Are a million women 'missing' from the UK economy?

13 November 2012

"...compared with the situation in the best-performing countries, about a million women are missing from the UK economy."

The Guardian, 12th November 2012

In a speech today Deputy PM Nick Clegg outlined plans to welcome women back into the workforce, suggesting that many women are shut out of the labour market after having children. 

Nick Clegg's solution is to allow more men and women to work flexible hours, with the idea that this will make it easier for parents to care for their children or elderly relatives whilst remaining in employment. Currently, men are restricted in how much they can help out with childcare because they are entitled to less parental leave than women.

However restoring the gender balance at home isn't the only reason for this policy. According to the Deputy PM, more women in employment "means an economy running on all cylinders, and it means a nation reaping the rewards."

If Nick Clegg is to be believed, there are one million women who are absent from the UK labour market. But what does this mean?

Where is this number from?

The women might be "missing", but, thankfully, the source of the statistic isn't. In its article, the Guardian states that Nick Clegg's speech was "heavily based" on research from the Resolution Foundation, a think-tank that aims "to improve outcomes for people on low and modest incomes".

In December 2011 the Resolution Foundation published a report in which it examined how female employment rates compare across countries in the OECD (Organisation for Economic Co-operation and Development).

The author of The Missing Million report concluded that, when comparing female employment rates, the UK ranked 15th in a list of 35 OECD countries. Among women aged 25-64 the female employment rate was 69%. In other words, 69 of every 100 women in this age bracket were in employment.

According to the OECD's table, the UK performs poorly in comparison to the Scandinavian nations, as well as the likes of Canada. However, our female employment rate compares favourably with that of the United States and south European countries. 

From the OECD's census data, we can see that of the 16.5 million women aged 24-65 in the UK, more than 11.3 million of them were in work in 2010 (a 69% employment rate).

The Resolution Foundation calculated that among the countries that ranked above the UK, the average female employment rate was 73%. If we apply this rate to the working age population in the UK, there would be more than 12 million women in work - an increase of some 700,000. If the UK female employment rate were 77% (the average rate of the top five performers), an additional 1.4 million women would be in employment.

Therefore the Resolution Foundation has calculated that, on average, one million women are "missing" from the UK economy.

However, as the author of the research notes, the "headline" OECD figures do not reflect the proportion of employed women who work part-time. In the UK they account for 39% of all women in employment - a much higher rate than the OECD average of 24%.

This means that if we adjust the overall employment rate to account for part-time employees, we find that the UK performs even more poorly, dropping to 24th in the OECD rankings.

The Government claims that its new policy ought to boost the economy: many women who are currently employed part-time might choose to work full-time if there were the option of more flexible hours. According to Mr Clegg, the initiative offers clear benefits: "Greater equality; a fairer society; a stronger economy too."

The OECD does not publish all of the data that it collects. In its report the Resolution Foundation has used OECD statistics that are not publicly available. However, the author of the report has kindly allowed us to look at the raw data sets that he has analysed, and the figures do justify his conclusions.

So while Nick Clegg isn't wrong about the scale of the gender gap in the labour market, we ought to be careful when quoting the "one million" figure because it only tells part of the story. We can talk about an increase in the female employment rate, but we still don't know how many women will be enabled to move from part-time work to full-time work - in other words, what the Government hopes to achieve with its new policy.

As the Resolution Foundation point out, the OECD statistics do not indicate the proportion of women who are employed in part-time work. Therefore our headline employment rate (and any revision of it) tends to be an optimistic figure.

Flickr image courtesy of William Allen, Image Historian

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