Increasing Women’s Participation in the Economy through Childcare Support

Increasing Women’s Participation in the Economy through Childcare Support
August 14, 2018

While Malaysia is one of the countries where female enrolment in public universities outnumbers males, our female participation in the workforce is among the lowest in East Asia.

Public university enrolments have hovered beyond 60% in favour of women since 2000, in seven of eight major fields of study, including science, mathematics and computing.

However, once women enter the economy, it is a different story.  The pay gap starts to widen in favour of men after 35, to between 3 to 4 percent. Many women drop out of the workforce altogether.  

Only slightly more than half of women in Malaysia participate in the workforce, data from the Department of Statistics shows. This figure is one of the lowest in ASEAN.

A significant portion of women workers in the country leave their jobs upon having children, and often never return to the workforce. Two-thirds cited family as the main reason for leaving, illustrating the challenges of balancing childrearing and a career.


The lost potential of women

According Talent Corp Malaysia, greater participation by women in the labour market could potentially boost Malaysia’s GDP by between RM6 billion and RM9 billion.

Economist Alan Tan of Affin Hwang Investment Bank notes that other than increasing productivity through the increase in labour supply, having more women in the workplace also increases household income.

“The increase in income would increase consumption and purchasing power of households, which will contribute to a stronger economy,” Tan told The Edge Financial Daily.


Quality childcare benefits all

The key to making full use of female talent lies with policies that make it easier to combine work with having children. This ensures that women can return to work easily after giving birth, and also remove pressures to delay childbearing due to career considerations.

Governments and the private sector can both contribute to removing obstacles for women to work, including beefing up maternity and paternity leave, allowing more flexible hours, and reforming tax and social security systems that create disincentives for women to work.

Sweden, at 79 percent female labour market participation, and Denmark, at 75 percent, lead the world. Swedes get up to 16 months of paid leave after the birth of a new born and extra tax credits to defray childcare costs. Both countries also focus on provisions for high-quality and affordable childcare, offering highly subsidised day care facilities with opening times friendly to working parents.

A Californian venture fund, Patagonia, has offered on-site childcare at its HQ for the last 33 years. It is an unusual model, run by highly qualified teachers, with learning happening outdoors as much as in. Parents can stay connected to their children throughout the day – often eating lunch with their children, taking them to the farmer’s market, and picking vegetables with them in the “secret” garden, while the company buses school age kids back to the office after school.

The results have been remarkable. 100 percent of the women who have had children at Patagonia over the past five years have returned to work. Turnover among employees who use its child care is 25 percent lower than in its overall workforce. About half of managers are women, and the same proportion of women makes up the company’s senior leadership.

These benefits translate to real dollars and cents, for instance, defraying the substantial costs that come from having to find and retrain replacements when women choose to leave. JPMorgan Chase has estimated returns of 115 percent for its child-care program, and global business consultants KPMG found that clients earned a return on investment (ROI) of 125 percent.


Malaysian employers making some headway

Malaysia’s Minister of Women, Family and Community Development has set a target of 59 percent female workforce participation by 2020. Dr Wan Azizah Wan Ismail recognises that, "We have many highly educated women with great track records, but they also have small children to breastfeed and take care of.

"If we don't tap into the opportunity, it will be a great loss to the country,” she told Bernama.

The ministry is also pushing for an increase in the mandatory maternity leave, from 60 days to 90 days, though this has resulted in some pushback from the private sector.  

Various ministries now provide on-site crèches, and the private sector is beginning to do the same. Citibank became the first bank in Malaysia to offer childcare facilities to its employees, while Air Asia’s onsite Lil’ Star Child Care opened this year with 42 children between the ages of 11 months and six years.

Air Asia Engineer Norhartini Md Ishak, 33, is grateful for the convenience and it makes her feels appreciated by her employer. “I used to spend an extra hour when I travelled to send my son to a babysitter before I came to work,” she told the Star.

Other companies such as IBM, DKSH, EY and Nestlé have put in place a variety of measures, such as extra maternity leave, flexi-hours and nursing rooms. PwC Consulting Associates has been experimenting with flexible hours for 10 years, and female staff especially have reported increased satisfaction and well-being.

Although Malaysia has a way to go in supporting working mothers, the signs are healthy that both the public and private sector understand their needs and are beginning to respond positively.