How to leverage flexible working to tackle the ‘child penalty’ facing women
Having children can be life changing in many ways. But the effect on someone’s career may not be front of mind as they navigate parenthood, time away from work and budgeting for immediate needs – including potential childcare costs.
Men with young children generally earn more than other men. This is true for men in their mid-30s up to men in their early 60s.
Meanwhile, for women in their 20s and 30s, having children is associated with a much lower income than other women. Older women with young children, though, tend to have higher incomes than other women (see below).
Graph: For many women, having children is associated with a lower income
International challenge
Motherhood appears to significantly affect women's participation in the workplace.
A study by academics at Princeton University and The London School of Economics and Political Science defines this drop in a woman’s likely employment after the birth of her first child as the ‘child penalty’.
The study collected data from 134 countries (95% of the world’s population). It found that, on average, 24% of women leave the workforce within a year of having their first child. Ten years later, 15% are still missing from it.
And, in wealthy countries, 80% of the disparity in labour force participation between women and men can be explained by women exiting the workforce after having their first child.
The same study found that the responsibility of caring for young children disproportionately falls on women.
Of course, in many countries, many women also worry about being paid less than men – and saving less for retirement. But these are linked.
Being out of work can mean delaying or missing out on promotions and other career opportunities and can also make it harder to find a job – therefore reducing a woman’s lifetime earnings.
In turn, this leaves many women saving less into pensions.
Closing the gap
Arguably, many factors contribute to this problem. But one factor is heavily involved, according to Claudia Goldin, a Harvard economist awarded the 2023 Nobel prize in economics for research into gender inequality in the labour market.
Thankfully, it’s a factor many employers can influence: the provision of flexible working.
Many employers still reward employees disproportionately for putting in extra hours – often within fairly rigid timeframes. This often disadvantages people with caring responsibilities, which includes a lot of mums.
Women with young children often seek flexibility in their work. But, right now, flexibility costs many workers, particularly women, too much – both in pay and career prospects.
Conversely, this often causes many fathers to focus harder on their careers – taking little time off after the birth of children, and logging long hours at work.
And this often drives the ‘couple inequality’ and income divergence seen among a lot of heterosexual couples after children are born.
To a large extent, Goldin’s research suggests, the size of an industry’s gender employment and pay gap reflects not discrimination, but how its businesses organise their working patterns.
Cheaper flexibility
The solution, according to Goldin, lies in employers providing ‘cheap flexibility’. This means women (and anyone else, for that matter) being able to take care of children, or other loved ones, without paying a heavy professional cost.
Flexible work is an intrinsic part of good work. It enables not just parents, but carers, disabled people, and those moving from benefits to enter and remain in the workforce.
This is why Standard Life supports the government’s new flexible working regulations, which came into effect on 6 April 2024.
This gives employees the right to request flexible working arrangements from day one of employment. Previously, workers needed to have been employed for at least 26 weeks before making such a request.
Next steps
Employers must take decisions that are right for their business. So we have called for action from employers that does not put heavy burdens on the business community.
This is why we are asking the business community to:
- Voluntarily publish information on flexible working, including statutory requests.
- Include flexible working in job adverts, using good practice from Timewise, the flexible working social enterprise.
- Encourage conversations about flexible work for existing colleagues.
- Encourage both formal and informal flexible arrangements.
These measures will benefit many different groups of people who may otherwise find their participation in the workplace compromised. In turn, we hope this will contribute to a more equal, productive and happy society.
To read more on this subject, please see Phoenix Group’s Good work for longer lives report.
In partnership with Standard Life
Standard Life are part of Phoenix Group, the UK’s largest long-term savings and retirement business. We both share an aligned ambition to help every customer enjoy a life full of possibilities.
