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Why record numbers of women in the work place is not a good thing
Everywhere you seem to look women in the work place are being championed. The debate about a quota of female board positions for FTSE100 companies, affordable child care and equal pay for men and women dominate our discourse, so is it finally paying off?
The latest labour market data from the Office for National Statistics (ONS) suggests that yes, it is starting to work. The last three months of 2013 saw a record breaking number of women in the work force, with 67.2% of women aged 16-64 having a job. To put this in some context, approximately 50% of women worked in 1973.
Surely if there are more women in the work force then the challenges the media love to bang on about should be just around the corner? Don’t hold your breath. While on the surface it looks like another victory for women’s lib, delve a bit deeper and you see a bleaker picture.
What it’s really telling us
In the last two years we have seen more women enter the work force at the same time as more men have dropped out. The number of economically active males in the UK labour force was 77.1% in December, which is still lower than the 2008-09 downturn when it averaged approximately 80%.
Why does this matter? Because at the same time as women have been coming back into the work place wages have been dropping. Wage growth was a mere 1.1% in December, lower than the 4.6% rate of growth before the financial crisis. How are women expected to win wage equality with men if they are coming back into the work force in a period where real wage growth (when adjusted for inflation) is negative?
This is not the only thing that darkens the employment figures. Women have made a phenomenal return to work, however it has not been in the lucrative jobs in our biggest companies.
Research by the Federation of Small Businesses (FSB) found that a record number of female entrepreneurs are starting up businesses on our high streets. According to their research, half of small businesses in the hotel, retail, leisure and catering space are now owned by women. 20-years ago this was just a quarter.
While the headline data is indeed impressive, there are a few problems.
Firstly, the research also found that women are more likely to work for micro businesses than big companies. This is concerning since the failure rate is far higher for a micro start-up than it is for a big company, thus it suggests that women have less security in their new roles as entrepreneurs. Secondly, a small or micro business often cannot afford to pay benefits like pensions and health care, also leaving women out of pocket.
If, according to the FSB research, women are more likely to work for small, or even tiny, companies then they may also be affected by the trend in part-time and zero hour contracts. Although the unemployment rate dropped sharply in 2013, the under-employed rate, which measures the number of people who work part time but would prefer to work in full time jobs, has increased. Thus, although women are back in the work place, they may not be getting the type of work they want.
The trend of women returning to work, but not necessarily the same quality of work available pre the 2008 downturn, could also go some way to explaining the UK’s productivity puzzle. Although output per hour grew in Q4 of 2013, according to the ONS, productivity is still some 5% below its pre-recession peak.
This is far from being the fault of women, however small and micro businesses are notoriously less productive than their larger counterparts due to economies of scale etc. Thus, if women are choosing or have no alternative but to start-up companies from scratch then this could limit their productivity going forward.
More isn’t always better
Overall, while it is important for women to work, earn their own money and contribute to the economy, the euphoria over the record number of women in the work-place is misplaced. Our labour market is still not equipped to help women succeed, especially in large corporations, which is why so many are deciding to get off the ladder altogether and start their own thing.
But while it is impressive that women are starting their own businesses with a gusto, start-ups come with many problems, not least the high rates of failure. While women are doing it for themselves, their career paths are still a lot harder than they are for men.
Kathleen Brooks is author of Kathleen Brooks on Forex, published by Harriman House.
