Scandinavia is often hailed as the best place on the planet for women. Yet in reality --- despite being frontrunners in gender equality --- Nordic countries have not been so successful when judged by women’s career progress.
A few years ago Professor Alison Wolf, director of Public Services Policy and Management at King's College, remarked: “the statistics are clear: among young, educated, full-time professionals, being female is no longer a drag on earnings or progress”. Her view is supported by the research of demographer Andrew Beveridge, who has shown that full-time working single women in New York aged 21-30 years went from earning 19 percent less than their male counterparts in 1970 to having the same median income in 2000. Five years later a 17 percent wage gap resurfaced, this time to the favor of the young women. Similar trends have been shown for many metropolitan areas in the US.
Even when we include smaller cities and the countryside, it is clear that the glass ceiling has been broken by US singles. The latest figures show that the average single American women aged 22-30 earns $27,000 annually, eight percent more than the average single man in the same age group. In the UK figures from the Office for National Statistics show that young women have 2 to 3 percent higher hourly wages than young men.
Nordic nations are characterized by early labor market entry of women, the least gender-biased attitudes in the world and a culture where men take much of the responsibility for care of children and household work. The emergence of a large public sector has historically played an important role in women's entry into the labor market. One reason is that many women have found jobs in the public sector. Another is that public services such as childcare facilitate the combination of work and family life. But in the long run, women's career success has been hampered by the fact that the labor market entry of women has been so intimately connected with public sector monopolies.
In 1998 the International Labour Organization noted that an unusually gender-segregated labor market had developed in Nordic countries, since many women worked in the public rather than the private sector. The report concluded: “in terms of differences amongst industrialized countries, several studies comment on how Nordic countries, and in particular Sweden, have among the greatest inequalities”. A similar conclusion is reached by Swedish economists Magnus Henrekson and Mikael Stenkula in their paper “Why are there so few female top executives in egalitarian welfare states?”.
Sweden is a case in point. Much of the progress that women are making throughout the world relates to their success in higher education. Women make up the majority of university students in Sweden. But although Sweden has fully tax-financed higher education, calculations by the OECD show that a young Swedish women opting for higher education will only earn the equivalent of 5,000 U.S. dollars more than if she would have worked right after high school – over her entire lifespan. In the U.S. the corresponding increase in earnings is $75,500. Swedish women who work for public sector monopolies, and monopolies often have a negative premium, as education is simply not sufficiently rewarded to compensate the income lost while in school.
But change is coming, albeit slowly, in the Nordic nations. Between 2007 and 2011 the share of female Swedish entrepreneurs rose from 18 to 22 percent, partially due to greater opportunities for private businesses in female dominated welfare services such as education and health care. The majority of the new firms in these sectors, which have been opened up for private business as previous public monopolies have been replaced by voucher systems, are run by women. Studies show that increased competition from private firms also pushes up wages and reduces sick-leave for employees.
The gender equal Nordic societies clearly have the potential to be world leaders also when it comes to women’s success in the business sector. The question is what policies will be used to reach that goal. The state mandated affirmative action which has been in place in Norway has not yet produced a ripple effect – only benefiting a handful of powerful women often filling positions in many boards.
The market approach taken in Sweden seems a wiser way. Perhaps there is also a good lesson here for the UK. While women do thrive in the private service sector in Britain, women’s entrepreneurship is, similarly to Nordic nations, hampered by public monopolies on welfare services. Opening up these services for private businesses can create a much needed boost for women owned businesses. Reducing women’s reliance on the welfare systems thus seems central for promoting gender equality.
Dr. Nima Sanandaji has written two books about women’s carreer opportunities in Sweden, and has recently published the report “The Equality Dilemma” for Finnish think-tank Libera.