Immigrant Labor or Working Mothers?

Countries facing labor shortages tend to focus on one or the other—but it doesn’t have to be a choice.

LONDON - JULY 18:  In this photo illustration a pregnant woman is seen stood at the office work station on July 18, 2005 in London, England. Under plans to revise paid maternity leave, an exteneded period of six to nine months will be offered for maternity leave from 2007. (Photo illustration by Daniel Berehulak/Getty Images)
LONDON - JULY 18: In this photo illustration a pregnant woman is seen stood at the office work station on July 18, 2005 in London, England. Under plans to revise paid maternity leave, an exteneded period of six to nine months will be offered for maternity leave from 2007. (Photo illustration by Daniel Berehulak/Getty Images)

With people living longer and longer, there’s little hope of funding pension schemes and health care systems unless more of them are earning paychecks and paying taxes. That’s why, around the world, countries of all kinds are attempting to get more folks to join the workforce. And they’ve targeted two groups—women and immigrants—as having the biggest potential to take up new jobs.

In the rich countries that constitute the Organization for Economic Cooperation and Development, there is still a significant gap in male and female participation in the labor market. Although 76 percent of working-age men have found paid employment, only 60 percent of women have. This share is even lower in developing countries. In short, there should be plenty of women who could be persuaded to join the jobs market.

On the immigration front, there are also wide discrepancies in employment rates between rich and developing countries, which opens possibilities for poorer countries with many people but few jobs to send migrants to rich countries with lots of jobs but not enough people. Theoretically, that would also expand the wealthier countries’ labor forces and, in turn, their tax bases.

Wealthier countries have tended to favor one option over the other. In Saudi Arabia, to take an extreme example, more than half of the workforce is made up of immigrants, mostly male. Only 15 percent of women work. In contrast, in Sweden, a high four out of five women take part in the labor market, but immigrants face significant barriers to entry. Indeed, they are three times more likely to be unemployed than those born in Sweden.

So why do some countries try to promote the employment of women, and of mothers in particular, while others prefer to encourage immigration? In short, it is because each system requires a different balance between state and market, and different sets of gender norms.

With women still bearing most of the responsibility for raising children, the main obstacle to getting a higher share of women into the workforce is an adequate supply of public or subsidized child care. If facilities to take care of children are inadequate or too expensive, employment rates typically drop for mothers. In Sweden and Denmark, where child care is abundant and affordable, more than 80 percent of women with children are employed either part or full time. In the United States, the only rich country without mandated paid maternity leave, the rate is between 10 and 15 percentage points lower. It would perhaps be even lower if high levels of income inequality did not allow some middle-class families to employ private nannies at low wages.

However, affordable public child care means more public spending and higher taxes. It also requires political parties willing to support those things. Not surprisingly, it is primarily Scandinavian countries, known as historical strongholds of left-wing politics, that have massively invested in generous child care policies and long paid parental leaves. Higher taxes and a larger public sector also mean more jobs for everyone, including women.

Another factor that figures into female employment is cultural values. Scandinavian countries typically champion more progressive norms when it comes to gender equality: Female employment, as well as sharing parental responsibilities, is widespread and accepted. In contrast, countries where patriarchy and religion still play an important role in society typically have low employment rates for women—think of Italy (55 percent of mothers are employed) or Turkey (30 percent).

In countries where left-wing parties are weak, increasing taxes to fund child care is politically difficult. In these cases, immigration may appear to be a cheaper alternative. Importing workers from abroad can be a way to expand the workforce without making the massive public investments required to encourage female employment. Noncitizens are less demanding of services, and they lack political clout to agitate for them anyway. It also leads to different industrial strategies: Women have predominantly employed in services and the public sector, while migrants are overrepresented in industry, agriculture, and the private sector in general.

One way to understand how these issues have played out over time is to look at Western European countries after World War II, as I did in a recent article for the Journal of Comparative Policy Analysis. In the 1950s and 1960s, faced with labor shortages in a period of strong economic growth, a number of these countries (Austria, Belgium, France, Germany, the Netherlands, and Switzerland) established temporary guest worker programs. Workers were brought in from poorer countries along the Mediterranean rim (Italy, Morocco, Portugal, Spain, Turkey, and Yugoslavia). Such programs were often jointly organized with sending nations, and workers were allocated to industries and firms in receiving countries either by employer associations or the government. The United States also experimented with such guest worker programs where receiving countries actively organized immigration. The most notable case, the Bracero program, was run with Mexico and lasted between 1942 and 1964.

In both cases, migrants enjoyed few rights, their residence status was tied to their employment, and they were seldom allowed to bring their families. Although this migration was mostly male in the beginning, women also came to represent a significant proportion of the flow of workers. Their employment rates would typically be higher than those of native women. In general, these countries adopted strategies focused on industry and manufacturing.

The guest worker programs were established to respond to supposed labor shortages, but the shortages really only concerned male workers. In the 1960s, the paid employment rate among women in Western Europe was not much higher than that of women in Saudi Arabia today. Women were discouraged from working once they had families, and social programs to reconcile work and family were scant. In the Netherlands, a country now seen as a bastion of progressive norms, only 22 percent of women were part of the labor force in 1960. Until 1965, married French women were not even allowed to work without the written authorization of their husbands. The situation was similar in the United States: After World War II, only 10 percent of married American women with small children (under six) held a job or were seeking one.

Against the background of the “male breadwinner” model, importing migrant labor was expedient: It made it possible to expand the workforce at a low cost while upholding the traditional family that Christian Democratic and conservative parties championed. Switzerland may be the clearest European example of this strategy. Now, a quarter of its labor force consists of noncitizens, and its economy has durably relied on high levels of immigration since the early 1950s. Meanwhile, the country granted suffrage to women only in 1971 and a statutory paid maternity leave only in 2005. Taxes are low, and left-wing parties and trade unions have been notoriously weak. Even though Switzerland’s female employment rate is now high, that is partly due to the prevalence of part-time employment, which enables women to reconcile work and care when child care is inadequate. The Netherlands is a similar case.

By contrast, Sweden invested heavily in women’s employment from the 1960s onward, while increasingly closing doors to labor migrants. To be sure, Sweden also recruited foreign workers in the 1950s and 1960s, particularly from the former Yugoslavia, but these programs were on a much smaller scale and were stopped in the early 1970s. Trade unions decided that the presence of migrants could end up creating a two-tier labor market where immigrants could undercut the wages of native workers. And so, Sweden adopted a policy where entry for labor immigrants was restricted, but where their rights once in the country were identical to those of Swedes, especially in their access to generous welfare services. This strategy has had the paradoxical effect of making it especially hard for low-skilled immigrants to enter the labor force: High taxes and high wages make labor expensive. The low-paid jobs that typically constitute a gateway into the economy for low-skilled immigrants in the United States, where unemployment rates for natives and immigrants are similar, are difficult to come by in Sweden.

Meanwhile, successive Swedish governments massively expanded public spending on child care and parental leave to create an environment more favorable to working mothers. The number of child care facilities dramatically increased in the 1960s and 1970s, and so did the employment rate of women. Now, Sweden is a world leader in child care and preschool spending, and on family policies in general. As a percentage of GDP, Sweden spends three times more than the United States on family policies (parental leave, child care, and so on). The public sector is very large, and about 70 percent of its employees are women.

The fact that some countries have historically preferred immigration and others preferred promoting female employment does not mean that one cannot have both. In fact, both employment rates for women and the share of migrants in the workforce have been steadily increasing over the last few decades in Europe and North America. What is really dangerous is to not choose either option.

Japan, for instance, has faced a severe demographic and economic problem in recent decades as its population ages quickly and it struggles to pull out of a long period of economic stagnation. The government has been reluctant to open the gates for more migration, while its work environment and family structures still make it very difficult for women to work, even if their labor force participation rate has increased considerably in recent years. Japan seems to be dealing with the issue of labor shortages by betting on robots and technology to replace its workforce, instead of using more women or immigrants to expand it. It won’t be possible to say whether the gamble has paid off for many years to come, but given that most new jobs are in services where mechanization is difficult (think elder care), this is a difficult route.

Alexandre Afonso is an assistant professor of public policy at Leiden University in the Netherlands.