As Germany's population ages rapidly, the country is urgently seeking ways to maximize the productivity of its workforce, which enjoys the most generous leisure time among wealthy nations. However, analysts argue that a crucial, underutilized resource is being neglected: women. Recent government initiatives include tax breaks to promote overtime and later retirements, along with a 2-billion-euro investment in childcare to facilitate more mothers joining the workforce. Despite these efforts, labor market experts claim that the measures fall short of tackling fundamental tax system issues and entrenched cultural practices that continue to keep many women at home.
Nicola Fuchs-Schuendeln, Chair for Macroeconomics and Development at Goethe University Frankfurt, expressed to Reuters that the major oversight was not considering more robust incentives for women to increase their work hours. Germany's demographic shift, with its labor force shrinking by 400,000 annually, poses a significant long-term threat to the nation's economy and public finances, acknowledged by Chancellor Olaf Scholz's government. While foreign workers have long been a cornerstone of Germany's workforce, the political landscape, particularly with an upcoming national election and the rise of the anti-immigrant Alternative for Germany party, is shifting, prompting a reevaluation of labor policies.
The challenge is considerable. According to the Organisation for Economic Co-operation and Development, Germany had the lowest average annual hours per worker among advanced economies in 2023. Enzo Weber from the Institute for Employment Research noted that although female and student participation in the labor market is high, much of it is part-time, reducing the average hours worked. EU data reveal that while German women have higher labor force participation than many EU nations, 47% work part-time, significantly above the EU average of 28%.
Holger Schaefer, a senior economist at the German think tank IW, highlighted that the high labor market participation rate does not offset the low working hours, resulting in underutilized labor potential compared to other countries. Historical factors, such as the 1958 tax benefit for married couples in West Germany, and the creation of 'mini-jobs' in the 2000s, which exempt low-wage jobs from tax, contribute to this issue. Additionally, Germany faces a severe shortage of childcare places, estimated at 400,000.
Some analysts fear that new measures might inadvertently create additional barriers for women. Tax incentives for full-time workers, predominantly men, to extend their hours could further diminish the scope for women to work in partnerships. Economic factors are compounded by social and cultural norms, particularly in West Germany, where traditional views on childcare persist. Despite incentives in the labor package for employers to reward part-time expansions, economists question whether this will influence women who can afford to prioritize leisure.
Jennifer Hart, a 38-year-old government adviser, exemplifies the challenges faced by working mothers. After her child's birth, she reduced her hours significantly, and while concerned about the impact on her pension, she sees part-time work as essential for managing childcare logistics and spending time with her child. Hart doubts that tax changes can alter this dynamic.
