Professori Diane Elsonin esitys Tasa-arvovajeen ja VATT:n seminaarissa "Plan F - parempaa talouspolitiikkaa" 30.11.2016

1. Why European Economies Need Feminist
Economic Strategies for Sustainable
Recovery
Diane Elson, Emeritus Professor, University of
Essex, UK
Seminar Presentation, Helsinki, 2016

2. Lack of Sustainable Recovery in Europe
• Fiscal retrenchment was supposed to lead to recovery in
growth rates, employment, and living standards
• Mechanism via a positive impact on business confidence and
low interest rates to stimulate private investment
• But investment has fallen as share of GDP (e.g. from 26% to
19% in Spain, 23% to 20% in Germany, 19% to 16% in UK)
• Growth rates, employment, and living standards have not, in
general, recovered to levels achieved before the 2008
financial crisis
• And challenges of population ageing , climate change,
inequality, insecurity and social tension have intensified

3. An Investment Plan for Europe?
• Some recognition of the failures of retrenchment
• European Commission President Juncker put forward an
Investment Plan for more investment, especially in economic
infrastructure
• But it represents annually only 0.75% of EU GDP, compared to
US government annual stimulus package of 2.8% GDP in
2009/10
• An assessment by Griffith Jones and Cozzi (2016) found that
the combination of the Plan, and continued fiscal
retrenchment, would lead to an EU growth rate of only 1.5%
for 2015-16 , well below the pre-crisis level of 2.3%
• The Juncker Plan pays no attention to gender issues

4. Women’s Labour Force Participation and the
European Employment Strategy
• European Employment Strategy, associated with the 1992
Lisbon Treaty, had gender equality as one of its four pillars
• Increasing women’s labour force participation was a crucial
component, to raise economic growth and tax revenue
• Targets for childcare coverage of pre-school population of
member states, though no targets for care provision for frail
elderly
• But fiscal retrenchment has swept aside these concerns, as
shown in Bargawi, Cozzi and Himmelweit (eds) 2016
• Need to recover, and extend, a gender focus in
macroeconomic policy

5. Feminist Approaches to Strategies for
Sustainable Recovery
• Rethink the objectives of macroeconomic policy
• Rethink the boundaries of the economy
• Rethink the design of fiscal consolidation
• Rethink the assessment of fiscal space
• Rethink the scope of investment : invest in social
infrastructure
• An Example : Plan F for the UK economy, developed by UK and
Scottish Women’s Budget Group
• Reorient scope of gender budgeting and gender impact
assessment

6. Rethink Objectives of Macroeconomic Policy
• Feminist economists raise the question of what is the
economy for and who is the economy for
• Emphasise well-being of people and environment as goal, as
well as growth of output and employment
• Growth of GDP needs supplementing by other indicators ( see
for instance Stiglitz at al 2009)
• Ability to buy more does not necessarily improve physical and
mental health
• Aggregate employment is not a good indicator of work that
promotes well-being: insecure, precarious work is growing
• Prioritise a caring economy above a competitive economy
• Consider care deficits as well as budget deficits

7. Rethink Boundaries of the Economy
• Unpaid production of services in households and communities
is outside the production boundary in the system of national
accounts and not counted as a part of GDP
• Unpaid work in households and communities improves well-
being of those who directly benefit from it
• And also produces a vital input for the economy: labour
• Disproportionately done by women, constraining their
participation in the paid economy and in public life
• Burden reduced by spending on public services but increased
by cutbacks to public services
• Recognise the importance of unpaid work and factor it into
economic decision -making ,including rethinking ‘efficiency’

8. Rethink Design of Fiscal Consolidation
• Need to consider the gender implications of revenue and
expenditure choices
• In many countries women , more than men, are employed in
the public sector, use public services, and receive a higher
proportion of their income from social security payments
• Women ,on average, also pay a lower share of their income in
direct taxes than men
• This is because they have more unpaid care responsibilities
than men and lower earnings from employment than men
• Fiscal consolidation that relies more on retrenching public
expenditure than on raising revenue will disproportionately
affect women

9. Example of UK Fiscal Consolidation, 2010-20
• Measures implemented and in pipeline: just under 90% public
spending cuts and just over 10 % net tax revenue increase ( taking
into account some tax reductions)
• Changes to taxes and benefits hit women more than men in
poorest, middle and richest income groups, with greatest losses as
share of income in 2010 for Black and Asian women in poorest
group (11.4% and 11.5%) ( See fig 1 for cash losses)
• Changes to taxes and benefits plus losses due to cuts to public
services hit lone mothers lose most (18.5%) and working age
couples without children least (3.4%); single women of working age
lose more than single men of working age , and single women
pensioners lose more than single male pensioners (See fig 2)
• Source WBG (2016)

10. Figure 1. 2010-20 cumulative individual impact of changes in taxes
and benefits (real-term £ per annum by 2020) by household income
groups, gender and ethnicity

11. Figure 2. Cumulative impact of changes in taxes, benefits and
spending on public services for 2010-20 for different family types
(change per annum in 2020 as % of household living standards)

12. Rethink Assessment of Fiscal Space
• Stability and Growth Pact stipulates limits to fiscal space-fiscal
deficit no more than 3% GDP and debt to GDP ratio no more than
60%
• But these are arbitrary limits that do not allow for borrowing to
distribute the costs of adjusting to shocks over a longer time period
• Austerity policies can increase these ratios rather then reduced
them by depressing economic growth and tax revenues
• Well designed deficit-financed investment can have a positive
impact on employment, output , productivity and tax revenue in
context of a stagnating economy, leading ultimately to falls in
budget deficit and debt ratios, as well as reductions in gender
inequality
• For example, investments that increase women’s employment and
improve the ratio of female to male employment. See Bargawi,
Cosi and Himmelweit (2016) chp8

13. Rethink the Scope of Investment in
Infrastructure
• Public investment in infrastructure is narrowly interpreted to
mean spending on physical structures, such as roads, railways,
broadband networks, buildings, and even weapon systems
• European System of National Accounts was revised in 2010 so
that expenditures on weapon systems (comprising vehicles
and other equipment such as warships, submarines, military
aircrafts, tanks, missile carriers and launchers etc.) are now
classified as fixed capital formation
• Public spending on people is classified as public consumption-
salaries of teachers, heath workers, care workers for instance
• Education, health and care services are not considered as part
of the infrastructure

14. Investment in Social Infrastructure
• Feminist economists are arguing that spending on education,
health, and care services should be considered investment in social
infrastructure (Bargawi, Cozzi, Himmelweit (eds) chp 1
• These services do not just produce immediate benefits that are
consumed as they are produced
• They produce long lasting economic returns like physical fixed
assets do, in terms of increasing productivity and enabling increases
in women’s labour force participation, as well as increasing well-
being and reducing insecurity
• Investment in an expansion of public child care services in the EU in
the range of 1%-2.5% GDP has been estimated to raise GDP in the
range of 1%-2.4% a year by 2020 ( Bargawi, Cozzi, Himmelweit
(eds) chp 9

15. Plan F: A Feminist Economic Strategy for the
UK Economy
• Reverse cuts to public services and social security that have had
particularly adverse impacts on low income women
• Invest in social infrastructure, including ensuring access to
affordable publically-provided care services
• Improve support for people who provide unpaid care for families
and communities and promote fairer sharing of this work
• Invest in social housing, renewable energy and environmentally
friendly public transport
• Reverse tax reductions that have benefited mainly higher income
men (such as increases in tax thresholds) and large businesses (
such as cuts in corporation tax
• Take effective action on tax avoidance and evasion
• Cut spending on nuclear weapons
• Source: WBG (2015)

16. Reorient Scope of Gender Budgeting and
Gender Impact Assessment
• Gender budgeting and gender impact assessment has been
endorsed by OECD in a report on gender budgeting in OECD
countries ( OECD 2016)
• And by IMF in a series of Working Papers and a Conference on
Gender Equality and Fiscal Policy ( see Stotsky 2016 and
http://www.imf.org/en/news/events/conference-on-fiscal-policies-
gender-equality )
• Both OECD and IMF argue that gender budgeting is better
budgeting
• But most gender budget reports and gender impact assessments
focus on individual tax measures and spending programmes
• Need to scale up to look at macro-level decisions and cumulative
impacts and alternative economic strategy options

17. References
Bargawi, Cozzi and Himmelweit (eds) (2016) Economics and Austerity in Europe:
Gendered Impacts and Sustainable Alternative London: Routledge
Griffith Jones and Cozzi (2016) ‘Investment-led Growth: a solution to the
European Crisis’ in M. Jacobs and M. Mazzucato (eds) Rethinking Capitalism:
Economic Policy for Sustainable and Inclusive Growth, London: Whiley-Blackwell
OECD (2016) ‘Gender budgeting in OECD countries’ Report to Annual Meeting of
OECD Senior Budget Officials, Stockholm, June
Stiglitz at al (2009) ‘Report by the Commission on the Measurement of Economic
Performance and Social Progress’ www.stiglitz-sen-fitoussi
Stotsky (2016) Gender Budgeting: Fiscal Context and Current Outcomes, IMF
Working Paper , WP/16/149
Women’s Budget Group ( 2015) Plan F: a Feminist Economic Strategy for a Caring
and Sustainable Economy http://wbg.org.uk/analysis/plan-f-a-feminist-economic-
strategy-for-a-caring-and-sustainable-economy/
Women’s Budget Group (2016) http://wbg.org.uk/news/new-research-shows-
poverty-ethnicity-gender-magnify-impact-austerity-bme-women/