Employing more women helps economy work; Investment banker's study says making it easier for women to enter paid workforce would solve many difficult social problems
Vancouver Sun
March 21, 2008
By: Daphne Bramham

There may be a magic bullet for solving some of our society's most difficult problems, such as affordable housing, immigration, productivity declines, an aging workforce or the near-crippling demands on the pension system.

Make it easier for women to get into the paid workforce.

Here's the magic. Not only would that increase family incomes, making homes more attainable, it's been shown to boost gross domestic product and decrease dependency on imported labour.

And, perhaps surprisingly, it would almost certainly increase the number of Canadian-born babies.

This isn't some wild-eyed feminist rant. These are the findings in a study done by Goldman Sachs, the global investment banking and securities firm.

…. However, it goes on to cite an Organization for Economic Development and Cooperation study that found 77 per cent of European couples believe the ideal is to have both partners in full or part-time employment, but only 53 per cent were able to live that way.

(Canada was not included in any of the research, but its female workforce participation rate of 62 per cent last month is roughly equivalent to the United States, but lags Sweden and Denmark by close to 10 percentage points.)

Janet Austin, chief executive officer, gave me a copy of the report after I'd sought her out seeking some fresh perspective on the seemingly intractable problem of homelessness.

For Austin, attacking homelessness isn't only about building more houses or shelters.

She says the approach has to be more holistic and include everything from job training to child care.

We hadn't talked long before she pulled out the April 2007 Goldman Sachs report, which begins by blowing up some of the most common arguments governments make against implementing policies that would result in more women working.

Governments should not interfere with family life. They already do. And the researchers' analysis of existing tax and benefits policies in eight developed countries indicated "the status quo in most countries actively discourages female employment."

The report notes that the inadequate supply of good-quality, affordable child care is the chief impediment to women taking full-time paid employment, followed by inadequate parental leave provisions.

Governments providing child-care subsidies that are conditional on employment, the report says, have been shown to consistently and significantly boost the number of women who work. However, child benefits paid to all parents (as the Conservative government in Canada chose to do rather than implementing a universal daycare program) "may act to reduce labour supply."

As for parental leave, Goldman Sachs research concludes that it encourages women to work and makes it easier for them to re-enter the workforce after they have had children.

But there are down sides.

The most significant is that in the absence of anti-discrimination policies (or the provision of paternity leave in addition to maternity leave), companies may be reluctant to hire women at all.

And that's linked to something the study barely touches on, but an issue that Austin believes is key -- the gender wage gap.

In 2005, Canadian women earned 23 per cent less on average than men. And while that's an improvement from 1979 when women on average earned two-thirds of men's incomes, Statistics Canada data from 2003 indicates that only a quarter of women in dual-income families are the highest wage earners.

So, when it comes to deciding who should take parental leave, Austin says it's a no-brainer. Couples want to forgo the lower income and that's almost invariably the woman's.

Then, because it's almost inevitably women taking the parental leaves, she says employers faced with two equal candidates -- male and female -- will almost invariably choose the man.

Higher female employment results in a lower birth rate. Nonsense, says Goldman Sachs. "This claim is simply contradicted by the facts. ... Fertility is positively correlated with high female employment."

More simply, countries with the best child-care policies not only have a higher proportion of women in the workforce, they also have higher fertility rates. Conversely, Italy and Japan, with the lowest levels of female employment, have the fewest babies.

For any remaining naysayers who think that child care, parental leave and all of those things are too expensive, Goldman Sachs again says that's simply wrong.

…. The only question left is: What is Canada waiting for?