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Short description of the region

Prior to the European Union (EU) enlargement in 2004, there were fifteen European member countries now considered the ‘old’ EU. The old EU or ‘Western Europe’ consists of Austria, Belgium, Denmark, Germany, Greece, Finland, Portugal, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Sweden and United Kingdom. Except for Greece, Portugal and Spain, all of these countries have a Gross Domestic Product (GDP) of greater than USD 25.000, ranking them amongst the most developed and the richest of countries both at the European and the global level. They are also amongst the most highly ranked countries in terms of the Human Development Indicators as developed by UNDP. All of the countries are members of the World Trade Organization (WTO) and all have ratified the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) and various conventions of the International Labour Organization (ILO).

Macroeconomic overview

From a women’s rights and a gender equality perspective, and indeed from a social protection perspective in general, there is growing evidence that social directives and guidelines from the EU are at odds with those ruling economic matters. It is undeniable that in some countries the social directives and guidelines have done much to introduce and accelerate an increased awareness and needed change with respect to women’s economic and social rights and gender equality in general. However, economic policies can work directly and indirectly against adequately guaranteeing these rights inasmuch as these policies assume gender neutrality when in fact they are gender blind.

The gender implications are many as nation states restructure themselves, reform their tax and benefit systems and decentralise operations. Many of these countries are already characterised by inequalities within the systems and institutional discriminatory practices. Many of the EU mandated structural changes result in the continued cut-backs of social services or their privatisation. This seriously diminishes women’s possibilities to access and maintain their footing in the labour market as they struggle to reconcile their work and private life. The assumption that the household will absorb the shocks that these changes provoke continues to assume specific gender roles, in particular the unpaid care work of women. Macroeconomic stability, or at least a good part of it, can thus be credited to women’s unpaid work.

Given the importance economic growth is granted in reaching convergence targets and in achieving greater welfare for all members of society (what neo-liberal terminology calls the trickle-down effect), it has to be noted, that economic growth alone does not fully guarantee economic development, nor welfare and much less gender equality. Under the Swedish presidency of the EU in 2001 a paper on Gender Equality and Economic Growth was prepared where it was clearly established that gender equality and economic growth is a two-way street. There are at least two issues which must be addressed in order to reinforce this relationship: pay differentials and the tax-benefit systems. The setting, design and finance of these two issues are closely related to the goals and objectives for economic convergence in the EU. The “trickle-down” effect will not reach the wider population without planned and targeted policies that address baseline inequalities. This has been demonstrated in many countries outside the EU who have followed this flawed neo-liberal advice.

Macroeconomic policy and its gender impact

The stability and convergence programmes that have been in place since 1999 for all the fifteen old EU member states make up the main core of macroeconomic policy across the EU. Although a Council Regulation ((EC) No. 1466/97) sets out the essential elements of these programmes, they are not homogeneous in design and practice, but they “should show the medium-term objective of the Stability and Growth Pact (SGP) as being achieved and maintained in accordance with the budgetary recommendations in the broad economic policy guidelines.” Therefore, having ceded the main elements of monetary policy to the Central European Bank (except in those countries outside the Euro zone), budget or fiscal policy then becomes the main macroeconomic policy instrument. Fiscal reforms must strike a balance between increasing incentives to business to invest and increasing household incomes to consume which are based on tax reductions and reducing social services. These social services, in particular, are crucial for women’s employment as can be demonstrated by a recent EU parliament study which points out that for the fifteen old EU countries there is a clear link between higher levels of taxation and higher participation of women in the labour market.

There is growing recognition that macroeconomic policy plays an important role in affecting living standards and economic opportunities for the population in general and women in particular. This provides the rationale for the introduction of a gender perspective into government budgets. According to Elson, (2002) there are costs associated with lower output, reduced development of people’s capacities, less leisure and diminished well-being when macroeconomic policy, through its different instruments, increases inequalities instead of reducing them. Increasing access to resources and opportunities has, consequently, positive economic effects. This is particularly true for women and other members of the population that endure inequalities. A gender impact assessment of all policies is yet another instrument that should be used regularly by governments.

Budgetary discipline is often another way of talking about cut-backs in government spending, particularly with regards to social services, education, health and culture as well as human resources in the government, an area where in general a large proportion of women work. Statistics show, that expenditure on social protection and other benefits as a percentage of GDP has fallen - social expenditure can therefore not be blamed for growing deficits.

These policy choices contrast with increasing expenditure in other areas such as military or security, particularly after September 11. The choices made by governments thus respond to political and not just purely economic arguments. If economic growth indeed makes the cake larger, the partitioning of the cake is a discretionary exercise. Commitments to CEDAW and to the protection of human rights must be given at least the same level of importance as commitments to NATO or to the fight against terrorism.

The level of social expenditure on benefits related to childbirth, child-raising and dependency (long-term care) shows a positive relationship with women’s activity and employment rates. The recommendation is given that member states with lower employment rates should increase expenditure on these benefits, especially through better provision of child and adult dependent care services at affordable prices. While at an individual level, there is a negative relationship between taxes, especially income tax and female employment, at an aggregate level there is a positive relation between the average tax level and the employment rate for women. In other words, countries with higher taxation levels are those with a higher percentage of working women. This apparent contradiction is explained by the positive effects that targeted public expenditure can have on the demand and supply of female labour. Higher taxes allow a higher public expenditure in services such as health, education or social services - areas that traditionally employ many women. But also, importantly, higher tax levels are associated with more and better social infrastructures, especially with regards to childcare and dependent adults, areas that favour women’s labour supply and affect women’s ability to take work outside of the home.

It is also important to highlight that women continue to be over represented in low-wage positions and in jobs that have less than favourable conditions of employment (for instance temporary, part-time, and informal positions often in un- or under-regulated sectors of the economy). Improving these wages and conditions could, through increased productivity, improved taxing revenues, higher consumption, etc, advance the process of achieving convergence. This is also relevant in understanding the gender dimensions of trade. Systems which continue to treat women as secondary income earners and assume that they have access to another, often higher male-related income in effect perpetuate the problems of women exiting the labour market, receiving lower hours and pay, and undertaking undeclared work, as households calculate that the extra income from women’s work in effect results in higher taxes for the household unit.

The participation of women in the labour market has not been fully taken into account in any of the reforms, plans and pacts that affect fiscal and social security reform issues. And these reforms have not resulted in equal pay for men and women. The principle of equal pay, that has been included since the Treaty of Rome, has not been enforced. Indeed, only five of the fifteen old EU member states have consistent data showing a narrowing of the gap - the rest show stagnation or a widening of the gap.

Internal market and trade

As recently illustrated in Germany, Italy and the Netherlands, cuts to social services or reforms to social protection systems are not easily implemented. In this respect, the Bolkestein initiative (proposal for directive COM(2000) 507 final 2000/0260 (COD)) later approved as a directive, has failed to take into account the gender implications of occupational pensions. It is also clear that directives affecting the free movement of persons, services and goods across the EU still fail to recognise and identify gender dimensions and implications. Also, the trend to privatise social services connected to these occupational schemes will impact adversely on women’s ability to access resources.

The most recent publication of Employment in Europe points more to the benefits than to the costs of outsourcing and globalisation on European employment. An obvious policy question would be how to increase women’s access to the better jobs and how to protect women stuck in the lower paying, less protected jobs, those that are more likely to be outsourced to third countries. It can therefore be seen that the downward trend in employment growth highlighted in the previous section, is affected by both globalisation and growing government deficits.

Employment, gender equality strategies, social protection and social inclusion

The objectives of EU social policy seem to run contrary to the objectives of economic policy particularly when looking at the distribution of income, social exclusion and equality, and on quality of employment. Although unemployment has decreased over the past 10 years (from 10% to 7% in EU15), and the employment and poverty reductions strategies at EU level make coordinated and some targeted efforts to address the needs of those who are excluded or at risk, there are still persistent shortfalls and gaps in particular for women.

The improvement in economic conditions and access to health and education are not sufficient to close gaps created by inequalities and discrimination in the access to the labour market where most social benefits are obtained. Furthermore, the higher percentage of women, particularly those over 65, under the relative poverty threshold (60% of median equivalised income) reinforces the idea that closing the pay gap and improving the participation rates of women in the labour market throughout their lifetime is crucial to prevent poverty later in life. The many benefits of paid, declared work reiterates the importance of reforming systems in a way that take women’s reproductive role into account. At the same time, policies must be put in place to encourage an increase in men’s participation in social reproduction, particularly in the care of children and other dependents. Pension reforms that do not take this into account will be detrimental to women.

Brief comment on the EU Constitution

The constitutional text has, for some, meant a lower standard in the equality legislation that has already been achieved. However, Article II-23 as it stands states that equality between men and women must be ensured in all areas, including employment, work and pay and that the principle of equality shall not prevent the maintenance or adoption of measures providing for specific advantages in favour of the under-represented sex. Therefore, both mainstreaming and positive action remain as the basis for moving forward with gender equality. Given that member states have already made commitments to women under international conventions such as CEDAW, the Constitution would be a stronger document if these commitments were expressly mentioned. It should be noted that the Constitution does, in effect challenge these commitments as it is based on a patriarchal social and neo-liberal economic model, neither of which advances the position of women.

Recommendations for policy change

There must be implicit recognition by the Directorate General for Economic and Financial Affairs of the gender dimensions of the stability and convergence programmes, particularly around appropriate medium-term budgetary targets. Gender budget analysis and gender impact analysis of policies, as tools mentioned in the Community Framework, should be moved forward more decisively.
There is an urgent need to address the question of coherence: Economic policies need to be in compliance with women rights and gender equality issues.
In the context of on-going reforms to tax and social security systems, the European Commission (EC) and the European Parliament must encourage member states to do away with the last vestiges of male-breadwinner models that discourage women from active participation in the labour market. WIDE recommends collective responsibility and horizontal subsidising.
The effects of globalisation phenomena such as outsourcing should be analysed by the EC through a gender lens. Particular attention should be paid to the fact that women are concentrated in low-paying jobs with less than favourable employment conditions.
National Action Plans for employment and for social inclusion should continue to strengthen the gender dimension of both analysis and the corresponding measures to address inequalities. In this sense stronger language on affirmative action should be included in addition to the gender mainstreaming approach taken and the references to specific problems such as the pay-gap and reconciliation of work and family life.
The provision of social services and public goods must be guaranteed - the EC should take measures to encourage member states to protect and to ensure access to public goods and social services for all, and discourage privatisation and commercialisation in the interests of private companies and international corporations.
The EC should take measures to eliminate the gap between the adopted gender equality legislation and its implementations in the area of employment and equal pay; this includes the need to build and strengthen mechanisms and institutions responsible for monitoring the progress of implementation of relevant legislation. Moreover, the monitoring needs to be linked to the general process of the European Employment Strategy.
The EC should urgently take the initiative to eliminate the neo-liberal, patriarchal and militaristic structure of the European Constitution and to integrate a rights-based approach to development that will ensure equal access to resources and rights for all.
The EC should take measures to eradicate poverty by strengthening social policies and economic rights instead of further weakening them.

This infosheet was produced with the financial assistance of the European Commission, DG Education and Culture. The views expressed herein are those of the author(s) and can therefore in no way be taken to reflect the official opinion of the EC or of WIDE.

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[1] A Report on Gender Equality and Economic growth, Åså Löfström, University, S-Umeå.
[2] European Commission Directorate-General for Economic and Financial Affairs, European Economy Nº 3/2002, Opinion on the content and format of stability and convergence programmes (2001 code of conduct).
[3] European Parliament, Women’s Human Rights Committee. Social Security Systems in the EU and their Impact on Reconciling Family Life and Work Life, prepared by Almenara Estudios Económicos y Sociales, S.L.
[4] Diane Elson (2002) “Integrating Gender into Government Budgets within a Context of Economic Reform”, in Gender Budgets Make Cents, Commonwealth Secretariat, Gender Affairs Department, London
[5] Op. cit.
[6] Here the choice lies between horizontal equity principles, in other words equality on tax treatment for families with the same capacity to pay, and neutrality to the civil status of individuals. The choice of an individual tax system or of a joint tax system means to a great extent choosing one or the other.
[7 ] EGGE – EC’s Expert Group on Gender and Employment, “The Gender Pay Gap and Gender Mainstreaming Pay Policy”.
[8] Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003. On the activities and supervision of institutions for occupational retirement provision.