growing number of policymakers, academics and business leaders conclude that long-term economic growth hinges on wide participation in the workforce of women with children. As the supply of skilled labor shrinks in most advanced economies, women, who have begun to outpace men in educational achievement, are increasingly seen as a critical and largely untapped asset.
"In many [industrialized economies, an] increasing female (especially maternal) labor supply is seen as being important to maintaining economic growth and ensuring sustainable pension and social protection systems more generally," according to a new study, called "Babies & Bosses" by the Organisation for Economic Co-operation and Development (OECD). The E.U. has targeted a female employment rate of at least 60% for its member countries by 2010.
The study ranks countries based on the percentage of women with children who were employed in 2006, breaking down the data into two categories for each country--the percentage of women with one child who are employed and the percentage of women with two or more children who are employed. Our list ranks the countries according to the average percentage of women employed in both categories.
European countries have had the greatest success integrating women with children into the workforce. In 2006, female employment rates rose above 80% in Iceland and were over 70% in Denmark, Norway, Sweden and Switzerland. In fact, it has been so successful that in several European countries, women with children are more likely to be employed than women without children. Why do working moms matter so much? Fewer women will join or seriously commit to the workforce if they know having a child will end their careers.
"Working mothers have become the biggest issue in most countries," said Shelley Correll, an associate professor of sociology at Stanford University. "European countries have taken aggressive steps to increase the number of mothers participating in the workforce, because they feel it is in their interests to keep them fully engaged in the labor force."
These policies have proved extremely effective in many countries. In Iceland, mothers are more likely to work than women without children. Nearly 90% of all mothers in Iceland are employed, which makes it the country with the largest share of moonlighting mothers.
Iceland is not the only country where mothers are more likely to be employed than women without children; in at least six other countries, moms are more likely to be employed than non-moms--at least for mothers with only a single child. In Portugal, mothers with more than one child are more likely to be part of the workforce than women with no children.
For better or for worse, the countries with the highest rates of employed mothers do not necessarily have the most family-friendly policies. Iceland offers just three months of partially paid maternity leave, a far less generous policy than other countries. On the other hand, Iceland has had one of the lowest unemployment rates and tightest labor markets in the world in recent years.
The bottom line: Labor markets are the ultimate arbiters of gender equality in the workforce. This certainly seems to be true in the U.S.
"During World War II, women needed to work, because there weren't enough men to work in the factories," says Correll. "The government began multiple initiatives designed to get more women into the work force--and it worked. When the war ended, so did many of the initiatives. But there is no question that if U.S. productivity hinged on retaining mothers in the workforce, these policies would be put back into place on a dime."
In the absence of tight labor markets, mothers must claw their way into the workforce if they want to compete. This is no mean feat. In a study published last year, Correll found employers tended to view mothers as less competent and committed than other workers, held them to higher standards and offered them lower salaries. The bias against mothers did not necessarily extend to women generally; employers call back mothers half as often as women without children.
Denmark, which has the second highest rate of employed mothers, has aggressively combated these obstacles. It spends more on family policies and maternity benefits than any other OECD country except Luxembourg, which is one of the reasons its tax rates are among the highest in the developed world.
But even in the Nordic countries, which felt the demographic squeeze long before other European countries and were among the first to implement family-friendly policies, life is seldom easy for employed mothers. In most E.U. countries, women spend three times as much time cleaning, cooking and looking after kids and enjoy fewer leisure hours than men, on average, according to Eurostat.
What's worse, women continue to earn less than men in most European countries. Last month, Deutsche Bank released a study on gender equality in the workforce with the provocative title,"Are Women Really Worth Less?" Although the report predicts the rising pressure of population aging will make women a more vital part of the workforce in coming years, it also emphasizes the broader economic costs of not making them so.
"The gender pay gap isn't just bad news for women and an equity issue," said Dr. Claire Schaffnit-Chatterjee, a research analyst for Deutsche Bank. It also "impedes economic growth."