Job or Baby? Italian Women’s Struggle to have Both Holds Back Growth
Elena’s child is seven months old, and she is on the verge of quitting her job. She is unable to overcome the challenges of balancing motherhood and work in Italy, a country with a birth rate that is among the lowest in the European Union and where women’s employment rates are also among the lowest.
The Italian central bank has stated that the move is necessary to support long-term economic growth and ensure that Italy’s 2.8 trillion euro ($3 trillion) debt load is sustainable.
Getting more women into the workforce is imperative for the central bank, which has indicated that the change is needed to support the shift.
Five economists, including Italy’s former chief statistician, recently spoke with Reuters on how addressing gender inequality — a topic that earned Claudia Goldin the Nobel Prize in economics this week — might also relieve a demographic issue that threatens the pension system.
Among those economists was Italy’s former chief statistician. According to a body of academic research, women who participate in the labor force are statistically more likely to become mothers.
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Job or Baby?
A statement made by Italy’s first female Prime Minister, Giorgia Meloni, in which she referred to women as “an untapped resource” that reduces the demand for foreign labor, has been widely reported.
However, the budget that will be delivered on Monday by her conservative government for the year 2024 is not expected to include any measures to encourage change.
According to Claudia Olivetti, an economics professor at Dartmouth College, “Italy is really a very interesting case because female participation is extremely low, against the backdrop of worrying fertility rates.” This statement was made in reference to the country of Italy.
Elena told Reuters under the condition of anonymity that she is unable to afford a full-time babysitter and was unable to secure a seat for her child at a nearby nursery. This is due to the fact that she has not yet submitted her resignation.
She claimed that the owner of her tiny company turned down her request for more flexible working arrangements, including some that were required by law.
According to a report compiled by the Italian government in 2021, about one in five Italian women under the age of 50 quit their employment after giving birth to their first child.
More than half of respondents reported that they were unable to balance work and childcare responsibilities. According to the survey, another 29% of respondents stated that they had been laid off or that their contract had not been extended.
In October 2011, after returning from her second maternity leave, Enza Guzzo discovered that she had been terminated from her position.
“They summoned me inside and handed the letter to me. According to what she told Reuters, “I refused to take it, and they sent it to my home address.”
She was able to get another work, and she filed a lawsuit against her previous employer, citing a need for retribution as her motivation. The judge ruled in her favor.
“I’m bringing up two kids, and they both have the potential to become mothers someday. “You can’t have kids and be forced to stay at home,” Guzzo, who is now 50 years old, said. “I had to do it for them.”
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The national statistics bureau ISTAT reported that Italy’s female employment rate reached a record high of 52.6% in the second quarter. Despite this, Italy’s employment rate for women is still the lowest in the European Union, coming in 14 percentage points behind the average for the bloc.
According to estimates provided by the Bank of Italy, eliminating that gap would result in an increase of almost 10% in both the labor force and gross domestic product.
The number of births, on the other hand, is forecast to fall even more from the record low of 392,600 that was reached in 2022, according to scholar and former ISTAT President Gian Carlo Blangiardo.
According to him, the current trends will result in a decrease of approximately 7 million people in Italy’s working-age population by the year 2042. According to the scenario that Blangiardo ran, if everything else remained the same, this one factor would be responsible for a GDP loss of 339 billion euros.
Already accounting for more than 15% of GDP, the government projects that by the year 2042, spending on pensions would account for 17% of output. This Monday, Economy Minister Giancarlo Giorgetti issued a warning that stated that the country’s pension system is unsustainable given the present birth rates.
Meloni, who is also a working mother, places a strong priority on the issue of the birth crisis as well as the employment opportunities available to women.
During the election campaign, her coalition committed to reducing the gap between themselves and the EU by increasing expenditure on families and children to 2.2% of GDP, which is equivalent to an additional 22 billion euros.
However, money is limited since Italy’s debt expenses have risen to their highest level in the past 11 years after Rome increased its deficit objective for 2024.
The government has announced that it intends to deploy EU COVID recovery funds in order to increase the number of nursery and preschool seats. There are now 26.6 nursery seats available for every 100 children under the age of three in Italy. This number is lower than the goal of 33 per 100 children that was established in 2010 by the Barcelona agenda for women’s rights in the European Union.
In spite of this commitment, it recently reduced the target for the number of new childcare spots that will be supported by the EU by 2025.
According to data provided by the OECD, Italy invests 0.1% of its GDP on care services for children aged 0-2, which is significantly less than France’s 0.6% or Denmark’s 0.8%.
The success of Spain
The government of Meloni may take a lesson from Spain, which had a lower female activity rate than Italy did in the early 1990s but is now higher than the norm for the EU.
“Spain has achieved tremendous results first with tax policies which removed the disincentives for women, who typically earn less than men, to work, but then they invested in childcare: that really made all the difference,” according to Olivetti.
One straightforward adjustment that may be made is the elimination of tax subsidies that encourage low-income individuals, most often women, to leave the labor market.
These include unemployment payments for parents who quit before their infant turns one, which were utilized by 37,662 moms in 2021.
This is a 47% increase from 2015, when the measure was initially implemented when the number of mothers who utilized these benefits was only 24,412.
“Italy’s tax and welfare systems currently provide no incentives for women, and mothers in particular, to work,” said Paola Profeta, an economics professor at Milan’s Bocconi University and the director of the AXA Research Lab on Gender Equality. Profeta was speaking about the situation in Italy.
Ahead of the budget that will be presented on Monday, the Treasury Department has only stated that it will support families with more than two children. According to ISTAT, this accounts for only 10% of all families.
Some legislators have suggested that there may be a possibility of enhancing a tax plan that is most beneficial to single-income households, in which the man is typically the breadwinner. This could create an additional disincentive for women to continue participating in the labor field.
According to calculations made by Katharine Neiss, head European economist at PGIM Fixed Income, a $776 billion investor in bonds, including Italy’s, increasing the percentage of women in the labor force to the level of the EU by the year 2030 would result in an additional 300,000 jobs.
“Increasing participation would completely alter the trajectory of Italy’s labour force from one that is shrinking to one that is growing over the next decade,” according to a research paper by her.
The challenge is not the demographic change in and of itself; rather, it is the governmental reaction to the change. However, because there has been no change in policy, the forecast is significantly less optimistic.
