Monday, January 30, 2012

Getting More Women To Work

Malaysia’s female labour participation rate is quite frankly a disgrace. But getting more women into the workforce comes up against a host of factors, not least of which are cultural and religious. The effort however is well worth making – consider that more than half the women of working age are not in the work force. You could potentially increase the work force size by 25%, just by getting all the women into formal jobs, with the obvious impact on GDP/GNI. That’s a pipedream of course, but you can’t deny the potential impact involved.

And one effective way to do that is…paternity leave!

How Can Policy Makers Increase Women’s Labor Force Participation?

…One of the most interesting stories the data tells is around maternity leave. Both common sense and many studies attest to the fact that it is easier for women to balance family and work commitments when they can take some time off after having a baby. So maternity leave increases women’s ability to participate in the labour force. But there is a trade-off: overly-generous maternity leave makes employers think twice before hiring women in the first place.

This was very clear when I looked at the impact of longer and shorter maternity leave policies. WBL* shows that 102 of the 128 countries surveyed mandate at least the 14 weeks of maternity leave advised by the International Labour Organisation. The mean ratio of female to male labour force participation for countries that mandate at least 14 weeks of maternity leave is 77.3% compared to 65.3% for countries that don’t (significant at the 0.01 level). It looks like the longer the maternity leave, the smaller the gap between men and women. But this trend reverses at the 140 day mark: very lengthy leave actually hinders women’s labour force participation. Such policies may discourage employers from hiring women in the first place. On top of this, extended absence from the workforce for maternity leave may hinder women’s labour market skills, and damage future career paths and earnings.

If maternity leave makes women less attractive to employers, this can at least be partially balanced by the provision of paternity leave. Once both women and men have the right to take time off after the birth of their child, women are less of a risk in the eyes of employers. WBL shows a significant and substantial difference in the average gender ratio of labour force participation between economies that mandate paternity leave and those that don’t.

*WBL: Women, Business and the Law database at the World Bank

There’s a few more notes on other policy issues available, such as unequal labour restrictions and tax policies, in the full paper. It’s a short and very readable paper (6 pages total), with a minimum of Econoenglish that’s accessible for the layman. If you’re interested, the link’s below.

Technical Notes:

Newton, Alice, “Women in Work: How can policy makers encourage female labour force participation?”, Harvard University, 2011


  1. Malaysia has a long way to go. Paternity leave scheme would be good. But you seriously think they will allow it here, when female workforce still have to make do with just a 2-month maternity leave?
    Currently, some women are being punished for taking maternity leave; in the form of bonus deduction. I know for a fact that some places deduct about 25% of a female employee's bonus entitlement due to the same utilizing her maternity leave.
    And in banking industry, most local banks have two-tier maternity leave scheme; one for those staffs under NUBE (they're entitled to 3 month maternity leave) and the other for non-NUBE members (entitled only to 2 month maternity leave). HOw sad is that? What is wrong with giving 3-month maternity leave across the board? We're not even talking about a 6-month or worse still 1 year maternity leave!
    Btw, another way to increase female participation is by mobilizing virtual office; it provides flexibility.


  2. I believe for business…striking a balance between both is a difficult task…
    I'd seen different behavior in my own team before….
    1 lady abused the system to the max, even work from home way too often/longer than usually allowed. another return to work on time when maternity leave ends, and don miss from work without valid reason…

    I believe many Malaysian work attitude really is the question here, to let most employers trust the local employee, the attitude has to change 1st

  3. The same reasons for why there are fewer women in the workforce applies for why paternity leave is such an alien concept. Cultural and religious.

    And because of this lock-in, the trend of more educated women than men will reduce any velocity to increase productivity based on more value-added activities.

    This time bomb will be a central issue in the future of our national planning. But looking at the quality of the women's wings in our political landscape, one should not have high hopes this challenge will be addressed with even one iota of sober intelligence.

    Beam me up, Mr Spock.

  4. @anon

    Agreed - I got all of 3 days when my daughter was born. Cultural attitudes take time to change (a generation or more) but as more educated women enter the workforce, the pressure for it will eventually come. I harp on about the female labour force participation rate, but if you actually look at the younger cohorts, the participation rate is closer to the global average.


    Good and bad points about overcoming that particular problem: make it easier to fire (and hire) people. I think some of the recent changes to employment law will facilitate this.

    The flip side of course is that these worsen the imbalance between labour and capital (employer) bargaining power - translation: lower real wage growth, especially at lower income levels.


    Yeah, I cringe at some of the utterings of our politicians, of both genders. But I think as more women enter higher levels of management, there will (slowly) be a change in attitudes. Probably not enough to matter in the next 10-20 years, but the day will come. We're not as strongly a paternalistic society as say, Bangladesh or Saudi Arabia.