Women`s work in Germany and Finland: A critical contemplation of the human capital model

Inhaltsverzeichnis

1. Women´s employment in Germany and Finland

2. The human capital model

3. Application of the human capital model to the conditions of the gender-specific labour market
3.1 Thesis 1: Concerning the education the investments and expected net yield of women are lower than those of men
3.2 Thesis 2: Men earn more money and work within other areas than women
3.3 Thesis 3: Women must expect disadvantages on the labour market due to discrimination

4. Criticism of the human capital model

Bibliography

1. Women´s employment in Germany and Finland

At the end of the Second World War the professional activity of women did not have a good stand in West Germany. The conception was widespread that the man on his own should be able to maintain his family by sufficient wages. Still in the year 1970, less than every second woman was gainfully employed. Only 46.2 per cent of the female population earned money to contribute to living costs of their families or to supply themselves. Until 1997, the labour force participation rate of women at the age between 15 and 65 years rose to 60.3 per cent (Statistisches Bundesamt 1998:80), this time with consideration of the women in East Germany. Up to the political change in 1989/90 the majority of the East German women was economically independent, but unemployment in East Germany rose also substantially due to the collapse of the GDR.

The increase in women's work in West Germany can be attributed to the increasing professional activity of mothers. The number of women taking part in the business life after the "baby break" rose quadruple between 1984 and 1992. The share of the married women attending to work is also risen in West Germany. Unfortunately the increasing readiness of women to work was transferred only to a small section into paid full-time work. Of 5.3 million part-time workers 90 per cent were women, two thirds of them with child (Bundeszentrale 1997:24f.). Besides the desires of many women to work flow into registered or hidden unemployment and into unprotected employer-employee relationships.

In Finland women´s employment has a longer tradition than in (West)Germany. The women could profit from the economy upswing in the 1960s because in contrast to West Germany there has been practically no immigrant labour force. The women were the only important source for the needed workers. The majority of the increased female labour force were married women who had been very little gainfully employed outside the agricultural sector until this time (Jallonoja 1980:9f.). Due to a further economic recovery in the 1970s and 1980s unemployment was almost eliminated. The labour force participation rate of women in Finland is almost unchanged for 20 years. In 1996 it amounted to 61.4 per cent concerning women between 15 and 74 years, whereas the value concerning men was 68.7 per cent (Statistics Finland 1997). The highest labour force participation rate of women was declared by the Work Research Centre of the University of Tampere which deals with the restructuring of the Finnish labour market. According to the specification of the institute, 87 per cent of the Finnish women at the age between 25 and 44 years were gainfully employed during the late 1980s (Work Research Centre 1996).

The specification concerning the labour force participation rate depends on the fact, which age limits are set in each case. The age limit for employed women would have to be set between 15 and 65 years to obtain a value, which is comparable with Germany. In view of the many different given values of different research institutes the mean average value will amounted to approximately 72 per cent - a value, which exceeds the female labour force participation rate in Germany by far. Due to the recession in the 1990s in Finland it came to the increased creation of part-time jobs but it is not comparable with the development in Germany. 11 per cent of the employed women and 5 per cent of the employed men worked part-time in 1996. Of the persons, who had a part-time job, 65 per cent were women (Statistics Finland 1997). About 40 per cent of the Finnish women decided only involuntarily in favour of a part-time job because they had failed to find full-time employment whereas the value concerning the German women only amounts to 10 per cent (Nurmi 1999:120). Because of the increasing labour force participation rate of women and the bad implementation of appropriate jobs for them, the demands become louder particularly in Germany to work against the bad conditions, with those women to be confronted in the economy. The equal participation of women and men in the working process can only be implemented, if the conditions, which prevail on the gender-specific labour market, are analysed. Since the 1970s the woman research (in Finland a little bit later as in Germany due to the relatively weak antiauthoritarian New Left of the 1960s) is oc- cupied increasingly with the position of women in the economic production process. For a long time the economists were interested only indirectly to explain the differences in the occupation structure between women and men. With the elaboration of the human capital model some economy theorists began at the beginning of the 1980s to investigate the gender-specific labour market from the neoclassical perspective.

The base of the following remarks forms the economic theory, extended by sociological aspects. Against this background the German and Finnish conditions will be considered in a special way.

2. The human capital model

The classical labour market model assumes that perfect competition prevails between all workers and an unhindered access and exchange of jobs insist on the labour market. This view has proved as unrealistic.

The neoclassical labour market theories try to recover some faults of the classical model. Among these new theories the human capital model plays a special role.

As starting point of the human capital model the assumption can be understood that the qualification is a crucial economical investment for the improvement of the chances on the labour market. The employee essentially behaves like an entrepreneur. He tries to keep and to increase his "capital" by graduations, professional experience, further training etc. Investments in human capital always represent, however, a trade-off problem: On the one hand the education is connected to direct costs and incomes must be renounced during the period of training. On the other hand investments in the own abilities, skills and knowledge lead to an increased productivity and therefore to an increase of the wage. That´s why the rational employee compares costs and benefits of his investments before he starts with an education.

Therefore the human capital model belongs to those labour market theories, which try to explain the connection between education investments and unemployment as well as earned income (Staehle 1990:724).

3. Application of the human capital model to the conditions of the gender-specific labour market

A gender-specific segmentation exists on the labour markets of all developed industrial countries but the circumstance that women and men carry out different work doesn't lead automatically to dis- criminations or social inequality. Only if the division of labour results in an asymmetrical power relationship between the sexes, it is legitimate to speak about discrimination (Helwig & Nickel 1993:235).

In Finland this doesn't seem to be a problem at first sight, if one has a look at the relatively same distribution of employed women and men. In 1996, the proportion of women in the labour force was 47.6 per cent and the proportion of men was 52.4 per cent (Statistics Finland 1997).

In Germany the number of employed men (57.2 per cent) and employed women (42.8 per cent) different more noticeably. Therefore it can be assumed from sociological view, that German women are exposed to other conditions on the labour market as men because they form the minority there. And even minorities are often subject to discrimination. They are partly excluded from the participation in the majority culture to which the men belong in this case. Narrow limits are set to the minorities, which try to get social integration and fight for equal treatment, because the majority wants to defend her culture, privileges and popular positions (Hillmann 1994:558).

The economic labour market theories do not give the discrimination trend opposite women special emphasis but the opinion that women are less productive in the working life than men. Therefore the women have to reckon with corresponding consequences. Professional differences aren't a result of social discriminations but a product of a different but rational investment behaviour. The human capital model based on this assumption.

Both approaches have in common that they assume that women are exposed to other conditions on the labour market as men. In the following, three theses are put up which shall outline the situation on the gender-specific labour market and which should be explained on the basis of the human capital model. If the human capital model doesn't find any starting point, the social scientific labour market theory will contribute to the explanation partly.

It is an interesting aspect that the gender-specific distribution on the labour market is so differently in Finland and Germany. The two countries represent two different models of female employment: high, full-time involvement (Finland, former East Germany) and reduced involvement and short part-time hours (former West Germany) (Nurmi 1999:103). Even if in Finland the women do not represent a minority on the labour market, then it is particularly interesting to examine whether the following theses apply to Finnish conditions unexpectedly.

3.1 Thesis 1: Concerning the education the investments and expected net yield of women are lower than those of men

Concerning the school education women and men invest to the same extent in their human capital. Female young people in Germany get on the average even better marks and acquire more comprehensive school and senior secondary school graduations, in German called "Re- alschulabschluß" and "Abitur" (Bundeszentrale 1997:20). That is not different in Finland. Of the pupils, who visit a comprehensive school, 49 per cent are girls and 51 per cent are boys. At senior secondary schools the differences become more clearly: 43 per cent of the pupils are girls and 57 per cent are boys (Statistics Finland 1997). The girls in Finland also get better marks than the boys (Nummenmaa 1994:61).

In the opinion of Ursula Rabe-Kleberg, to the reasons for the higher school education of women belongs the fact that women need a higher graduation to have the same chances on the appren- ticeship market as men. Additionally the training programmes, which are open for women, require higher graduations. In Germany it also often occurs that girls stay longer in the education system,because they do not get a training post and acquire higher graduations in such a way. Therefore girls attain middle graduations particularly in occupation-preparing "waiting loops" at full time schools (Rabe-Kleberg 1992:72). From the view of the human capital model it can be concluded that regarding their education women do not invest consciously in their human capital. They invest in their human capital because they have no choice due to the labour market situation.

So "girls have caught up or even overtaken the boys regarding the attendance of continuing schools, their proportion of the trainees, however, amount to only 38%. A scarce third of them still concentrates on a training as shop assistant and hairdresser, and they are to find to a quarter in - almost all - training posts of only two-year duration" (Engelbrech/Kraft 1983, quoted from Rabe-Kleberg 1992:72)

That does not seem to apply to Finland. Concerning graduations in vocational and professional education, women are represented with 54 per cent and men with 46 per cent (Statistics Finland 1997).

The human capital model will not find a starting point in the case of Finland because there are no substantial differences in the proportion of the training posts between women and men. In the case of Germany the human capital model seems to be able to explain, why men have on the average a better education than women. If the employee must decide to have an additional education or not, it is rational for him to compare costs and benefits. The investment in the education is worthwhile, if a higher salary exceeds the spent costs due to the additional education. The renunciation of education is rational for women, if they plan an interruption of the activity from the beginning. Then occupations are attractive for them, in which education and professional experience play no crucial role for the income. Whether women take part in the business life and whether they plan an interruption of their employment, depends on the fact, how the division of labour functions in the family. The rule of the comparative advantage means that a specialization takes place, if woman and man are talented differently, because each household pursues a common profit maximization strategy. Therefore the human capital theoreticians assume on the one hand that women are more suitably for housekeeping activities than men. "They suppose, without making this explicit, the model of a traditional breadwinner/housewife marriage, and according to their own position they explain this with socialized specialization advantages or simply biologistically with the ability of the women to bear" (Maier 1998:23). On the other hand they see that the demands for division of labour in family,occupation and society still remains unfulfilled, because the conventional image of man was never questioned seriously. Therefore they assume that the woman will concentrate on the housework. If the man earns more than the woman (and that is mostly the case) the woman will concentrate on the housework anyway. Because the standard work supply model assumes that, with the lowering of the market wage rate, the attractiveness rises for a woman to be confined to the housework. The higher the requirement or reservation wage rate, measuring the value of time, which is spent in the household and in the family, the more uninteresting is the employment for a woman. If the market wage rate is smaller than the requirement wage rate, then the employment is not of advantage for her. However, the increasing female labour force participation can be attributed to the fact that the requirement wage rate is smaller than the market wage rate (Weck-Hannemann & Frey 1989:563f.). Today women generally strive for both a satisfying, qualified work and a family life. But the difficulty to combine occupation and family is still the problem of the women, both in Germany and in Finland. Phase employment, desires for reduced work hours, the assumption of responsibility for children, patient and old persons weaken the negotiating position opposite the employer (Knapp 1995:21). A further reason, why the net yield of an education for women is not as high as for men, are the smaller vocational opportunities for promotion, which are connected with the employment of women from the beginning. Additionally, due to interruptions women have less chances to be classified under a higher wage category, because wage increases are linked to seniority times. Earnings are also reduced by temporary and part-time jobs, what is particularly relevantly in Germany. Moreover, it is often not possible for German women to continue their practised occupation after the interruption of their gainful employment (Kühn 1991:35).

According to the specification of the "Family survey 6", that was realized by the German institute for youth Munich, only 27 per cent of the married women with child could improve in relation to their vocational entrance. After the interruption women have to accept jobs, which do not correspond to their qualification, to be allowed to work at all. The value of the acquired human capital is deducted increasingly and the market wage rate continues to sink. In Finland it seems to be better in this point. There the job warranty after the maternity leave became generally accepted. Social policy measures give the mothers of small children the option of paid absenteeism from the labour market without risking their labour status, e.g. maternity leave and benefit, child home care leave and subsidy (Work Research Centre 1996). Moreover, fathers are entitled to a paternity leave (paternity allowance period) of 6-12 weekdays in connection with childbirth and to another six weekdays within the parental allowance period (Statistics Finland 1997). That may be a small step for the relief of the mother after delivering the child.

3.2 Thesis 2: Men earn more money and work within other areas than women

"If one updates the trend of the 80s, then it is not to reckon with the removalof the gender-specific earnings differences before the year 2412"

(Kurz-Scherf 1992:213, quoted from Knapp 1995:24)

This quotation may work scandalizing in view of the efforts of the international equal rights policy, but actually this statement is not surprising.

Today the income differences still amount to 25 to 30 per cent. The smaller income of women is frequently connected with the double load in occupation and family: women can perform less well paid overtime and shift work, work less professional years due to interruptions and spend on the average shorter times in the same company. For these reasons women are rarely promoted to higher wage categories. The human capital theoreticians interpret this income loss as a consequence of the smaller investments in the human capital and as a result of the reduced productivity of the female workers.

Two types of occupations are unattractive for women due to the small net yield of an education: (1) occupations, in which professional experience and continuous employment are of importance, and (2) occupations, which require a long-continuing education, which have to be payed by the employees (e.g. studies) (Willms-Herget 1985:49).

The economists Hannelore Weck-Hannemann and Bruno S. Frey assume that women have to expect high depreciations of the human capital particularly in occupations, in which the expectations change fast concerning the qualification.

“From this it can be explained - without consideration of the gender-specific preferences or suitabilities - , why women concentrate on occupations with alinguistic-literary, artistic or caring direction and they are under-represent in technical occupations." (Weck-Hannemann & Frey 1989:566)

So the human capital model explains the segregation of different occupations and vocational fields and the development of male- and female-dominated occupations. According to the definition of the institute for labour market and occupation research, male-dominated occupations are occupations, in which the proportion of women amounts to less than 20 per cent (Bundeszentrale 1997:23).

Therefore the technical occupations, in which only 16.4 per cent of the employees are women in Germany, can be defined as the domain of men. The service sector, where in Germany 56.4 per cent of the employees are women, can be considered as the domain of women (Statistisches Bundesamt 1998:84). The numbers in Finland differ only insignificantly from those in Germany. In Finland within the technical sector women are represented with 25,9 per cent and within the service sector with 61,3 per cent (Statistics Finland 1997). Just about 80 per cent of each sex are working in occupations of their own sex. About 10 per cent are working in occupations dominated by the opposite sex (Nummenmaaa 1994:47).

In Germany the number of male-dominated occupations is sunk from 186 to approximately 140 between 1977 and 1990, but two thirds of all women still operate in only ten occupational groups, particularly in the office, trade as well as in the health and care sector (Bundeszentrale 1997:23). There aren't only gender-specific differences with regard to the numerical distribution on different professions but also with respect to activities within the branches of profession. Women primarily work in lower positions, both in the private and in the state sector.

In Germany the share of women in the position of a professor amounts to only 5 per cent. In comparison with this it is remarkable that since the 1980s a third of the members of the Finnish parliament are women and they fill different minister positions. In Germany it is inconceivably to have a female head of state like Tarja Halonen. But also in Finland women usually fill lower positions than men.

Because women mainly work in lower positions and in economic areas with low wage levels they also draw a clearly lower income. Moreover, in the industrial sector the number of jobs is reduced by the input of new technologies and the shift of the production in cheap wage countries.

3.3 Thesis 3: Women must expect disadvantages on the labour market due to discrimination

Discriminations on the gender-specific labour market aren't taken into consideration by the human capital model. From the economic perspective, wage differences are attributed to wage relevant factors like the formal education and the length of the membership in a company. These two prerequisites are just fulfilled only insufficiently by many women. It was noticed in Germany that only 54 per cent of the wage differences can be derived from really wage relevant factors, the remaining 46 per cent can be considered a discrimination.

The aversion of the employers is one of the reasons for discrimination opposite women: In this case women are referred to a lower status from the beginning, individual qualifications are of second-rate importance. In connection with this, the "crowding" approach assumes that the preferences of the employers lead to a gender-specific labour market segregation. The discrepancy between supply and demand for workers for a certain profession can lead to a power imbalance between the market participants. That means, that in female-dominated occupations many women compete for a restricted number of jobs so that the wage levels drop. The reduced competition in the male- dominated professions leads to the fact that the wage increases there (Willms-Herget 1985:51f.).

Women are also put at a disadvantage, if men, who are already engaged in a certain company, fight against the admission of a woman into a typical male-dominated profession or into higher positions. Then the employer has to reckon with conflicts between the employees which can reduce the productivity. He will generally decide against the woman and not employ her. The preferences of the customers can also lead to the fact that women are discriminated on the labour market. Women, who work in male-dominated occupations, must primarily expect, that their abilities aren't appreciated in the same way like those of men. Because most customers think that women have only a low ability in the technical and manual area, they will seldom award corresponding orders to them. Regarding the training of women it turned out that girls cannot surmount the barriers of the gender- specific job market only by the modification of their occupation voting pattern. They frequently have no choice, because the companies refuse them admittance to male-dominated occupations and they have to reckon with discriminating behavior in these occupations (Knapp 1995:25).

Due to the results of a poll of the senate office for equalization in Hamburg, only 6 per cent of parents thought that their daughters have a talent for natural sciences and technique, whereas 13 per cent of the daughters thought that they are talented in these fields. With the same percentages parents and daughters support the training in occupations, which are not typically for women (Bundeszentrale 1997:21). These results prove that people usually think that women aren´t capable of having technical competences, which are presupposed with men. But in the years between 1978 and 1985, the German Federal Ministry for Education and Science executed the model project "Development of occupations in trades and technique for girls". It turned out that girls are just as suitably as boys for a technical training: 963 of 980 girls pass the skilled worker examination in this time (Bundeszentrale 1997:23).

In Finland it depends on the social status of parents whether they support that their daughters work in male-dominated occupations. Parents with a higher education endorse this voting pattern rather than parents with a lower education. In investigations it came to light, that girls are more willing than boys to choose occupations other those strictly of their own sex (Nummenmaa 1994:58ff.). But because the unemployment ratio of young women in male-dominated occupations is still above the average (Bundeszentrale 1997:23, Nummenmaa 1994:68), women tend to work in the service sector. Moreover, on a long-term basis and in international comparison it was proven that the status and the proportion of women in an occupation are correlated negatively.

4. Criticism of the human capital model

Many social scientists criticize, how the human capital model explain the gender-specific segregation on the labour market. In their opinion the model can explain, why women can develop a preference for occupations with a short training duration. The reason for this occupation selection can be that women concentrate primarily on the family and on the housework and that the gainful employment has only a secondary meaning for them. However, it is doubtful whether economic factors (like the maintained differences in the productivity between female- and male-dominated occupations) are actually responsible for the wage differences. The activity in female-dominated occupations is generally not as profitable as it would be to expect due to the qualification requirements.

Beyond it the human capital model cannot explain, why income differences also exist, if women and men invest the same in the education, e.g. in the case of assistant jobs. The model also does not explain, why women work at all in unfavorable female-dominated occupations, if the costs of the education are as low as in (unskilled) male-dominated occupations, but they earn less. The argument that the intermittent labour force participation does not lead to income losses in female-dominated occupations, cannot reconcile with the empirical findings. Additionally, women, who interrupt their gainful employment, do not work more frequent in female-dominated occupations than women, who are employed continuously (Heintz et al. 1997:29). Weck-Hannemann´s comment, that women have to expect high depreciations of the human capital particularly in occupations in which the expec- tations concerning the qualification change fast and that´s why women concentrate on occupations with a linguistic-literary, artistic or nursing direction, is also not convincing. On the one hand such an argumentation neglects discriminations opposite women, who want to work in male-dominated occupations. On the other hand women also must expect disadvantages in the case of an interruption and a missing further training in non-technical occupations.

Angelika Willms-Herget assumes that non-economic incentives must be decisive, if women decide for female-dominated occupations. In her opinion women prefer female-dominated occupations due to a "special liking", although those imply income disadvantages. Women work in such occupations, in which they learn much for the family work or in which they can bring in housework abilities (Willms-Herget 1985:51). Willms-Herget makes the same mistake as the human capital theoreticians. She does not analyse the integration of the woman in the housework and the sexual division of labour. Like the human capital theoreticians she thinks that women cannot combine housework and employment.

A strict delimitation of public employment and private housework is presupposed. But this opinion does not reflect the reality. Today women usually invest in their education as much as men. Women and men aim at higher education graduations to the same percentages: in 1996 the proportion of female students amounted to 46 per cent in Germany (Bundeszentrale 1997:24) and 52 per cent in Finland (Statistics Finland 1997).

The missing solutions belong to a further important critical point. The human capital model tries to explain the vocational differences between men and women, but it seldom offers detailed and developed starting points, which could modify the given situation on the labour market. To the politico-economic starting points belongs the model of intensified competition. If only one employer would not have a tendency towards discrimination and would employ women as cheaper workers, then he could produce with lower costs and eliminate the competition in this way. The increased demand for female workers would entail an increase of the wages of women or a lowering of the wages of men. That would lead to equilibrium wages (Maier 1998:24). Both neoclassical and social scientists cannot explain, why this pro??cess does not begin.

In Germany further solutions would be the formulation of administrative regulations (which ensure an increased promotion of women and families), direct political and unionized pressure and the separate taxation of the income of each person, so that the gainful employment of wives is not punished. Besides changed preferences of the customers, lower income losses due to the temporary interruption of the gainful employment and more possibilities for flexible employment would be necessarily to work against the unequal conditions on the gender-specific labour market (Weck- Hannemann & Frey 1989:568).

In Finland many demands were already implemented, which advance the equal rights of men and women:

„The exceptionally high levels of labour market participation among women in [Finland] has been explained by the double bind between women and the state: the public sector has provided women with jobs, and the high coverage of public care services for the elderly and children has enabled women to undertake employment. Other social structures and systems [as in Germany], such as separate taxation of spouses, good provisions for maternity and parental leave and flexible possibilities for temporary exit from the labour market have encouraged women to enter the la-bour market. […] It has been [more] possible for women to combine work and fam-ily life.“ (Nurmi 1999:107)

However, n Finland still exist gender-specific income differences and a segregation of the labour market. Nevertheless the following statement is quite surprising:

„The countries with the highest participation rates of women in paid work [like Finland] seem to be those with the highest segregation rates as well. The rate of segregation seems to increase in times of economic prosperity […].“ (Jolkkonen et al. 1994:193)

In Finland it is to expect a relaxation of the conditions on the labour market, because unemployment is decreased (Nurmi 1999:133). The situation in Germany will be intensified, because unemployment is risen since the mid-90s.

The human capital model can explain neither the one nor the other development. A comment by Angelika Wilms-Herget can replace the many critical remarks about the human capital model. In her opinion “the human capital model can contribute nothing to the explanation of vocationalsegregation” (Willms-Herget 1985:51).

In addition, it must be considered that in the 1980s, in which the human capital model was developed, the conditions in West Germany quite corresponded with those, which the model presupposes. Many women concentrated on the housework and did not invest in a professional training. That can be proven by empirical findings. Only by the increasing readiness of women for the gainful employment, the human capital model has lost its requirement for assertion regarding the genderspecific segregation on the labour market. Since the 1960s Finland already met the requirements of the human capital model not any longer.

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