Increasing female workforce could help labor market
Although making fertility rates increase is a marathon, CEE could buy time by increasing its female workforce. There is a gap between CEE and the EA (Euro Area) in female employment, that is even bigger compared to Sweden – a country with one of the highest female employment rate. Closing this gap would potentially bring millions of female workers to the job market. Further, both fertility and female labor participation could benefit from developing appropriate institutional childcare in CEE. Analysis of German reform from mid-2000 suggests that expansion of public child care has positive effect on fertility, in particular, increasing the incidence of second
and third birth.
There is also evidence in CEE that government policies seem to play an important role in how women decide on employment. In Poland, particularly, the introduction of generous child benefits seems to have lowered employment among lower educated women. In the Czech Republic, there is evidence that the introduction of joint taxation in 2005 led to a decline of about 3pp in the employment rate of married women with children. Further, part-time employment, which could particularly encourage young mothers to return to the job market, remains a limited option in CEE.
Another important aspect of labor force participation is employment by age group. Employment rates remain low, especially among women above 55, as many of them take advantage of early retirement, making the effective retirement age among the lowest in the OECD world.