This choice-that-isn’t-a-choice is making women poor. A recent Organisation for Economic Co-operation and Development (OECD) study found that the gender pay gap in hourly wages is substantially higher in countries where women spend a large amount of time on unpaid care compared to men.48 In the UK, women make up 61% of those earning below the living wage,49 and the Institute for Fiscal Studies has found that the gender pay gap widens over the twelve years after a child is born to 33%, as women’s careers – and wages – stagnate.50 The US pay gap between mothers and married fathers is three times higher than the pay gap between men and women without children.51
Over time, these pay gaps add up. In Germany a woman who has given birth to one child can expect to earn up to $285,000 less by the time she’s forty-five than a woman who has worked fulltime without interruption.52 Data from France, Germany, Sweden and Turkey shows that even after accounting for social transfers that some countries employ to recognise the contribution women make through their unpaid care work, women earn between 31% and 75% less than men over their lifetimes.53
This all leaves women facing extreme poverty in their old age, in part because they simply can’t afford to save for it. But it’s also because when governments are designing pension schemes, they aren’t accounting for women’s lower lifetime earnings. This isn’t exactly a data gap, because the data does mostly exist. But collecting the data is useless unless governments use it. And they don’t.
Largely on the advice of international financial institutions such as the World Bank, the last two decades have seen an increasing global shift from social insurance to (often privately managed) individual capital account schemes.54 The payments a pensioner receives are directly based on their past contributions and the number of years during which the person is expected to collect benefits. This means women are penalised for the following: having to take time out for unpaid care work; early retirement (still a legal requirement in certain countries and professions); and for living longer.
Other policies simply benefit men more than women. These include Australia’s recent tax concessions for pension funds (men are likely to have a higher pension pot),55 and the UK’s recent shift to auto-enrolment. As with many pensions around the world, this policy makes the standard error of forgetting to compensate women for the time they have to take out of the paid labour force to attend to their unpaid care load. As a result, women ‘miss out on vital contributions to their pension’.56 More unforgivable is the British system’s failure to account for the fact that women are more likely to have several part-time jobs in order to combine their paid and unpaid workloads.57 In order to qualify for the auto-enrolment pension, a worker must earn at least £10,000 a year. But while many women do earn past this threshold, they earn it from multiple employers – and combined earnings are not counted towards the threshold. This means that ‘32% or 2.7 million employed women will not earn enough to benefit from auto-enrolment compared to 14% of employed men’.58
A counterpoint is provided by Brazil, Bolivia and Botswana, which have achieved close to universal pension coverage and smaller gender gaps ‘thanks to the introduction of widely available non-contributory pensions’.59 Women in Bolivia are credited with one year of pension contributions per child, up to a maximum of three children. As a side benefit (and a more long-term solution to the problem of feminised poverty), pension credits for the main carer have also been found to encourage men to take on more of the unpaid care load.60 Which raises the question: is women’s unpaid work under valued because we don’t see it – or is it invisible because we don’t value it?
Alongside addressing male bias in pensions, governments must address feminised poverty in old age by introducing policies that enable women to stay in paid work. That starts – but certainly doesn’t end – with properly paid maternity leave.
EU countries with comprehensive support for working parents have the highest rates of female employment.61 Numerous studies world wide have shown that maternity leave has a positive impact on women’s participation in the paid labour market.62 This impact is seen not only in the raw numbers of women employed, but also in the number of hours they work and the income they earn. It has been shown to be particularly beneficial for low-income women.63
There is a caveat, however: not all maternity-leave policies are made equal. The length of time and the amount of money on offer matter. If women aren’t given enough time off, there is a risk they will leave the paid labour force entirely,64 or transition to part-time work.65 When Google noticed that they were losing women who had just given birth at twice the rate of other employees, they increased their maternity leave from three months at partial pay to five months at full pay. The attrition rate dropped 50%.66
With the exception of the US, all industrialised countries guarantee workers paid maternity leave,67 but most countries aren’t hitting the sweet spot either in pay or the length of leave allowed. And they certainly aren’t hitting them both together. A recent Australian analysis found that the optimum length of paid maternity leave for ensuring women’s continued participation in paid labour was between seven months to a year,68 and there is no country in the world that offers properly paid leave for that length of time.
Twelve countries in the OECD offer full replacement wages, but none of these countries offers more than twenty weeks, with the average being fifteen weeks. Portugal, for instance, one of the countries that offers 100% replacement wages, offers only six weeks of leave. Australia, by contrast offers eighteen weeks of maternity leave – but at 42% of earnings. Ireland offers twenty-six weeks – but at only 34% of earnings. For
