Wednesday, March 12, 2014

Change policy to increase women’s employment

夏伟文(Har Wai Mun) & 张龙翔(Chong Long Xiang) (24th Feb 2014)

In a 2004, Florence Jaumotte released a women labor force participation study report for Organization for Economic Co-operation and Development’s (OECD). She claimed that women choose between supplying labor service not only against leisure but also “home production”, which mainly consist of taking care of (young) children. In Asian traditions, this may even include responsibility to care for elder family members.

Taking analysis approach of “labor supply” versus “home production”, factors that affect women labor participation can be generalized into (i) tradition, (ii) technology, childcare and work condition, and (iii) policies.

Traditions Rope
Tradition is referred to activities or practices passed down from previous generations. In Asia, traditions tend to assigned home production like doing housework, taking care of children and elders to women. Generally, men are viewed as breadwinner, therefore commanded a relative superior standing to women. Malay tradition of Adat Temenggung and Chinese tradition of Confucianism give superior status to men in patriarchal family structure. Hypothetically, these put extra barrier for women to choose work over home production.

If traditions see home production as women’s duty, it also put extra opportunity cost for women if they choose it. How high this opportunity cost depends on how tradition thinking of the family are and how pressing is the needs for women to be available for housework. Higher the opportunity cost, higher salary enticement needed for women to choose working over home production. As a result, only single and/or highly educated female stand considerable chance to participate in labor market. Figure 1a that analyzes and plots data from Statistical Department of Malaysia may confirm it. The trend line in Figure 1a has an upwards slope, thus statistically implying a positive relationship between tertiary education enrollment and female labor participation rate. Nonetheless, Figures 1b shows a surprisingly negative relationship for secondary enrollment and female to male labor participation rate.

Common thought is that women work until they get married or luckier work until they have child. Perhaps, having at least a diploma or degree qualification is an exception. Otherwise, tradition is like a rope that tied down women to home production. Question is does Malaysia’s Economic Transformation (ETP) has plan to relieve traditions barrier for higher female labor participation rate?

 Figure 1a: Tertiary Education Enrollment vs. Female Labor Participation

Figure 1b: Secondary Education Enrollment vs. Female Labor Participation 

ETP does aims to create job opportunities for skilled labor. Projected new job creation for 2020 by qualification are 24% for vocational/certificates, 22% for diploma, 22% for degree, 7% for Master/professional and 3% for PhD. Jobs creation for unskilled worker is projected at 22%. However, no specific action plan targeted specifically to improve neither women education enrollment nor labor participation.

Technology, Childcare Service and Work Condition
Improvement in household technologies, information technologies and work condition are favorable factors to encourage female labor participation. Available of many home appliances and automation in affordable prices like washing machine, cloth dryer, auto vacuum cleaner and microwave have decrease time needed to perform household works. Commercial childcare center, which also provide early childhood education are available but may be unaffordable for the poor.

Early childhood education has been allocated two “Entry Point Projects” (EPP) in National Key Economic Area (NKEA) for education. Availability of foreign maids and/or elderly parents that can help to take care of some household work and childcare may help free up women to participate in labor force.
Information technology and increasing job opening of freelance, part-time and flexible work hour should greatly facilitate female participate in both labor market and home production.

Reforming Policies

Tax and childcare support
In term of tax, Malaysia does not have much encouragement to increase labor participation among women. Working wife can claim for personal relief of RM9000. If they did not work, the working husband can claim wife relief of RM3000. There is no relatively favorable tax treatment of second earners, which is given in countries like Austria, Czech Republic, France, Mexico, Portugal, South Korea, Spain and Turkey.

The more attractive motivation is the salary women can earn if they work. Therefore, tax policies should be reformed to (i) give favorable tax treatment for second earners, and (ii) ensure salary of Malaysian workers, particularly working mother is not being discriminated and high enough to beat cost of living plus extra expenses to take care of their household tasks. In addition, childcare subsidies could be given since there are empirical evidences from some research that claim its effectiveness. According to OECD Economic Studies No.37 (2003/2), child benefits increase the disposable income of families with two children. Countries with biggest increment include Hungary (21%), Austria (18%), Luxembourg (17%), Belgium (15%), Czech Republic (12%) and Germany (12%).

From company perspective, revenue expenditure incurred in providing childcare benefit to employee is deductible. This may encourage company provide childcare facilities but how many company has done it? To what extend the childcare facilities in the office can help working mothers? How about giving long maternity leave, parental leave and childcare leave to help women to reconcile work and family life? The same OECD studies reported variety degree of paid leave entitlement across its member countries. Countries that offer long paid leaves for mothers include France (73 weeks), Slovak Republic (59), Hungary (58), Finland (55) Denmark (42) and Sweden (40). Australia and United States do not have paid leaves while New Zealand only offers it recently. International Labor Organization suggested 14 weeks maternity leaves. In Malaysia, materiality leaves is 8 weeks only.

Public preschool
Availability of ample public kindergarten is also important to boost female labor participation as well as lessen the burden of poor citizen. Indeed, having national-wide free preschool education has been proposed by President of United States, Barack Obama in early 2013. He argued that poor family who cannot afford preschool for their children may put their children at a permanent disadvantage. Providing preschool also reduce the needs of women to take care of their child at home. Yet, free public preschool may be in conflict with ETP on education where private education institutions play big roles in every level of education. Solution could be as simple as government put a legal obligation for private education institutions, especially those preschool operators to offer certain percentage of intake places as free for the poor.

Flexible hour or Part Time Jobs
Flexible working hour arrangement, especially those jobs that can be work from home are getting more and more popular. A check through Wikipedia found some interesting information. In 2003, the United Kingdom government introduced legislation that gave parents of children under 6 years of age, or the parents of disabled children under 18, the right in law to request a flexible working arrangement from their employer.
Alternative to flexible work time is part time job. For women that have young children, working part time is preferable particularly if childcare is less affordable. There are no data for part time employment in Malaysia. For other countries, data from World Bank revealed higher percentage of part time job participation for women as compared to men. For a random selection of 22 countries, female part-time employment as percentage of total part time employment is over 50% (see Figure 2).

Figure 2: Female Part-time Employment (% of Total Part-time Employment) for 2010

Austria recorded 80.6% percentage. Among countries with high percentage include Switzerland (80%), Germany (78.7%) and Spain (76.2%). Part time job also has its disadvantage such as low job security, poor wages, no training and lack of other employment benefits and rights. Thus, any policy to encourage part time should come with plans to ensure proper working condition and human rights.


Women can be an asset to our economic growth if their labor participation is increase significantly. To achieve that, we need to change some of our traditions and reform policies.

[Chinese version published at Nanyang Press, 24th February 2014. Available online at This English version may be slightly different from the Chinese online/printed newspaper version]

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