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For 25% of the European population, pensions are the primary source of income. This translates into more than 90 million individuals who in 2012 received a pension. A ratio of four working people to every pensioner. Pensions are among the greatest public expenditures in Europe; it is challenging to maintain at the current level the costs of public pensions as a part of GDP, particularly since the European population is gradually ageing as a result of longer life spans and decreasing birth rates. Within the EU specifically, the number of pensioners is expected to double in the next 40 years. It is crucial, now more than ever, to find a way to keep the pensions both adequate and sustainable. Adequate for the need not only to avoid poverty but also to ensure acceptable life standards. This is particularly challenging when it comes to women.


Current state of the gender pension gap in the European Union

In 2012 in the EU women over the age of 65 were granted an average pension worth 38% less than those usually granted to men. Furthermore, women are more likely to receive lowest pension’s level.

It is worth to be noted that there is a significant difference in gender pension gaps among the member states of the EU, ranging from 4% to 46% in 2012. But in all cases, however, everywhere in the 28 states the average pension earned by men is higher.
The smallest gender gap is found in Estonia, only 5%. Nevertheless, it must be noted that pensions in this country are extremely low; in 2012, women on average received 316 € a month, while men received 332 €. The gender gap is relatively small in several other former communist countries, i.e. in Slovakia (8%) and Lithuania (12%), where female participation in the work force was actively encouraged through governmental policies. Remarkably, the gender gap is the highest in the rich Western countries such as Luxembourg where it reaches 45% and where women in 2012 received 2,207 € and men as high as 4,017 €, or the Netherlands (42%), Austria (39%), and France (36%). In spite of the differences among the member states, the situation for women, in general, is unfavourable.

The gender pension gap is the result of cumulative inequalities women face over their life courses and in various economic, social, and cultural domains. The primary reason is that women’s average wage is significantly lower than their male counterparts. Furthermore, the current situation regarding pensions reflects the traditional family model in which the man is a breadwinner and the woman a primary caregiver. Women are therefore conventionally in charge of homemaking tasks, with all the annexed consequences. On average European women spend 26 hours a week on unpaid care and household activities, while men only spend 9, with this meaning a 17-hour difference. Women often take career breaks to look after their children and families: this does not influence hourly pay but impacts on future earnings and pensions. They also work part-time more frequently than men – 1 in 3 women versus 1 in 10 men.

And there is more. The financial crisis has severely affected European pension systems, pressure on public spending has caused a number of governments to increase pensionable age, as happened in Italy for example, and even downsize pension benefits, often causing dramatic implications on the citizen’s welfare. While pensions slump, poverty rises, particularly for women.


Comprehensive strategy at EU level to fight gender pension gap

The current situation of women receiving on average lower pensions than men, is worrisome. Lower income during retirement years is likely to lead to the loss of economic independence for women, and it is particularly challenging for divorced and single women. This situation needs to be tackled quickly and effectively at national and European levels.

The role of the European Union is rather limited in this context, as pension systems fall under the Member States sole competence. However, the European Union, as stated in Article 153 of the Treaty on the Functioning of the EU (TFEU), has both supporting and complementing competences. For this reason, we need an effective EU strategy in order to progressively close the gender pension gap. First of all it is necessary to address the gender pay gap and to ensure that the female labour participation becomes comparable to the employment rates registered for male workers. This strategy will necessarily have to take into account the urgent need to find innovative and sustainable ways to balance family and professional lives, primarily through sustaining maternal and paternal leaves and affordable, high-quality care. What is more, pensions systems must include measures and safeguards to ensure decent pensions for part-time workers and that take into account women’s career interruptions due to the motherhood, in order to protect them from the risk of poverty once retired.

A significant contribution in developing such strategy could come from the European Parliament. The Women’s Rights and Gender Equality Committee (FEMM) has in fact decided to tackle this issue. The Committee has appointed Member of the European Parliament Constance Le Grip (European People’s Party) as Rapporteur of an own-initiative report (INI), with the intention of addressing GGP1. Own-initiative reports often lay the foundations for new legislative proposals, exploring diverse topics of interest to Members, and expressing Parliament’s position on different aspects of European integration. Although they have no legal value, they are important tools in the early phase of the legislative cycle because they aim at shaping the agenda. On July 11, Le Grip presented her preliminary working document to the FEMM Committee dealing primarily with the following topics:

  • Development of tools to raise awareness amongst both general public and national policymakers, to increase recognition (especially among women) about the current challenges and how to combat the primary causes of GGP.
  • Monitoring of EU legislation against gender discrimination to maximize efficiency and propose necessary revisions.
  • Balancing family and professional life to combating the GGP, notably in the context of the implementation and enforcement of the European Commission’s Roadmap
  • Sharing recommendations and proposing good practices to Member States governments

The report is still at a preliminary stage and will be fully discussed and voted in early 2017.  The European Parliament should take up its role and pave the way for the urgent actions that are necessary. European policy makers can no longer ignore GGP and it’s increasingly worrying consequences. If we continue to dismiss these issues, European women will soon be burdened by poverty.

 
Gender Gap in Pensions (GGP) refers to the difference in women’s average gross income versus the average gross income of men.

 

References

European Commission, The Gender Gap in Pensions in the EU. Retrieved August 21, 2016, from 

FEMM Committee, European Parliament. Working Document. Retrieved August 21, 2016, from 

European Commission, European Union pension systems

European Union Law, Social Policy

Women’s Lobby (2016), Gender pension gap – frequently asked questions. Retrieved August 21, 2016, from 

Platon Tinios, Francesca Bettio and Gianni Betti (2015), Men, Women and Pensions, European Commission 

Platon Tinios (2015), Pensions and gender: a critical gap in our radar screens?, European Commission. 

Matteo Jessoula (2013) Gender Aspects of the Financial Crisis and Economic Downturn on Welfare Systems: Evidences from Italy

European Institute for Gender Equality, Gender gap in pensions in the EU.