Gender and Scotland’s labour market

Mhairi Love is a third year undergraduate economics student at the University of Strathclyde and is participating in a summer internship in the Fraser of Allander Institute supported by the Carnegie Trust. Mhairi’s research interests are in inclusive growth, labour economics and the Scottish economy. This blog is one of a series of articles Mhairi will publish over the summer summarising her research.


Boosting female participation in the Scottish labour market has been a key policy priority for successive governments over a number of years. Considerable progress has been made, but there remains much work still to be done if Scotland (and the UK) are to match the performance of some of the best performing counties on labour market gender equality (principally, the Scandinavian countries).

This blog summarises recent trends in the gender breakdown in Scotland’s labour force.

As discussed in the Fraser of Allander Institute’s latest joint report with the Scottish Centre for Employment Research, the Scottish labour market has recovered well in recent years. The unemployment rate is now at the joint lowest rate since records began, and the number of people in employment is high.

However, desired participation rates remain higher than actual participation rates, with more people who would like to work than are actually working.

More of these people are women and, from an economic perspective, it could be argued that Scotland is underutilising its potential workforce. This is one reason why boosting female participation rates is a key element of the inclusive growth agenda and ensuring that everyone can fulfil their full economic potential.

Economic Activity

Over the last twenty years or so, economic activity has been rising for women. Back in 1992, the gap in activity rates for 16-64 year olds between men and women was 20%. It is now 7%.

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Source: LFS June 2017

This is likely to be for a number of reasons, including a decline in manufacturing jobs which had -in the past- been disproportionately performed by men, changes in social attitudes towards working mothers, reduced discrimination in work-places, and a rising pension age for women.

Rising costs of living may also be a factor in recent trends, with some households now depending on two incomes to make ends meet.

More recently however, there has been a fall-back in levels of economic activity amongst women.

Fewer women are now participating in work or seeking employment than before. The trend observed before 2015 of increasing rates of economic activity for women has reversed somewhat.

Economic inactivity has also been rising for men since 2015, but to a lesser degree.

Scottish labour market data can be volatile, but it does appear at this stage as if the trend toward more women entering the labour force has – at the very least – been put on hold for the time being. It will be interesting to see if this trend continues.

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Source: LFS June 2017

There can be many reasons why people become economically inactive, such as illness, studying, caring responsibilities, or just general discouragement from working.

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Source: LFS June 2017

By far the most common reason given for economic activity among women is home and family commitments.

This data is not broken down into the care of children or other family care responsibilities, so we don’t know the precise nature of this category, but it’s clear that women are disproportionately affected by caring responsibilities.

Interestingly, the rise in economic inactivity among women since 2015 was driven by more women looking after family/home and a rise in women citing ‘other’ reasons.

Inflation, rising since 2015, could be a contributing factor – with money having less purchasing power and wages not stretching so far, the trade-off between working and the cost of childcare may be less attractive.

Changes in Reasons for Inactivity Since 2014-2015

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Source: LFS June 2017

Less job security could also be a factor if recent trends in employment have been driven by part-time or self-employed work. The ‘type of employment’ that women tend to be involved in – for example public sector work and retail – have been particularly squeezed in recent years both in terms of employment opportunities and wages.

Preferences for work

Preferences for work among economically inactive men are higher than their female counterparts, with more 27.2% of economically inactive men stating that they would rather have a job. The rate for women was lower at 21.5%.

However, this percentage of women still represents a larger volume of the overall workforce. 5.9% of working-age women in Scotland economically inactive but would like to work, versus 5.1% of working-age men.

Policies which aimed to encourage economically inactive women into work could have a substantial impact on the gender employment gap in Scotland.

Economic Inactivity in Scotland (Age 16-64)

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Source: LFS June 2017

Conclusions

While the recent headline rise in employment and decrease in unemployment is to be welcomed, the trend towards increased inactivity – if sustained – could be worrying. This is particularly the case for women, who are more likely to move away from economic activity.

The number of women who would like to work but are not participating in the workforce is higher than for men, and the reason for this is most likely to be home and family caring responsibilities.

Just as diversification in business has shown to lead to more robust organisations, a diverse workforce should lead to a more stable economy overall.

For example, a higher concentration of female business owners and managers have been shown to lead to regional economies which are more resilient to recession, even when controlling for traditionally ‘female’ or ‘male’ sectors (Deller, 2017).

As for future policy developments, it will be interesting to see if the Scottish Government’s commitment to double free childcare provision by 2020 has a substantial impact on female participation.

In future work, I will examine differences in female and male employment outcomes, including the type of work that is undertaken, the part-time/full-time split and how secure different roles are likely to be.

References

Steven Deller, Tessa Conroy and Philip Watson (2017) “Women Business Owners: A Source of Stability during the Great Recession?” Applied Economics, available at: http://www.tandfonline.com/doi/full/10.1080/00036846.2017.1332745