Sunday, September 24, 2017
It's been a woman's world in the job market
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

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My regular column is available to subscribers on www.thesundaytimes.co.uk This is an excerpt.

It would have been easy this week to focus on the latest projections from the Organisation for Co-operation and Development (OECD), which are for a slowing British economy at a time when the global economy is speeding up, something which does not normally happen.

And, while some will say you should never believe forecasts, the OECD is merely extrapolating what is already happening. The global economy is growing more rapidly this year while Britain has cooled, and you do not need to be Miss Marple, or perhaps more appropriately Hercule Poirot, to work out what is happening.

Or I could have focused on Friday evening's downgrade of Britain's sovereign debt rating by Moody's, taking the country even further away from the old AAA rating.

But, while mention of Brexit is guaranteed to send some people frothing at the mouth, which can be entertaining, the OECD forecast has been well covered. I sensed some glee behind the decision to splash it all over the front page of George Osborne’s Evening Standard, the London free newspaper. And government bond yields have not risen, despite the post-referendum ratings downgrades.

It was another aspect of the OECD’s new interim economic outlook, however, I wanted to focus on and it relates to the job market. This is the interesting fact that, across the industrialised world, the post-crisis recovery in jobs has been led by women.

For OECD countries as a whole, the male employment rate is still lower than it was in 2008, when the economic downturn as a result of the global financial crisis began to hit. The female employment rate, by contrast, is up sharply compared with the pre-crisis peak. The OECD’s index of its members’ employment rates is up by around 5% for women, while down by 1% among men.

Male employment has been recovering from its post-crisis lows. But it was harder hit by the crisis and has not got back to where it was. Female employment, in contrast, suffered a smaller hit in the crisis and has enjoyed a stronger recovery.

The picture in Britain follows a similar pattern though with some differences. Both male and female employment rates are above pre-downturn peaks, though the rise in the female employment rate – up from 67.1% in March-May 2008 to 70.8% now, has been bigger than the rise in the male rate, which is up from 79% to 79.8%. As far as jobs are concerned it has been a woman’s world.

I have been aware of the faster rise in female employment in recent years for some time. One special factor has been the move to equalise the state pension ages of men and women, a process that has increased the proportion of women in the 50-64 age group in work. As the Office for National Statistics notes, the changes mean that fewer women are retiring between the ages of 60 and 65,

But the narrowing of the gap between male and female employment rates is part of a long-term trend. In 1971, the starting point for Britain’s Labour Force Survey, the male employment rate was 92.1% and the female rate just 52.7%, a gap of nearly 40 percentage points. Now, the gap is down to just nine percentage points, and closing. While the female employment rate has never been higher than now, a male employment rates of just under 80% would once have bene regarded as quite low.

There are long-term trends at work here. That and the fact that as the OECD points out, what is happening is international in nature, suggests this goes well beyond changes in pension age.

Government policy has made a difference, both over the decades of rising female employment and more recently. Improved childcare arrangements and assistance and enhanced parental leave have had an impact, and not just in Britain.

In the mid-1990s Japan had a lower female employment rate than most other countries. Now it is in the centre of the pack thanks to targeted policy and campaigns aimed at increasing the proportion of women in work. The initiatives included additional allowances for new partners, subsidised nursery care and allowing parental leave to be shared between mothers and fathers.

The relative success of women in the workforce is also explained by the shifting patterns of employment and output in the economy. Manufacturing and construction are, despite the efforts of firms in these sectors, male-dominated.

Manufacturing and construction are, moreover, the laggards when it comes to both output and jobs. Employment in these sectors is down on pre-crisis levels, as is output. Employment in more female-friendly service industries, on the other hand, is about 2m above pre-crisis levels in Britain and output in this, the dominant sector of the economy, is also significantly higher than it was.

This, while creating opportunities, also creates challenges. In some of Britain’s old mining and manufacturing areas the absence of traditional male jobs has led to decades-long blight.

The service sector is also more likely to be associated with flexible working arrangements. Part-time employment is still relatively unusual among men; only 13% of men in work are part-timers. It is much more common among women, where 42% are part-time workers.

This relative shift towards female employment – since the crisis the proportion of women in employment has risen from 46% to 47% - is welcome. But it may have another consequence, which can be added to the explanations of why the growth in wages has been so weak in recent years.

"Employment rates for women have grown faster and are above where they were in 2008, but employment rates for men have not even gotten back to where they were,” said Catherine Mann, the OECD’s chief economist, said in an interview with the BBC World Service after the publication of its interim outlook.

“That [must be seen] in conjunction with what we know about women's wages - that women are paid less than men. You've got more women employed, as compared to men, so the algebra works out to be a downward pressure on wage growth.”

Compositional changes – shifts in employment between sectors and high and low-skilled jobs - have been an important factor in the weakness of wages in recent years, alongside poor productivity, a weak bargaining position for employees and an acceptance by many workers of 2% pay rises as the going rate. In an ideal world of pay equality between the sexes, this particular compositional change would not matter. In the real world unfortunately it does.