Increasing the employment of women through flexible work arrangements

The Peer Review was held in Oslo on 26^th and 27^th May 2005 and hosted by the Norwegian Ministry of Social Affairs. In addition to the host country, a further 12 peer countries participated in the Peer Review: Austria, Belgium, Bulgaria, Cyprus, Finland, Hungary, Iceland, Malta, the Netherlands, Slovenia, Spain, and Turkey.

Key Issues

Labour market participation of women is a major issue for the European Union as a whole and one which has been consistently tackled with a noteworthy degree of success for many years in Norway. At 75.9% in 2003, labour force participation rates of women in Norway are high by European standards (55% in the EU). Women’s participation is considered to be of high importance in Norway for three main reasons: demographic ageing and the shrinking of the workforce, the increasing demand for services and the skills of both men and women, and economic independence and equal opportunities. The Norwegian policy is targeted at making participation easier and more attractive to women through flexible work arrangements and a family friendly work environment. The specific policy instruments under review were: Earnings-related paid parental leave arrangements and cash benefits and flexible working time regulations.

Earnings-related parental leave arrangements and cash benefits
Norway has a number of types of parental benefits of which the most important is the earnings-related parental benefit which is equal to the mother’s or father’s full salary for a period of 42 weeks or to 80% of the salary for a period of 52 weeks. To be entitled to this benefit, the mother/father must have been in employment for at least six out of the ten months prior to the benefit period. The parents can choose to share the period of paid leave with the exception of three weeks prior to the birth and six weeks after the birth which are reserved for the mother for health reasons and four weeks which are reserved for the fathers. Further benefits are the time account scheme through which parents can combine parental benefits with shorter working hours and the lump sum maternity benefit for women who do not qualify for the parental benefits. A further cash benefit scheme is available for children of one or two years of age who are not in full-time public day care. This allows economic flexibility and freedom of choice by supporting families who do not want their children to be in full-time public day care.

Flexible working time regulations

Parental leave is complemented by legal arrangements that ensure flexible working hours to help workers reconcile work and family life, e.g. there is a right to reduced working hours and a right to refuse overtime. A right to flexible working time and a right to stop working at night were being discussed in parliament at the time of the Peer Review.

When pointing out the high level of female labour supply in Norway the individual based, rather than household based tax system has also to be considered.

The policy challenge in this context is reaching the right balance between work incentives and welfare opportunities to ensure both labour supply and a family-friendly working environment. An equally important challenge is to develop policy instruments in such a way that both men and women can share opportunities and duties on the labour market and in their family lives.

There was discussion about the issues of unwilling underemployment and labour market segregation which are concerns in Norway although most unwilling underemployment is short-term. Further issues which were discussed were the involvement of the social partners in policy-making, employer attitudes, individual taxation, and state support for day care for children, changing cultural values and the role of men.

Aspects of transferability

The great interest of the participants and the relevance of the theme of the Peer Review were reflected in the lively discussions. There was overall agreement on the aims and implications of most of the policies presented in Norway although there was great diversity among the participating countries regarding the types and extent of flexible and part-time working arrangements in use. Some countries saw the possibilities of transferring aspects of the Norwegian policies to their own countries as limited by economic and cultural factors. Similar policies in other countries are not as successful because, for example, the parental benefits are much less generous or part-time workers are as costly to the employer as full-time workers in terms of social security payments. Some countries still have a household tax system which encourages women to stay at home. The cultural norms regarding the length of time mothers should spend with small children and the role of fathers in the family also play a decisive role in the potential transferability of the policies.  However, there was overall consensus on the way forward and the results of the Norwegian Peer Review are undoubtedly of great value in the context of the European Employment Strategy.