State of Australia’s Skills 2021: now and into the future
Trends in labour force participation by gender
One of the most significant developments in the Australian labour market over the past 40 years has been the dramatic rise in female labour force participation. This sharp increase was particularly apparent in the 1980s and 1990s, but the upward trend continued over the 20 years to February 2020 (see Figure 6). The female participation rate rose from 44.4% in February 1980 to 54.0% in February 2000. In the 20 years since, it increased further, to 61.2% in February 2020.
Figure 6: Participation rates by gender, February 1980 to February 2020
The rise in female labour force participation can be attributed to a range of factors. In particular, there has been a considerable shift since the 1970s and 1980s in social attitudes to women working, as well as changes in perceived gender roles, which have facilitated greater participation of women in the labour market across a range of occupations and in positions that were traditionally male-dominated.
Australia’s fertility rate has also decreased significantly, from a peak of 3.55 births per woman in 1961, to 1.66 in 2019 (the latest data available from the Australian Bureau of Statistics, or ABS), which has meant that women are currently less likely to leave the labour force to have, and care for, children than they were in the 1960s. Although the fertility rate did temporarily rise, from 1.74 in 2001, to a recent peak of 2.02 in 2008, when the baby bonus and other non-means tested welfare measures were introduced, women with young children now have much greater access to formal child care than they did several decades ago. This, together with an increasing acceptance of women with children remaining in the labour force has also facilitated a rise in labour force participation of mothers with children. In this regard, the participation rate for mothers with children under 15 has risen significantly, from 57.2% in February 1991, to 73.3% in February 2020 7.
The crude divorce rate (divorces per 1,000 Australian residents) rose considerably in the 1960s and 1970s and peaked at 4.6 per 1,000 in 1976, after the introduction of no-fault divorce. This trend also coincided with a rise in female labour force participation rates, as some single mothers with children had to enter the labour market for financial reasons after separating from their spouses. Many older women also returned to the labour market during this time after a long absence, often when their former spouse had previously been the main breadwinner.
The emergence of more flexible working arrangements in Australia also coincided with an increase in female labour force participation. Most workers report that their workplace provides access to carers’ leave and permanent part-time employment, while more than half of workers report that their workplace provides paid maternity leave (up from less than 40% in 2002) and around a third report that they can work from home, which is up from around 20% in 2002 8. This is likely to have increased even further, due to the impact of the COVID-19 pandemic.
The structural change noted earlier has also been another key factor that has contributed to the rise in female labour force participation, with strong growth recorded over recent decades in service-based industries that have traditionally employed a high proportion of women, such as health care and social assistance, and education and training. Service-based industries are also more likely to offer part-time employment, which is attractive to people choosing to balance work with caring responsibilities.
The strong rise in the educational attainment level of women over the last 40 years, together with the recent strong growth in occupations which require degree-level qualifications, have also contributed to the significant increase in female labour force participation. Although the figures are not strictly comparable, ABS data from the Education and work survey show that the proportion of women with a bachelor degree or above has increased from just 4.2% in 1982 (when it was well below the 7.5% for men), to stand at 32.6% in 2019, above the 26.7% recorded for men 9.
Interest rates can also have a significant impact on the female participation rate, as more women tend to participate in the labour force when interest rates are higher in order to help alleviate the greater debt servicing ratios that ensue, in part, because of the emergence of larger family mortgages. For example, the significant increase in home loan interest rates that occurred in the late 1980s, following the lifting of the mortgage interest rate ceiling in mid-1986, also coincided with a rise in female labour force participation over that period. Analysis by the Reserve Bank of Australia has found that higher levels of household debt increase labour force participation in Australia, particularly for women with young children 10.
The large rise in female labour force participation over the four decades to February 2020 has occurred in conjunction with a clear downward trend in the male labour force participation rate, from 78.2% in February 1980 (when the male dominated manufacturing industry was the largest employing sector in Australia), to a low of 71.1% in August 2004. From that trough, the mining boom and the related strong economic growth provided solid support for the male labour force participation rate, which rose to 72.8% in January 2011. Since then, however, the male participation rate has fallen to 70.7% in February 2020.
The downward trend in male participation over the past several decades can be attributed to a range of factors, including an increase in the number of reported cases of ill health (own injury or illness, and disability), increased participation in education, structural change away from manufacturing and lower skilled entry-level jobs and, to some extent, the increasing role of males in unpaid domestic work such as home duties, child care and looking after ill people or those with disabilities.
Other factors that have contributed to the decline in the male participation rate include early retirement – due to the difficulties that some mature age men have encountered finding subsequent employment upon retrenchment in industries such as automotive manufacturing.
Alexandra Heath, ‘The evolving Australian labour market’ [speech transcript], Reserve Bank of Australia, 2018. Figures are from have been sourced from The Household, Income and Labour Dynamics in Australia (HILDA) Survey, Release 16, Australian Data Archive, 2021.
ABS, Education and work, Australia. 1982 data are for women and men aged 15-69 years; 2019 data are for women and men aged 15-64 years. Data are collected in May of each year. The 2019 data were the latest available prior to the onset of COVID-19.
R Belkar, L Cockerell and R Edwards, Labour Force Participation and Household Debt, Reserve Bank of Australia 2007-05.