One Way to Higher Fertility Rates: Support Working Mothers

Posted by John J. Edwards III

Yesterday’s New York Times magazine ran a fascinating and disturbing cover story about the deep decline in Europe’s birthrates, which threatens to leave its countries economically stagnant and socially moribund in coming decades. As the article lays out, the entire continent is below the “replacement” birthrate of 2.1 on average per woman, in some places far below. Among the many possible reasons for the baby bust, particularly interesting is a combination of differences in government support for working mothers and social mores about motherhood.

In short, the more juggle-friendly the country, the higher the birthrate tends to be. The article, by Russell Shorto, notes that Scandinavian countries have a relatively high birthrate of 1.8, while southern European countries have some of the world’s lowest rates — 1.33 in Italy, for example. In Norway, the government guarantees 54 weeks of maternity leave and six weeks of paternity leave, plus a payment of €4,000 (about $6,300) upon the birth of a child. In Italy, there’s less state child-care support, and only 50% of women work outside the home, compared with 75% to 80% in Scandinavia, the article says.

Meanwhile, the U.S. has a healthy birthrate of 2.1, despite offering relatively little government child-care assistance. The key here seems to be the flexibility of our labor market and workplaces, coupled with social mores that increasingly encourage fathers to take an active role in child rearing, says the article. Motherhood is thus more attractive to women in the U.S. than in the more economically rigid and socially traditionalist Europe.

Arnstein Aassve, a Norwegian sociologist quoted in the article, sums up the situation this way: “You might say that in order to promote fertility, your society needs to be generous or flexible. The U.S. isn’t very generous, but it is flexible. Italy is not generous in terms of social services and it’s not flexible. There is also a social stigma in countries like Italy, where it is seen as less socially accepted for women with children to work. In the U.S., that is very accepted.”

Readers, what’s your take on this theory and how you’ve seen it play out in your lives and communities? I’m especially curious to hear from readers who’ve lived and worked in Europe, or are there now.

Call for pensions tax relief to fund Irish universal pension

IRELAND – Ireland should significantly reduce tax incentives for occupational and private pension schemes in order to pay for a higher, and universal, state pension, a joint paper from Trinity College and the Think tank for Action on Social Change (TASC) has claimed.

The response to the consultation on the Green Paper on Pensions argued the public pension system is much easier to operate than the private sector system, while the cost of tax reliefs on private pensions is "now as large as the cost of direct expenditure on the public system".

As a result, the TASC and the Trinity College Pensions Policy Research Group (PPRG) outlined two alternative options for pension reform:


To eliminate pensioner poverty by increasing social welfare pensions paid for by a reducing private pension subsidies – rather than increasing retirement age
To introduce a universal state pension similar to the New Zealand model – including a 'top-up' second tier social insurance pension based on contributions.
The report argued a universal pay-as-you-go (PAYG) system is "lower cost and lower risk than a funded system organised in a pensions industry which is not competitive and locked into high risk investment strategies".

It claimed the Green Paper – which closed to consultation on May 30, 2008 – "implicitly" suggested the key to providing adequate retirement incomes and reducing pensioner poverty is to "continue to limit the role of the public system and to increase tax incentives for private pensions".

However, the TASC and PPRG claimed a further shift towards private pensions system over the public system would be "ill-advised" as they argued "this approach has not worked in the past and that it is unlikely to be successful in the future".

Instead, it said the trend should be reversed in favour of a public system, with subsidies for private schemes "significantly reduced and targeted at low and middle income earners".

The report claimed most of the benefits of the pension tax reliefs have been "appropriated by the very highest earners" – as the bulk of tax incentives are received by the top 20% of earners, while the bottom 20% receive "virtually nothing", for example these lower earners benefited from just 1.1% of tax reliefs in 2000.

In addition, the response argued the policy of providing generous tax reliefs to encourage the growth of occupational pension schemes "has not been very effective" as the coverage of occupational schemes fell by 4% between 1985 and 2006.

It also said the most important contribution to the total income of pensioners is made by social welfare pensions and other social benefits, with the public pension system accounting for 60% of pensioners’ total income.

As a result, it claimed its options for reform "draw on the strengths of the public system and begin to correct the inequitable treatment of taxpayers who gain little from tax reliefs for private pensions".

It argued a New Zealand-style universal state pension "could be adopted in Ireland at less cost to the Exchequer than the present pension arrangements", while a universal pension would eliminate means-testing as well as address the problems of women's irregular contribution records and provide security for the 20% of older people currently receiving no state pension.

That said, the report highlighted the development of a universal system would have to include "a significant curtailment of the tax incentives for occupational pensions, Personal Retirement Savings Accounts (PRSAs), Retirement Annuity Contracts (RACs) and Approved Retirement Funds (ARFs)".

The report claimed the recommendation to reduce tax reliefs are "not as dramatic as they might seem" as the state pension is already providing the bulk of retirement income for the majority of pensioners, while tax reliefs have "not succeeded in increasing coverage of occupational schemes" and incentives for PRSAs "have had little effect on coverage especially at the lower end of the income distribution".

The response from the TASC/PRRG follows recent submissions against the introduction of a mandatory pension saving system from the Society of Actuaries in Ireland and the Irish Association of Pension Funds (IAPF). (See earlier IPE articles: Higher state pension 'more cost-effective' and IAPF warns of compulsory pensions 'havoc')

Meanwhile, Life Strategies, an actuarial consultancy, claimed in its response to the consultation diverting tax relief towards a higher state pension - one of the potions outlined in the Green Paper – would be "fundamentally unsound" as the figures in the paper had been "overstated". (See earlier IPE article: Diverting tax reliefs to state pension is "unsound")

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com



Author: Nyree Stewart

Butler’s pharmacy addition just what the doctor ordered

New $14M building will help college meet increasing demand for graduates

Scott Olson - solson@ibj.com
Mary Andritz, dean of Butler University’s College of Pharmacy and Health Sciences, bursts into laughter when asked how long her department’s been short on space.

“I’ve only been here for two years, but I think it’s been for some considerable amount of time,” she guessed. “Probably for 10 years.”

Lilly Endowment Inc., however, is filling the prescription in the form of a grant to fund a 40,000-square-foot addition under construction and scheduled to open by the fall 2009 semester.

The $14 million, four-story building is included in a $25 million gift the endowment gave to Butler and will double current space at the College of Pharmacy and Health Sciences. Connected to the existing structure built in 1951, the new addition will include larger classrooms, two laboratories and project rooms for future pharmacists, who are in great demand.

Both Butler and Purdue University, which hosts the state’s only other pharmacy program, say their pharmacy students typically receive two to three solid job offers each after graduation.

“It’s more an issue of where they want to locate,” said Craig Svensson, dean of Purdue’s College of Pharmacy, Nursing and Health Sciences, “because they have so many choices.”

A consortium of pharmacy groups called the Pharmacy Manpower Project issued a report in 2002 that experts still cite because of its thoroughness. It predicted 157,000 unfilled pharmacy openings by 2020.

Several factors are fueling the shortage, including changes in insurance policies and federal regulation of pharmaceuticals, making drugs available to more people. An aging population and the increasing practice of drugmakers advertising directly to the public has helped cause the number of prescriptions to rise from 2 billion to 3.2 billion annually in the last decade.