11

The Active Social Policy Agenda: An OECD Perspective

Paper for the European Regional Meeting of the International Social Security Association, Oslo, 15 - 16 May 2007

Peter Whiteford

Social Policy Division, OECD

Peter.Whiteford@oecd.org

22

Outline

Why is active social policy on the agenda?

Problems and challenges

Older workers:

Policy responses

People with disabilities:

Policy responses

Annex:

• Families with children

33

Why is active social policy on the agenda?

Mix of economic and social concerns:– Population ageing and implications for labour force growth and

economic growth and levels of public spending.– Equity concerns, including child poverty, women’s poverty in

retirement and gender equity.– In particular, the jobless are the most disadvantaged, and the

most disadvantaged are most likely to be jobless.– Fertility concerns

Emerging concerns – widening market income inequality, increasing evidence that early experiences of children have profound effects on future life chances.

All these factors suggest that OECD countries should encourage greater employment, particularly among those who are not participating in the labour force.

But, if countries should aim to encourage higher labour force participation, then policies need to support individuals and families in staying attached to or re-entering the labour force.

44

The challenges of population change

People are living longer and fertility has declined, particularly in Germany and Southern Europe.

The large “baby boom” generation – born 1946 to 1964 - has started to enter pre-retirement and retirement years.

These developments have significant implications for social programmes and for the future labour force.

Over the next 50 years, the share of the population aged 65 years and over will roughly double in most OECD countries.

There is also an earlier effect of the baby boom generation on the size of the population of older workers – a person born in 1946 reached 55 years in 2001.

55

Population ageing is likely to result in:

• A sharp slowdown in labour force growth

• Labour shortages

• Slower economic growth

• Higher public expenditures and higher taxes, or cuts in benefits

66

Projected labour force growth, 1950 to 2050

0.6

0.6

1.6

0.6

1.1

0.6

-0.1

0.4

-0.8

-0.3

-0.1

-0.5

-0.1

2.2

1.2

0.6

0.4

0.7

0.4

-0.4

-0.5

0.2

-0.1

-0.2

0.5

-1.0

-0.1

-1.2 -0.8 -0.4 0.0 0.4 0.8 1.2 1.6 2.0 2.4

Japan

Italy

France

Canada

Ireland

United States

EU 15

OECD

1950-2000 2000-2020 2020-2050

United Kingdom

77

Higher productivity.

Longer working hours.

Immigration.

Promoting the employment of older workers.

Increasing the labour force participation of women.

(Re)Integrating persons with disabilities in the labour market.

Reducing unemployment and receipt of social assistance.

In the longer run, maintaining or increasing fertility.

Ageing and the labour market – possible responses

88

A further complicating factor – widening market income inequalities mean the welfare state has to

work more effectivelyGini coefficient for household earnings

0

0.1

0.2

0.3

0.4

0.5

0.6

Net

herla

nds

Fin

lan

d

Den

mar

k

Nor

way

Sw

eden

Uni

ted

Sta

tes

Ger

man

y

Gre

ece

Uni

ted

Kin

gdom

Fra

nce

Italy

1980s 2000

99

Active Social Policy

Aims to address root causes of widening market income inequality.

Reorient towards investment in children, youth. Put heavy emphasis on employment. It is also necessary to take a comprehensive and co-

ordinated perspective on these challenges and policy responses – it is not much use to reduce early retirement if people move onto disability benefits instead.

1010

Increasing employment is of key importanceEmployment and its effects on dependency ratios, 2003

0

20

40

60

80

100

120

140

160

Icel

and

Sw

itzer

land

Nor

way

Den

mar

kN

eth

erla

nds

Uni

ted

Sta

tes

Uni

ted

Kin

gdom

Sw

ede

nIr

ela

ndA

ustr

iaF

inla

nd

Por

tuga

lC

zech

Re

pub

licO

EC

DJa

pan

Luxe

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urg

EU

-19

Ger

man

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lova

k R

epub

licS

pain

Hun

gar

yB

elgi

um

Gre

ece

Italy

Pol

and

Tu

rkey

Conventional Age-adjusted

1111

The potentially mobilisable labour force varies in size

Excess inactivity and unemployment as % of population 15 to 64, except students

0

5

10

15

20

25

30

35

40

Icel

and

Nor

way

Sw

eden

Sw

itzer

land

Den

mar

kU

nite

d S

tate

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gal

Japa

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anad

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nite

d K

ingd

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zech

Rep

ublic

Net

herla

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Fra

nce

Aus

tralia

Ir

elan

dG

erm

any

Aus

tria

bB

elgi

umLu

xem

bour

gS

pain

Hun

gary

Gre

ece

Pol

and

Slo

vak

Rep

ublic

Mex

ico

Italy

Tur

key

1212

The potentially mobilisable labour force varies in composition

Excess inactivity and unemployment as % of population 15 to 64, except students

0

5

10

15

20

25

30

Icel

and

Nor

way

Sw

eden

Sw

itzer

land

Den

mar

kU

nite

d S

tate

sP

ortu

gal

Japa

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anad

aF

inla

ndU

nite

d K

ingd

omC

zech

Rep

ublic

Net

herla

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Fra

nce

Aus

tralia

Ir

elan

dG

erm

any

Aus

tria

bB

elgi

umLu

xem

bour

gS

pain

Hun

gary

Gre

ece

Pol

and

Slo

vak

Rep

ublic

Mex

ico

Italy

Tur

key

OE

CD

c

25-49 50-64

1313

Unemployment is only part of the problem

Some 35% of the OECD working-age population (i.e. 265 million people in 2005) do not have a job.

The bulk of them (almost 230 million) are not unemployed.

They mainly consist of students, women, early retirees and the disabled, many of whom rely on welfare benefits.

1414

Reliance on benefits has increased% of working age population in receipt of income replacement benefits,

full-time equivalents, 1980 and 2004

0

5

10

15

20

25

Spa

in

Uni

ted

Sta

tes

Irel

and

Uni

ted

Kin

gdom

OE

CD

-16

Net

herla

nds

Sw

eden

Ger

man

y

Den

mar

k

Bel

gium

Aus

tria

Fin

land

Fra

nce

1980 2004

1515

More than one in five persons of working age are reliant on benefits in many European

countries% of working age population in receipt of income replacement benefits,

full-time equivalents, 2004

0

5

10

15

20

25

Spa

in

Uni

ted

Sta

tes

Irel

and

Uni

ted

Kin

gdom

OE

CD

-16

Net

herla

nds

Sw

eden

Ger

man

y

Den

mar

k

Bel

gium

Aus

tria

Fin

land

Fra

nce

Age Survivors Incapacity Unemployment Lone parents/social assistance Maternity/Caring

1616

Unemployment benefitsare a relatively small share of total benefit

receiptShare of unemployment benefits in total benefit receipt, 2004

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

Uni

ted

Kin

gdom

Uni

ted

Sta

tes

Sw

eden

Aus

tria

Den

mar

k

Fra

nce

OE

CD

-16

Fin

land

Irel

and

Net

herla

nds

Bel

gium

Ger

man

y

Spa

in

1717

The jobless are the most disadvantaged…

For example, jobless lone parents on average have incomes about 45% of those of all families with children – and this under 40% in Hungary, Ireland, Italy, Poland, Portugal and Spain.

Jobless households with children in OECD countries are less than 6% of all households, but more than 30% of poor households – a poverty risk of more than 5 to 1.

1818

… and the most disadvantaged are most likely to be jobless.

Persons not having finished upper secondary schooling account for over half of non-employment in OECD countries.

In 2001, the employment rate for persons not having completed upper secondary schooling was a little below 50% for the OECD area as a whole, as compared with over 80% for working-age persons with a university or tertiary degree.

45% of working-age persons in the low-education group were neither working nor looking for a job in 2001, as compared to 24% of their medium educated counterparts and 15% of high-educated individuals.

The proportion of low-educated individuals who are inactive is over 50% in Central and Eastern European member countries, Belgium and Italy. At the other extreme, it is under 20% in Iceland, and also relatively low in Portugal (29%).

1919

Live Longer, Work Longer: Ageing and Employment Policies

2020

Trends in receipt of early retirement benefits are diverse

Proportion of working age population receiving retirement pensions, 1980 to 2004

0

1

2

3

4

5

6

7

8

9

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Austria

Belgium

Denmark

Finland

France

Germany

Sweden

United Kingdom

OECD-16

2121

OECD has carried out a major study of Ageing and Employment PoliciesAgeing and Employment Policies::

21 separate country reports

– Identifying work disincentives and barriers to employment of older people

– Setting out policy recommendations

Synthesis report, Live Longer, Work Longer

If living longer means working longer, how to achieve this?

2222

• Financial disincentives

• Employer reluctance to hire and retain older workers

• Weak employability

Key barriers to working at older ages

2323

Key policy directions to encourage work at an older age

Tackle age discrimination

Align labour costs with productivity

Protect employment opportunities not jobs

GOVERNMENT EMPLOYERS

UNIONSNGOs

Reward work

Change employer practices

Pension reform to cut implicit tax on working

Restrict other early retirement pathways

Better options for phased retirement

Suitable training opportunities at all ages

Better help for older jobseekers

Safe & healthy working conditions

Improve employability

2424

Ensure greater neutrality in work-retirement choices

Moving towards actuarial neutrality Taking account of rising life expectancy

Reduce early retirement options

Raising pension age Phasing out formal early retirement schemes Ensuring that other welfare benefits are not used as early

retirement pathways

Beyond neutrality – actively promote participation

Increasing pension rights with age Part-time pensions Combining work and pensions

Reward work

2525

Key issues:

Actuarial neutrality raises difficult issues concerning initial age, equity and adequacy of benefits.

Are measures to promote later retirement sufficiently targeted?

How to increase the flexibility of work-retirement decisions while discouraging early retirement?

How to deal with the stock of older people already on long-term benefits?

Reward work

2626

Direction of OECD pension reforms

Higher pension eligibility age – for men and women (11 countries; e.g. Italy, US) or for women alone

(6 countries; e.g. UK) Improved incentives to delay retirement

– 10 countries; e.g. France, Germany, Italy, UK, US Tighter qualifying conditions for retirement

– 9 countries; e.g. France, Italy Links to life expectancy or financial sustainability

– in earnings-related schemes (Germany, Japan)– in qualifying conditions (France)– through notional accounts (Italy, Poland, Sweden)– through defined-contribution schemes (Australia, Hungary, Mexico,

Poland, Slovakia, Sweden) Direct cuts in generosity rare

– lower accrual rates (Austria, Japan, Korea)

2727

Tackle negative employer attitudes

Through age discrimination legislation And through information campaigns and guidelines

Align labour costs closer to productivity

Link earnings more closely to individual performance

Avoid wage subsidies that are simply targeted by age

Focus on enhancing employability of older workers rather than on job protection

Reassess impact of job protection rules on labour mobility and hiring of older workers

Change employer practices

2828

Key issues:

Age discrimination legislation is no panacea.

Should wage subsidies go to employers or to older workers via an earnings top-up?

Important role for non-governmental organisations.

How can good practices be promoted among SMEs?

Change employer practices

2929

Ensure older unemployed are actively seeking work in exchange for better employment services

General exemptions from looking for work should be abolished

More resources should be devoted to helping older job seekers

Encourage greater take-up of training

More flexible courses

Better opportunities for lifelong learning

Improve the work environment

Greater flexibility in work hours

Adapting working conditions

Improve employability

3030

Key issues:

For older workers, returns to training may not be high, thus need to invest more in lifelong learning. But how to do this?

o Who should pay for training and how can the more disadvantaged groups be encouraged to train?

How best to encourage public and private employment agencies to

give more priority to helping older jobseekers find jobs?

How can employers – especially SMEs – be encouraged to improve working conditions for workers at all ages?

Improve employability

3131

Older workers - conclusions

If work at an older age is rewarded and encouraged, we can all look forward to both living longer and greater prosperity

This also means taking a lifecycle perspective in terms of promoting women’s employment, better working conditions and greater opportunities for lifelong learning.

Implementing this agenda will require the co-operation of government, employers, trade unions and civil society

3232

The case for more effective disability policies

Successful Practice in Disability Employment and RehabilitationBudapest, 30-31 January 2006.

3333

OECD work on disability and sickness

3434

Key challenges for disability policies

Population ageing, leading to increased incidence in health conditions but also future labour supply shortages

Changes in the work environment and rising labour market requirements

Low employment rates of disabled people and high benefit dependence

Lower resources and higher poverty risks of households with disabled people

Co-ordination of different social protection and employment schemes and reforms

High and often increasing sickness and disability-related public spending

3535

Disability and disability pensions

The prevalence of disability for people aged 50 to 64 years is nearly twice as high as for the working-age population generally

Employment rates for people with disabilities are only around 40%—45%

Older disabled people have lower employment rates than younger people with disabilities

Across OECD countries benefit recipiency rates average 5.5%, but are close to 8-9% in Denmark, Norway, Sweden and the Netherlands

Roughly one in four persons who are not employed receive disability benefits

People over 45 are 70-90% of the stock of disability beneficiaries, and similar proportions of inflow to benefits

3636

High public cash spending

Public incapacity- and unemployment-related cash spending in % of GDP, 2003

Source: : OECD (2007, forthcoming), Social Expenditure Database, Paris (www.oecd.org/els/social/expenditure)

0

1

2

3

4

5

6

7

Norway

Sweden

Nether

lands

Poland

Denmar

k

New Zea

land

Czech

Rep

ublic

Luxe

mbo

urg

Hungar

y

Finlan

d

Portu

gal

Switzer

land

Austri

aSpa

in

United K

ingdom

Austra

lia

Slovak R

epub

lic

Belgium

Franc

e

Icela

ndIta

ly

Irelan

d

Germ

any

United S

tate

s

Canada

Greec

e

Japa

n

Korea

Turke

y

Mex

ico

OECD

Unemployment cash spending

Incapacity-related cash spending

3737

High disability benefit recipiency

Disability benefit recipients in % of the working-age population

Source: : OECD (2003, 2006 and 2007, forthcoming)

0

2

4

6

8

10

12

14

PO

L

NO

R

NL

D

SW

E

GB

R

DN

K

PR

T

LU

X

BE

L

ITA

CH

E

AU

S

ES

P

US

A

FR

A

AU

T

DE

U

CA

N

ME

X

KO

R

TU

R

OE

CD

2000

2005

3838

Growth in numbers of people receiving disability benefits has been worryingly rapid

Trends in receipt of disability benefits, OECD countries, 1980 = 100

0%

50%

100%

150%

200%

250%

300%

350%

400%

United Kingdom

Ireland

Netherlands

Norway

Sweden

USA

Average

Germany

3939

Disability benefit receipt traps people outside mainstream society

Annual rates of outflow from disability benefits, 1999 (percentages)

0

2

4

6

8

10

4040

Disability benefit receipt traps people outside mainstream society

Employment rates for working-age disabled people are significantly lower than for non-disabled.

For the 19 countries for which data are available, the employment rate for persons who assess themselves as having a disability was 27 percentage points lower than for persons saying that they were not disabled (employment to population ratios of 44% and 71%, respectively).

In more than half of OECD countries, the employment rate of disabled people varies between 40 and 50%. In Switzerland and Norway, the rate is over 60%, while relatively few working-age people with disabilities are in work in Poland and Spain (21% and 22%, respectively).

On average, the disabled account for 21% of non-employment in the working-age population, but there is a large overlap between the disabled and older groups because disability incidence rises strongly with age (OECD, 2003a).

4242

Trends in disability policies in the OECD area A generalised change in “philosophy” – but country approaches and

implementations differ greatly

Move from benefit to integration orientation

Tightening of access to disability benefits

– reduction in benefit levels– stricter medical and/or legal assessment procedures– emphasis on temporary benefits– new ways of dealing with partial disability

Promotion of employment integration

– introduction/fostering of anti-discrimination legislation– increase of employers’ obligations towards disabled people– stream-lining of administration and individualisation of case

management– measures to increase work incentives for disabled people

4343

Examples of recent disability reforms

Luxembourg - since 2002 only individuals with assessed continued work incapacity remain on sickness benefit. Those no longer entitled to sickness benefits provided with job-search support, with clearly defined redeployment procedure to support access to employment. Successfully redeployed person receives permanent payment to compensate for difference between previous and new earnings. Person waiting to be redeployed classified as unemployed but receives waiting allowance - increased unemployment benefit set at higher level of disability benefits.

Denmark - disability scheme reformed in 2003. Disability assessment about what a person can do and not loss of capacity. Authorities assess extent to which person able to carry out subsidised job (so-called “flex-job”). Suppression of partial benefits granted to those with at least 50% reduced work capacity. Disability benefit now only granted to people whose capacity is permanently reduced and not able to carry out flex-job, even after participation in activation or rehabilitation programmes. Unemployed people with partially-reduced work capacity only able to perform flex-job receive special unemployment benefits, set at the same level as disability benefits. Permanent wage subsidy paid to employers of people on a flex-job to compensate for reduced work capacity, while flex-job workers receive standard wage.

4444

Examples of recent disability reforms Netherlands - Since 2006, entirely new disability benefit system in place. New

scheme has two components: permanent disability benefit for people who cannot work any more and another benefit for persons whose disability is either partial or not permanent. Fine grid of partial disability benefits, with seven steps in line with the reduced capacity abolished. First category comprises permanently disabled workers with at least 80% reduction of earnings capacity, who receive a disability benefit at a level of 75% of their last wage. Workers with earnings capacity reduction of 15-34% can no longer receive a disability benefit. Instead, employment relationship is maintained (if possible) and employer has to adapt the workplace if necessary. In case of job loss, after exhaustion of sickness benefits, treated like unemployed. Workers with incapacity of 35-79% and those fully but not permanently disabled entitled to a benefit that is higher if worker is working for at least 50% of the remaining capacity. After five years, benefit will be reduced to a flat-rate payment if the worker is not utilising that capacity.

Switzerland – Reform in 2004, keeping 50% and 25% disability benefits, and adding new 75% benefit for people with 60-69% earnings incapacity. Aimed at reducing further the share of people on a full disability benefit, thereby raising incentives to return to the labour market on a part-time basis

4545

Further reform is needed

Transform the disability benefit schemeinto a flexible labour market programme

Assess needs and, if necessary, intervene earlier: Avoid disability benefit inflow through job search measures, training, rehabilitation and prevention

Disentangle eligibility for support from work ability and work status: Make cash benefits a flexible (in-work) tool that covers extra costs and the labour market disadvantage

Ensure that work for disabled people is financially attractive and sustainable

4646

Break the link from temporary sickness to permanent disability

Implement a “mutual obligations” approach

Strengthen individualised, tailor-made pre- and post-placement support

Integrate employers into the process, and design proper balance between obligations and financial incentives for them

Monitor outcomes carefully

Further reform

4747

SUMMARY AND CONCLUSIONS

4848

Summary and conclusions

Across OECD countries, there are strong economic and equity reasons for arguing for policies to encourage increased employment, particularly for older workers and people with disabilities and women.

But this requires shift towards more supportive public policies, changed employer practices and changes in family responsibilities.

Different countries have different starting points and different challenges. There can be no “one size fits all” solutions.

4949

Annex:

Reconciliation of work and family life

5050

OECD analysis of work-family balance

Promoting parental employment options, and balancing work and care commitments are key policy challenges

– Parental labour market outcomes – Family outcomes

Babies and Bosses addresses the wide range of factors that affect the parental work and care choice.

Reviews cover 13 OECD countries in all (Australia, Denmark, Netherlands, Japan, Austria, Ireland, New Zealand, Portugal, Switzerland, Canada, Finland, Sweden and United Kingdom).

www.oecd.org/els/social/familyfriendly

5151

Raising women’s employment rates could help to face the demographic challenge

In virtually all OECD countries women represent more than 60% of the total number of non-employed persons aged 25-54, and this proportion is often close to 70% or higher.

Since prime age women (25-54), together with older workers (55-64), constitute one of the largest demographic groups of non-employed persons who could be mobilised, raising participation among women is key.

5252

Higher employment rates can advance equity and social inclusion goals

A significant proportion of non-active women state that they would like to have a job (more than 17% of non-active women aged 25-54 in 2001, on average over 19 European countries).

Non-employment among lone mothers leads very often to poverty and child poverty.

Periods of non-employment can result in poverty in old age.

5353

Behind women’s non-employment: Non-participation more than unemployment :

– Most non-employed women are not in the paid labour force. In many OECD countries, 80% or more of non-employed women are not looking for a job. Usual policies aimed at fighting unemployment are not enough to increase significantly women’s employment rate.

– On average over 19 European countries, more than 50% of non-active women aged 25-54 in 2001, stated that they were not searching for a job because of personal and family reasons (proportion close to 60% among women aged 25-44).

Educational attainment:

– Various studies have shown that having a low level of education and having held a precarious or unstable job seem to lower the chances of returning to work after having a child. Low educational attainment increases the probability of being non-employed, for women as well as for men. But there are more inequalities related to education and training in the female labour market.

– In the OECD, on average 82% of women with university or tertiary education are in employment compared to 56% of women with less than upper secondary education.

5454

Child poverty is an increasing problem in Europe

% of children in households with incomes less than 50% of equivalent medianPreliminary figures

0

5

10

15

20

25

30

Bel

gium

Fra

nce

Ger

man

y

Gre

ece

Hun

gary

Italy

Luxe

mbo

urg

Nor

way

Spa

inS

lova

k R

ep.

Sw

eden US

OE

CD

15

Mid 1990s

2000

Mid 2000s

5555

Worklessness among families with children is a particular problem in some countries

Jobless households as percentage of all households with children

0

2

4

6

8

10

12

14

Luxe

mbo

urg

Por

tuga

lS

witz

erla

ndA

ustri

aG

reec

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nite

d S

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wed

enC

anad

aF

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nd

Italy

Spa

inD

enm

ark

Bel

gium

OE

CD

Nor

way

Fra

nce

Irel

and

Net

herla

nds

Cze

ch R

epub

licP

olan

dU

nite

d K

ingd

omG

erm

any

Hun

gary

5656

Non-employment significantly increases poverty risks

Ratio of child poverty rates, working and non-working lone parent families, 2000

0

1

2

3

4

5

6

7

Norway Italy Ireland Finland OECD UK USA

Re

lativ

e r

isk

of p

ove

rty

5757

Joblessness and poverty – what are the links?

Jobless families are the most disadvantaged families– The average incomes of jobless families is about half that of all

families with children.

– They are everywhere at a high risk of child poverty (five times higher than their population share, on average).

But, on average only one-third of poor families in OECD countries are jobless (ranging from 4% in Greece to 70% in Norway).

But, in all countries with low child poverty (<5%), joblessness is also low (although Norway has 7% joblessness).

Countries with high child poverty mostly tend to have low joblessness (except UK and Ireland).

5858

Higher female employment is key to reducing child poverty

Percentage point reduction in child poverty rate through reforms to reduce joblessness and increase share of two-earner couples to level of third-best performing countries

012

34567

89

10

5959

The policy challenges

Increasing female employment, therefore, can improve sustainability of social protection and maintain labour force growth. Properly designed, it can also contribute to reductions in child and family poverty.

But it is necessary to ensure that increased employment is not simply an extra burden on mothers, who are primarily responsible for care of children (and dependent older people).

– Analysis of time-use surveys, 11 OECD countries, 1986 to 1997, shows burden heaviest for women working full-time – on average they put twice as many hours into child care as men (range from 1.4 times to 2.7 times). In total, spend about 10% more hours in paid and unpaid work, with range from equality to 30% more.

What policies are consistent with maintaining or increasing fertility? There are also questions about the best interests of children. What about choice?

6060

Supporting work/life choices of individuals Promote gender equity and autonomy Reduce non-employment among families Child development (Future) labour supply concerns

Policy approaches: the mix of policy objectives on which family-friendly policy is based

6161

Policy instruments

Tax-benefit systems and disincentives to participate in the labour market.

Maternity and parental leave and the responsibilities of fathers.

Child care. Working time and the role of employers.

6262

The relationship between fertility and female employment

across nations reversed in recent decades

1980 2000

USA

SWE

SVK

PRT

POL

NZLNOR

NLD

MEX

KOR

JPNITA

ISL

IRL

HUN

GBR

FRAFIN

ESP

DNK

DEU

CZE

CHECAN

AUT

AUS

1.0

1.4

1.8

2.2

2.6

20 30 40 50 60 70Employment rates of women

TFR

USASWE

PRTNZL

NLD

KOR

JPNITA

IRL

GRCGBR

FRA

FIN

ESP

DEU CHE

BEL

AUT

AUS

1.0

1.4

1.8

2.2

2.6

3.0

3.4

20 30 40 50 60Employment rates of women

TFR

6363

Raising women’s employment rates could help to meet demographic challenges and improve social outcomes

In nearly all OECD countries women represent more than 60% of the total number of non-employed persons aged 25-54, and this proportion is often close to 70%.

Prime age women (25-54), and older workers (55-64), constitute the largest demographic groups of non-employed persons who could be mobilised. Raising their participation is of key importance.

A significant proportion of non-active women say they would like to have a job (more than 17% of non-active women aged 25-54 in 2001, on average over 19 European countries).

In many OECD countries, 80% or more of non-employed women are not actively looking for a job. Standard policies aimed at fighting unemployment are not enough to increase significantly women’s employment rate.

Low educational attainment increases the probability of being non-employed, for women as well as for men. But there are more inequalities related to education in the female labour market.

In Germany 79% of women with university or tertiary education are in employment compared to 43% of women with less than upper secondary education. The education/employment gap relative to men is twice as wide for low skilled women as for highly educated women (18% and 8%).

Non-employment, particularly among lone mothers leads very often to poverty and child poverty.

Non-employment can contribute to poverty in old age.

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Reduce disincentives to work in the tax-benefit system

Tax/benefit systems should be so designed to given both parents in couple families equally strong financial incentives to work.

Analysis of tax-benefit models across OECD countries finds that income-testing of family benefits is the most important source of disincentives for barriers to second earners and is more important than the choice of family tax unit.

Potential disincentives for second earners are strongest for the low paid, mainly because of the withdrawal of income-related benefits; and incentives are strongest when the primary earner is well paid and the second earner is working full-time (i.e. when needed least).

To reduce the risk of long term benefit dependency and poverty among sole parents and their children and jobless couples and their children a comprehensive strategy of active and early interventions in labour market re-integration is needed.

It is important to ensure that benefit recipients do not expect to remain unattached to the labour force for extensive periods because of parental care responsibilities. Once employment and childcare support is available on a comprehensive basis, it would be reasonable to oblige parents on income support to make use of it.

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Offer low-cost, high-quality child-care services (1)

There is a positive relationship between mother’s participation rates and the availability of formal child-care.

Funding of childcare investment should follow parental choices, and use could be made of a mixture of financing tools. Direct (supply-side) subsidies should be made towards capital investment, providers in deprived and/or scarcely populated areas, or for the provision of services to children with special needs. In addition, earmarked support (or vouchers) could be awarded to parents in order to improve: efficiency through competition; and, choice in terms of providers and types of care, including out-of-school-hours care.

Financial support for formal childcare should be strictly tied to providers adhering to pre-set quality standards (e.g. rules on the number and qualifications of certified staff among personnel, staff-to-child ratios, but also on parental involvement in childcare provision, etc.).

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Offer low-cost, high-quality child-care services (2)

Fee support for childcare can be made on an income-tested basis to achieve an equitable allocation of public resources, and, when linked to working hours, to pursue employment policy objectives.

To contribute to the long-term financial viability of childcare systems, maintain where possible, the role of family day-care, as such services are less costly than centre-based care services.

Out-of-school-hours care for school children is a key policy weakness in most OECD countries (except for Denmark, Sweden and perhaps the Canadian province of Québec). Investment in such policies should be extended, also by exploring options to make better use of existing education facilities for the provision of such care.

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Parental leave: useful, but under certain conditions

Paid maternity leave with a job guarantee increases women’s attachment to the labour market when not too long (5-6 months). Long paid parental leave is particularly attractive to less skilled women and women in precarious job situations who subsequently find it most difficult to return to work. Allowances that enable mothers to stop work for a considerable time without job protection can have a negative impact on employment trajectories.

Give parents choice in their return-to-work decision, by allowing flexibility in taking leave payments, e.g. allow a parent to return to work after a shorter period, possibly on a part-time basis, without loss of overall entitlements.

To give employers due notice on the return of their employees consider appropriate notice periods for those on parental leave.

Take measures aimed at reducing the differences in the use of parental leave between men and women, for example, by granting a bonus to parents who equally share parental leave entitlements, increasing the duration of paid leave entitlements that are non-transferable between the parents, and increasing information to both parents about fathers’ rights to parental leave.

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• Legislation that grants working parents the right to ask for flexible workplace practices may increase labour costs, but makes the employee and management carefully consider the nature of existing workplace practices, and can support parents in meeting family commitments.

• Governments can also enhance the family-friendly nature of workplaces, for example, through the introduction of subsidies to employers for participating in assessment processes that give enterprises advice on family-friendly measures tailored to workplace needs. Such initiatives are most effective when through ongoing monitoring they generate long-term commitment of enterprises to family-friendly workplace practices.

Flexible workplace practices need to be enhanced

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– Ensure that there is a continuum of care for young children

– Remove barriers to employment for parents

– Workplaces need to be more family-friendly, so that parents can realistically plan their work and family commitments and employers can be reasonably certain about whether and when employees will return to work.

– Target public support first at low-income families as return on investment is potentially very high

There is no single model that fits all countries. Key elements include: