Women workers needed to reduce labour shortage

Encouraging older women to return to the workforce will require changes to the tax code and increased employer willingness to experiment with flexible forms of employment, according to a FAS report to be published shortly.

FAS predicts that unemployment is likely to average under 6.5 this year and 5 per cent or below in the early years of the next decade. Labour shortages could lead to wage inflation and, in order to counteract this, the report argues, policies need to be developed to increase the size of the labour force. Increased participation by women is one way of doing this.

Mr John Lynch, the director general of FAS, argues that because of the rapid increase in the workforce of women in the age range 25 to 44 years, further growth in female participation will depend increasingly on women aged between 45 and 64 years.

The sheer pace of the transformation in women's participation in employment during the 1990s is not yet widely recognised, according to Mr Lynch. For the age range 25 to 44 years, Irish women's participation has converged on the EU average.

The income tax system, through the transfer of personal allowances and the doubling of tax bands, provides for lower taxation of single-earner couples than for single people without adult dependants, but means partners who return to work are taxed heavily.

"While this appears to have had a limited impact on decisions by working women to remain in employment after marriage, it can represent a more visible disincentive to decisions to return to working life after a period of inactivity. Achievement of the projected growth in participation by older women will almost certainly require some re-examination of this aspect of the tax code."

The report also states that many older women may only be available for part-time work or other forms of flexible employment. Growth in part-time work has been a feature of most European countries with high labour force participation by women.

In 1996, according to the report, almost 80 per cent of women workers aged over 50 years in the Netherlands, and 55 per cent of those in the UK, were working part time. The corresponding figure for Ireland was 32 per cent.

The report shows that in the period since 1983, women have accounted for 220,000 of the total jobs growth of 330,000. Ireland had a women's employment rate similar to the southern European norm in the 1980s, but now has a rate more akin to those which exist in northern European countries.

The report quotes current ESRI predictions of an almost 10 per cent increase in female participation over the next decade, bringing the Irish rate to well above the EU average. The main potential for additional increases in female labour lies in the older age groups.