EUROPEAN COMMISSION Brussels, 26.4.2017 SWD(2017) 202 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a Directive of the European Parliament and of the Council on work-life balance for parents and carers and repealing Council Directive 2010/18/EU

{COM(2017) 253 final}

{SWD(2017) 203 final}



Table of Contents 1. INTRODUCTION 2. EU CONTEXT 2.1.Legislative measures 2.2 Background of the 2008 proposal to revise the Maternity Leave Directive 2.3 Enforcement and Evaluation of existing legislation 2.4 Non-legislative measures 2.5 Other relevant initiatives at EU level 3. PROBLEM DEFINITION 3.1.Women's underrepresentation in the labour market 3.2 The addressed driver: the unequal distribution of caring responsibilities between women and men 3.2.1. Root cause 1: Gender stereotypes and discrimination 3.2.2 Root cause 2: Ill-designed work-life balance policies 3.2.3 Reinforcing driver: economic disincentives for women to work 3.3 Consequences 3.3.1Individual level 3.3.2 Business level 3.3.3 Societal level 45

3.4 Summary Tree 4. BASELINE SCENARIO 5. POLICY OBJECTIVES 5.1 General and specific objectives 5.2 Coherence with other EU policies 6. EU COMPETENCE AND ADDED VALUE 6.1.Legal right to act 6.2.Compliance with the principles of subsidiarity 6.2.1 Necessity of Union action 6.2.2 EU added value 7. POSSIBLE OPTIONS FOR EU-LEVEL ACTION 7.1.Family-related leaves 7.1.1 Maternity leave 7.1.2.Paternity leave 7.1.3 Parental leave 7.1.4 Carers' leave 7.2.Flexible working arrangements for parents and carers 7.3 Intervention logic of options 8. EXPECTED IMPACTS OF THE DIFFERENT POLICY OPTIONS AND HOW THEY COMPARE 8.1 Maternity leave

8.2 Paternity leave 8.3 Parental leave 8.4 Carers’ leave 8.5.Flexible working arrangements 8.6.Impact of the Combination of preferred options 9. PROPORTIONALITY CHECK OF THE PREFERED OPTIONS AND COMBINATION 10. MONITORING AND EVALUATION 11. GLOSSARY ……………………………………………………………………………………... Annexes Annex 1. Procedural information Annex 2. Stakeholder consultation Annex 3: Who is affected by the initiative and how? Annex 4. Methodology for quantitative impact analysis Annex 5: Evaluation report of the existing WLB framework



Abstract I. POLICY CONTEXT The ‘New Start’ initiative follows the withdrawal of the Commission's 2008 proposal to revise Council Directive 92/85/EEC on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding (hereinafter the Maternity Leave Directive). Following the withdrawal, the Commission announced its intention to prepare a new initiative that would undertake a broader approach taking into account the developments in society in the past decade whilst still promoting the objectives of the previous proposal and providing minimum protection. The "New Start" initiative is more holistic and extends the scope of the previous proposal by offering a wider range of legislative and non-legislative measures that can help improve the protection of working parents and carers, allow them to better reconcile their professional and private life, and contribute to addressing women's underrepresentation in the labour market and the unequal sharing of caring responsibilities between women and men. This widened scope is in line with calls from the European Parliament as well as many Member States, social partners and stakeholders. It follows the alarming observation that in 2015 the gender employment gap still exceeds 11 percentage points and 18 percentage points when referring to full-time equivalent employment. While women’s underrepresentation in the labour market is influenced by a combination of drivers, the scope of the initiative is limited to modernising and adapting the current EU legal and policy framework in order to ensure a more equal distribution of caring responsibilities between women and men. Evidence shows that well-designed policies to help both parents and carers reconcile their work and family responsibilities - such as paid leaves, flexible working arrangements – can be very effective in reducing gender inequalities in employment. While many Member States have already planned policy measures in order to improve parents and carers' work-life balance, the projections on the baseline scenario show that the above challenges will not be sufficiently addressed without EU action. The gender gap in activity rates is expected to still amount to 9 percentage points in 2055. In addition, budget measures in the context of the economic and financial crises have affected family-related leave schemes and led to cuts in the public or publicly subsidised provision of childcare services in some Member States. This initiative would contribute to the Treaty-based goals of equality between men and women with regard to labour market opportunities and equal treatment at work and of promoting a high level of employment in the EU. It would equally contribute to the Commission's priorities on jobs and growth, as outlined in President Juncker’s political guidelines for the European Commission. This initiative will also be linked to the forthcoming European Pillar of Social Rights initiative, which seeks to strengthen the social dimension of Union and enhance Member States’ upward convergence in social performance. This initiative builds on the existing EU legislative and non-legislative frameworks. With regards to EU legislation on family-related leaves, this initiative stems from an assessment of the limits of the Maternity Leave Directive (92/85/EEC) and of the Parental Leave Directive (2010/18/EU) in achieving the objectives set out by the co-legislator, including the Parental Leave Directive objective of achieving a better balance of caring responsibilites between women and men. In the field of flexible working arrangements, EU legislation currently only provides a right for parents to request reduced working hours and flexible schedules when returning from parental leave (Directive 2010/18/EU) and to eliminate discrimination against part-time workers (Directive 97/81/EC). This initiative also has synergies with the EU acquis with regards to protection against discrmination and dismissal (in particular the Gender Equality Recast Directive 2006/54/EC) and working time (Directive on Working Time 2003/88/EC) . In addition to legislation, the EU has been addressing work-life balance issues and obstacles to female labour market participation through the European Semester , the European Structural and Investment funds, and policy guidance, but this has not been sufficient to achieve the Europe 2020 target of 75% employment rate for women and men. This initiative also builds on Member States' best practices in the area of work-life balance. For instance, with regards to family-related leaves, this initiative finds inspiration in Member States such as Sweden, where reserving parental leave to the father has led to a doubling in the number of days of leave taken by men and where female employment is among the highest in the EU. This initiative is also inspired by the example of the 2007 parental leave reform in Germany, where ensuring adequate remuneration has led to a rapid increase in father's take-up. In the area of flexible working arrangements, this initiative stems from examples from Member States such as Austria and The Netherlands who have taken measures to broaden such arrangements and tend to experience higher female employment rates. A roadmap for the new inititaive was published in August 2015 and this initiative has been included in the Commission's 2017 Work Programme. This initiative has been informed by an extensive consultation process. In line with the Treaty, the Commission completed a two-stage consultation with the EU social partners in 2015 and 2016. There was no agreement among social partners to enter into direct negotiations on any of the issues raised during the consultations. An open public consultation was also carried out to seek the views of different stakeholders and citizens on the issue, and the EU Advisory Committee on equality between women and men was also consulted . 2. PROBLEM DEFINITION As outlined in the Roadmap of this initiative, the problem to be addressed is women’s under-representation in employment, particularly due to the lack of equal sharing of caring and professional responsibilities by parents with children or those with dependent relatives. In 2015 the gender employment gap (age 20-64) in the EU amounted to 11.6 percentage points (pps). Considering this initiative follows the withdrawal of the Commission's 2008 proposal to revise Council Directive 92/85/EEC, it aims to address the unequal distribution of caring responsibilities between women and men, which is one of the main drivers of this problem. Gender gaps in the labour market are most acute for parents and people with other caring responsibilities. The gender employment gap has been shown to widen substantially after having children. On average in 2015, the employment rate of women with one child under 6 is 8.8 pps less than women without young children and in several countries this difference is over 30 pps . Similarly, women are much more likely to assume the role of informal carers for elderly or dependent relatives than men . In addition to the role of gender stereotypes and discrimination in supporting an unequal sharing of caring responsibilities between women and men, one of the main reasons for this problem is inadequate work-life balance policies. The availability, or lack-thereof, of leave arrangements can strongly influence women’s decisions to stay at home or return to the labour market after assuming care responsibilities. On the one hand, the availability and attractiveness of leave arrangements for fathers also has a considerable impact on the division of work and care between parents, and in turn on overall female employment outcomes. The use of leave arrangements by fathers can lead to a more equal distribution of care between parents, allowing for women’s faster return to the labour market after having children. Those Member States that have earmarked a significant portion of leave to fathers and paid the leave at a relatively high replacement rate tend to experience higher take-up by fathers and positive results in terms of mothers’ employment outcomes. For example, in Sweden, reserving parental leave to the father has led to a doubling in the number of parental leave days taken by men. Currently there is no EU legislation on paternity leave and the EU legal framework gives very little incentives for fathers to take parental leave (the Parental Leave Directive does not foresee compensation and allows for most of the parental leave to be transferable to the other parent). On the ohther hand, the lack of adequate leave to take care of other dependent relatives also exacerbates the unequal sharing of caring responsibilities between women and men. Where there is no carers' leave provision, it is generally women who will work part-time or drop out of the labour market in order to take care of their relative for a short period of time. Currently there is no EU legislation on carers' leave. In addition to inadequate or ill-designed leaves, the unavailability of flexible working arrangements can lead to some workers, particularly women, to drop out of the labour market altogether when taking on caring responsibilities. Flexible working arrangements include remote working, flexible working schedules, and reduced working hours (part-time work). Insufficient availability of flexible working arrangements can also lead women with caring responsibilities to change their job to one that is perceived as offering more flexibility or reduced working hours, which is often below their skill level or for less pay. This consequently can lead to or foster gender wage gaps and labour market segmentation. Currently only parents returning from parental leave have an entitlement to request reduced working hours and flexible work schedules. Difficulties in accessing afforadable and quality formal childcare services can also lead many women to reduce their working hours or drop out of the labour market. The Barcelona targets set by the EU in 2002 to improve the provision of formal childcare arrangements by 2010 and reaffirmed in the European Pact for Gender Equality spanning until 2020, are still not reached today. The lack of formal long-term care arrangements can also lead many people with dependent relatives, most often women, to take on the role of informal carers, and lead them to take long leaves of absence from the labour market or dropping out completely. Finally, economic disincentives such as tax-benefit disincentives, which discourage second-earners, often women, from entering the labour market, working more hours or remaining in the labour market, as well as the gender pay gap can reinforce the unequal distribution of work and caring responsibilities by putting on women the bulk of the burden of caring responsibilities. These challenges have negative consequences on individuals, companies and the wider society. On an individual level, these problems reduce women's career opportunities and this, in addition to their longer career interruptions and concentration in lower paid jobs exacerbates the gender pay gap. Women’s underrepresentation in the labour market also results in their higher risk of poverty and social exclusion, especially in old age. This has negative consequences on their families and children, who are under higher stress and at higher risk of poverty. Inadequate work-life balance policies also have negative consequences on men, who tend to work longer hours after having children. On a company level, the underrepresentation of women in the labour market leads to a reduced talent pool and poor work-life balance impedes on workers' motivation and productivity. For the society, the costs of these inequalities between women and men in employment amounted to an estimated €370 billion euros in 2013, equivalent to 2.8% of EU-GDP , and this is only exacerbated by the demographic challenge. 3. POLICY OBJECTIVES The general policy objective of this initiative is to address women's underrepresentation in the labour market and to promote equality between men and women with regard to labour market opportunities by modernising the current EU legal and policy framework and adapting it to today’s labour market to allow for parents with children or workers with dependent relatives to better balance caring and professional responsibilities . The specific objectives of this initiative are therefore defined as follows: -to improve access to work-life balance arrangements – such as leaves and flexible working arrangements -to increase take-up of family-related leaves and flexible working arrangements by men. The specific objectives seek to respond to the drivers set out in the problem definition in the following way: The availability of leaves and flexible working arrangements have been shown to strongly mitigate the effect of caring responsibilities on women’s employment outcomes. By providing parents and carers with tools for greater choice in how to organise work and caring responsibilities these measures avoid that they chose a job below their skill level and for less pay or that they drop out of the labour market altogether. Moreover, the use of work-life balance policies by men (i.e. family-related leaves, flexible working arrangements) can help in rebalancing the distribution of care within the household, which usually falls principally on women. However, opportunities and incentives for men to make use of work-life balance arrangements are generally scarce, and their take-up is accordingly low in most Member States. Improving the gender-balanced design of these arrangements can help address this. It should also be noted that other policy areas mentionned in the problem definition are not covered in this impact assessment. With regards to the provision of formal care services and 'economic disincentives, this is due to the limited EU competence in these areas. Considering their significant influence on the addressed problem, the initiative could foresee measures to enhance current efforts in these areas, in particular in relation to the monitoring of Member States' policies in the EU Semester and to the use of EU funding in the case of formal care services. Furthermore, the options presented below are expected to indirectly mitigate some of the other drivers mentioned above such as gender stereotypes and the gender pay gap. 4. SUBSIDIARITY This initiative respects the principle of subsidiarity and has a strong added-value in addressing the challenges mentioned in the problem definition. First, the current situation demonstrates that EU action has a strong influence on Member States' legal frameworks. In the policy area covered by this initiative, it is only when EU legislation is in place (i.e., maternity and parental leave) that there is legislation in place in every Member State. When Member States do have legal entitlements, variations between Member States with regard to length and the generosity of the conditions could result in an unbalanced level of rights, an unequal protection for EU citizens across the EU and differences in the functioning of labour markets. Secondly, the projections based on the available information clearly demonstrate that only EU action will ensure that sufficient progress is achieved in all Member States. Employers, particularly small and medium-sized enterprises, may be hesitant to provide greater work-life balance measures on their own, given the short-term costs and administrative burdens that may result. Member States may hesitate to correct such a failure through regulation in this area because they may perceive a risk of putting their own companies at a disadvantage with companies from other Member States. Considering that a significant percentage of EU firms' trade is intra-EU, EU-level action could mitigate such concerns and establish a level-playing field while taking into account the need to avoid additional burdens on businesses, particularly SMEs, and ensuring that all Member States move in the same direction. Thirdly, EU-level intervention could mitigate trends in some Member-States to reduce work-life balance provisions. Indeed, as a result of the recent crisis, policy priorities diverge between Member States, and other issues (particularly those expected to produce short-term benefits) are focussing national authorities' attention. Finally, there is a clear European horizontal dimension to the issues related to work-life balance and the underrepresentation of women in the labour market. Low labour market participation of women hinders the EU's goals in relation to gender equality, fighting poverty and supporting employment and growth. 5. POLICY OPTIONS The impact assessment outlines possible non-legislative and legislative options in the following areas: maternity leave, paternity leave, parental leave, carers' leave and flexible working arrangements. For each area, key parameters are identified on the basis of the analysis of stakeholders' views. Tables presenting the assessed options can be found in section 7 of the report. Maternity leave The following parameters have been considered: -Arrangements to enable breastfeeding mothers to work. Such measures can facilitate successful transitions between maternity leave and employment. -The level of payment or allowance for part of the leave. Increasing pay for at least the compulsory period of leave is also considered as a parameter as it could provide additional income protection for women for whom this leave is compulsory, thereby supporting new mothers. -The length: this parameter has been discarded because this consideration was one of the most contentious aspects in discussions among Member States in the Council. Moreover, providing greater opportunities for women and men to share leaves would have a more positive effect of reducing the imbalance in caring responsibilities between women and men. -Dismissal protection: this parameter was discarded for legislative options because the evaluation of the Maternity Leave Directive shows that the issue of discrimination at the workplace is mainly due to the fact that all employers do not respect the legal rules transposed by the Member States in this field and not to the legal provisions themselves Paternity leave The following parameters have been considered: -The length as this determines how much leave men can take to get involved in childcare at an early stage, also as this is important for how involved they will be in caring throughout the child's life. -Payment as it provides income protection for fathers after having children and has also been shown to increase the likelihood of fathers making use of this leave. Parental leave The following parameters have been considered: -Payment as this encourages both parents to make use of their parental leave entitlements and as it is a strong factor in fathers’ take-up of parental leave. -The degree of transferability of the parental leave between parents as making the leave non-transferable can encourage a greater sharing of leave arrangements between parents and support women's faster return to the labour market after having children. -The possibility to take leave on a flexible basis as this can facilitate the maintenance of parents' connections to the labour market during leave, and promote greater take-up of these leaves by fathers. -Increasing the age of the child up to which parents can take leave from 8 to 12 years old in order to give more possibilities for parents to take part of their parental leave entitlement when their children grow up. This parameter has not been taken into account in the assessment of the quantitative impacts presented below but estimations of its impact on companies and Central governments can be found in the report. -The length but this parameter was discarded given that there is no definitive evidence that a longer parental leave would help to further facilitate women’s labour market participation. Carers' leave The following parameters have been considered: -Length in order to represent the variety of provisions in place in EU Member States. -The level of payment as this could increase the likelihood of carers in general and men in particular to make use of the leaves. -The possibility to take leave on a flexible basis as this can help workers achieve a better balance of their professional and caring responsibilities. Flexible working arrangements The following parameters have been considered: -The scope of the right thereby extending the concerned population as currently this right only exists under the EU Parental Leave Directive for parents returning from parental leave. Parents, who are not on leave, or other types of workers with dependent relatives, could also strongly benefit from such increased flexibility in order to better balance work and care responsibilities. -The type of flexibility (flexible working schedules, remote working or reduced working hours). -An extension of the level of the right to request flexible working as an absolute right for employees was discarded as a parameter, as it would create serious restrictions for employers to determine how work is organised in a firm. 6. EXPECTED IMPACTS AND HOW THE OPTIONS COMPARE A detailed analysis of how many and which Member States would need to adjust their legislation can be found in Section 8 of the report. No clear East-West or North-South pattern emerges in relation to the most relevant policy changes proposed. Expected impacts are quantified where possible and details on the methodology used are provided in Annex 4. Important efforts have been undertaken to collect the necessary data in order to quantify the impact on companies (including SMEs), Central Governments and the macro-economic impact of the options; however data available in this area is scarce. Many Member States do not collect administrative data on the use of various types of leave by sex and number of days. Data on the employment status of informal carers is also scarce. Nevertheless, data and robust evidence are available for several countries which underpin the assessment of impacts and allow overcoming certain data limitations, either by extrapolating data or by using assumptions based on the relevant economic literature. The limitations of such assumptions, especially when behavioural (on increase in take-up of entitlement rates for example), should be duly noted and a sensitivity analysis of key factors such as lost production and take-up assumptions as well as taking into account collective agreements is presented in the report. A qualitative assessment of impacts is also provided, to complement the quantitative analysis where necessary and give a more complete picture of the overall costs and benefits of the options outlined. Maternity leave The non-legislative Option, which includes measures to enhance the enforcement of the current Directive in the area of dismissal protection and policy guidance on facilitating transitions between leave and employment, has been identified as the preferred option. The non-legislative option would have a positive impact on individuals by facilitating mothers' return to employment after taking leave as well as a positive impact on companies and Central Governments. The non-legislative Option only entails limited costs on companies due to the potential provision of breastfeeding facilities and breaks. It also entails benefits due to an increase in workers' productivity and a reduction in recruitment costs. In terms of its impact on Central Governments, the non-legislative Option does not foresee any additional payment of maternity benefits but does foresee savings due to a reduction in payment of unemployment benefits and hence has a more positive impact on Central Governments than the legislative options in the medium-term. In comparison, Options 1 (legal entitlement to breastfeeding breaks and facilities) and 2 (breastfeeding provisions and first two weeks fully paid) both have a small positive impact on companies, Option 1 has a positive impact on Central Governments due to a rise in tax revenues and a decrease in health care expenditures and Option 2 has a negative impact on Central Governments due to the rise in payment of benefits. In order to limit the costs due to introducing breastfeeding facilities and ensure that the decision of introducing such facilities takes into account employers' needs, the preferred option is the non-legislative Option. Paternity leave Option 3 (an individual entitlement of 10 working days paternity leave paid at least at sick pay level) has been identified as the preferred option. Evidence of Member States' experiences suggests that where leave is remunerated, it has a strong positive impact on its take-up by men, as well as female employment outcomes. Options 2 (individual entitlement of 5 working days paternity leave paid at least at sick pay level) and 3 would thus have a much higher individual positive impact than Option 1 that does not foresee pay and the non-legislative Option. Although Option 3 has the highest cost for companies, when disaggregated the cost represents only 14 € per company in 2030 and 43 € per company in 2050. Moreover, thanks to its longer duration, Option 3 is the option that best improves the possibilities for fathers to be involved in caring responsibilities directly following the birth of a child. Evidence also shows that the leverage effect on parental leave, which has highly positive impacts on GDP, labour force participation, employment and real incomes (see below), is more likely to occur with paternity leave of 10 working days or more. Parental leave Option 3 (4 months non-transferable, paid at least at sick pay level, flexible uptake, rise of age of the child from 8 to 12) is identified as the preferred option for parental leave. As Option 3 provides for an individual entitlement to remunerated leave for the full four-month period that is non-transferable between parents, it entails much higher take-up by men and hence will have the highest positive impact on female employment. Significantly increasing the length of the non-transferable period has considerable benefits in terms of increased household incomes and individual well-being (for fathers, mothers and children). Option 3 is more costly for companies and Central Governments than Options 1 (flexible uptake but no change on pay and non-transferability) and 2 (flexible uptake, only one month paid and non-transferable, rise of age of the child from 8 to 12), but its higher costs remain modest in relative terms (88€ per company in 2030 and 145€ in 2050). In addition, it has much larger effects in terms of labour market participation as well as income security for workers taking leave. Furthermore, Option 3 also has much higher positive macro-economic effects. This Option hence appears to rank higher than the other parental leave options assessed. Carers' leave Both Options 2 (4 weeks throughout the career paid at least at sick pay level, flexible uptake) and 3 (5 days/year/dependent paid at least at sick pay level) are expected to have high positive impacts on individuals, enabling them to take a short period of leave to care for their dependent relatives with a limited earnings loss. The quantitative assessment for both options reveals a neutral impact when estimated per company in 2050 and a high positive impact on Central Governments. Option 2 has slightly more positive macro-economic impacts than Option 3. Option 2 may however entail a higher administrative burden for companies/central governments than Option 3, given the need to track a ‘bank’ of leave throughout a worker’s career. Option 3 therefore appears to rank slightly higher in efficiency than the other carers’ leave options assessed and is therefore identified as the preferred option. In order to further increase the efficiency of Option 3, it would be considered to limit the scope of the entitlement to 5 days per year per worker (and not per dependent relative). This would limit the disruption and complexity due to introducing such as measure for companies, as well as possibly reduce its costs. Flexible working arrangements Option 3 (right to request flexibility in place of work, flexible working schedules and reduced working hours, employer has no obligation to grant the request) has been identified as the preferred option. While the quantitative analysis showed high positive impacts on female employment and central governments for all legislative options, they are the highest in Option 3. This is especially the case for the increase in employment which is foreseen to be comparable in Options 1 (only flexibility in place of work) and 2 (only flexibility in working schedules) and much higher in Option 3 thanks to the right to request reduced working hours it entails. In consequence Option 3 is expected to lead to a large increase in tax revenues for Member States. Although Option 3 has the highest cost for companies, when disaggregated the cost represents only 118 € per company in 2030 and 597 € per company in 2050. There can be mixed impacts on individuals, particularly in the use of part-time work because of the risk of women making much higher use of it, which is why it would be important to accompany these measures with awareness-raising and monitoring to facilitate improved gender balance in the take-up of such arrangements. Combination of preferred options Expected impact of the combination of preferred options The quantitative analysis shows that the combination of preferred options has a positive impact on GDP (+ € 840 billion, NPV 2015-2055), employment (+ 1.6 million in 2050) and the labour force (+ 1.4 million in 2050). The analysis shows that the increases in employment and labour force participation will mainly concern women. Real incomes are also expected to increase by 0.52% in 2050. Although relatively small, the combination represents a cost for companies. However, the majority of this cost is driven by the flexible working arrangements option which assumes a very high level of demand for and accommodation of flexible working arrangements although employers can refuse requests for flexible working, particularly where it would cause a cost to the company. The total cost for companies of the combination could hence be significantly lower. It should also be taken into account that the preferred options of the combination have strong synergies and that the costs of the combination of preferred options could be lower than the sum of the individual costs for each option. For example some costs linked to the provision of an IT system to monitor leaves and flexible working arrangements could be combined for several preferred options and this would lead to a decrease in the burden for companies and Central governments. Conversely, in the long-term this initiative is expected to have wider positive impacts than those assessed in this report. Indeed, the measures presented above will facilitate reaching a gender-balanced sharing of care responsibilities between women and men, thereby giving women and men equal opportunities in the labour market. As mentioned in the problem definition, this would have a series of positive impact that were not quantified in this report. These include increasing the pool of talents, increasing the motivation of workers, increasing the number of women in management positions, etc. The long-term effect of the positive impact on children's personal and cognitive development was also not quantified.



1.INTRODUCTION

In 2015, the employment rate of women aged 20-64 was 11.6 percentage points lower than that of men. As a substantially higher proportion of women work part-time, the gender employment differences in full-time equivalents are even larger with a gap of 18.1 percentage points for the EU as a whole . The gender employment gap is particularly acute for parents and people with caring responsibilities. Upon having children or taking on caring responsibilities, women tend to reduce their working hours, take long leaves of absence or drop out of the labour market altogether, while the opposite is true for men. On average across Europe, the employment rate of women with children is 8.8 percentage points lower than women with no children. In some countries, this difference is greater than 30 percentage points . This trend has negative consequences on women and their families, in terms of increased stress, lower earnings and increased risk of poverty. It also has negative consequences on employers and on the wider economy, as the gender employment gap in the EU estimated to cost 370 billion euros per year, or 2.8% of the EU’s GDP. The ‘New Start’ initiative therefore aims to modernise the current EU legal and policy framework and adapt it to today’s labour market to allow for parents or other workers with dependent relatives to better balance caring and professional responsibilities. In doing so, the initiative would address women’s underrepresentation in the labour market. It would thereby contribute to the Treaty-based goals of equality between men and women with regard to labour market opportunities and equal treatment at work and of promoting a high level of employment in the EU. This initiative is linked to the forthcoming European Pillar of Social Rights initiative, which seeks to strengthen the social dimension of Union and enhance Member States’ upward convergence in social performance. This initiative would also contribute to the Commission's priorities on jobs and growth, as outlined in President Juncker’s political guidelines for the European Commission. Evidence shows that enhancing work-life balance would benefit companies through improved skill matching, improved productivity and increased retention of workers. Enhancing women’s participation in the labour market has also been shown to be a key driver for economic growth, and can contribute to mitigating the negative impact of demographic ageing on budgetary sustainability. Following the withdrawal of the Commission's 2008 proposal to revise Council Directive 92/85/EEC on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding (hereinafter the Maternity Leave Directive), the Commission announced its intention to present a broader initiative. The Commission annouced that this initiative "will continue to promote the objectives of the previous proposal and provide minimum protection" while taking "into account the developments in scoiety over the past decare and [using]the best mix of available policy tools to deliver results as effectively as possible". A roadmap for the new initiative was published in August 2015 and this initiative has been announced in the Commission's 2017 Work Programme. In addition, this initiative has been informed by an extensive consultation process. In line with the Treaty, the Commission completed a two-stage consultation with the EU social partners in 2015 and 2016. Between November 2015 and January 2016, the social partners were first invited to give their views on the possible direction of EU action. A second-stage consultation ran from July to September 2016, in which social partners provided their views on a range of possible EU-level measures. There was no agreement among the social partners to enter into direct negotiations on any of the issues raised during the consultations. An open public consultation was also carried out to seek the views of different stakeholders and citizens on the issue, and the EU Advisory Committee on equality between women and men was also consulted . Considering the evidence that shows that well-designed policies to help parents reconcile their work and family responsibilities can be very effective in reducing gender disparities in employment, the 'New Start' initiative adopts a comprehensive approach which will include family-related leaves, flexible working arrangements and formal care services. It will also consider the needs of women and men with caring responsibilities for ill, elderly or dependent relatives. This widened scope is in line with calls from the European Parliament as well as many Member States, social partners and stakeholders, who felt that the previous proposal was too narrow in its scope. Finally, this initiative would fully complement and reinforce existing activities to enhance female employment, such as the European Semester country-specific recommendations, the monitoring of progress to achieve the Barcelona targets in the area of childcare and EU funding. This initiative applies to all workers who have an employment contract or employment relationship as defined in the Member States. The self-employed are not explicitly covered by this initiative due to very diverging national systems as regards the status of persons engaged in a self-employed activity. The decision on whether the self-employed should benefit from this initiative should be left to the Member States. It needs to be noted, however, that there are already a number of existing instruments which cover self-employed activities Furthermore, in the context of the European Pillar of Social Rights initiative, the Commission will launch a first stage social partner consultation on access to social protection, with a focus on atypical contracts and on the self-employed. In line with the requirements of the Better Regulation Guidelines, the Commission has undertaken an impact assessment of a potential range of legislative and non-legislative measures in the areas of family-related leaves and flexible working arrangements, which could enhance work-life balance for parents and carers. While formal care services and economic disincentives are two very relevant areas when tackling the problem of the underrepresentation of women in the labour market, measures in these areas were not assessed in this report. This is due to the limited EU competence in these areas. Considering their significant impact on the addressed problem, the initiative could foresee measures to enhance current efforts in these areas, in particular in relation to the monitoring of Member States' policies in the EU Semester and to the use of EU funding in the case of formal care services. 2.EU CONTEXT Equality between women and men with regard to labour market opportunities and reconciliation of private and professional lives have long been on the EU’s agenda. These issues are enshrined in EU primary law, and have been a longstanding part of the EU’s policy priorities. Work-life balance has been highlighted as a key policy area by the Member States. The Council of the European Union has repeatedly stressed the importance of work-life balance policies in removing barriers to women’s participation in the labour market. The 2014 EPSCO Council Conclusions on Women in the Economy and most recently, the 2016 EPSCO Council Conclusions on Women in Poverty both called on Member States to step up work-life balance measures and allow the possibility for a better sharing of care responsibilities between parents. A number of earlier commitments can also be recalled, including the 2000 Council Resolution on Balanced participation of women and men in family and working life and the 1992 Council recommendation on childcare (1992/ 241/CEE) recommending Member States should support reconciliation between work and family life and "a more equal sharing of parental responsibilities between women and men. The European Council also set targets to improve the provision of childcare, the ‘Barcelona targets’ in 2002 . They aimed to provide childcare by 2010 to at least 90% of children between 3 years old and the mandatory school age, and to at least 33% of children under 3 years of age . In the context of the economic crisis and of budgetary cuts in services, these targets were not reached by 2010 and the European Council reaffirmed them in the European Pact for Gender Equality 2011-2020. The European Parliament has also been extremely active in this area. Most recently, the 2016 European Parliament Report, ‘Creating Labour Market Conditions Favourable for Work-Life Balance’ stressed "the need to eliminate gender inequalities in paid and unpaid work" and called on the European Commission to put forward a comprehensive package of legislative and non-legislative measures as part of the Commission Work Programme 2017. Many EU-level stakeholders, including social partners and NGOs, also give high priority to the topic of work-life balance. An overview can be found in Annex 2 on Stakeholders consultations. Equality between women and men is a fundamental right in the European Union and an objective under the Treaty. The right to family and professional life is also recognised under the EU Charter of Fundamental Rights. EU legislation provides for individual rights for workers in relation to work-life balance. In particular, several EU directives are relevant for family-related leaves and flexible working arrangements. Non-legislative support measures have also been developed. An overview of such measures is outlined below. 2.1.Legislative measures The Parental Leave Directive (2010/18/EU) , which incorporates in its annexe an agreement between the social partners, provides workers with an individual right to parental leave of at least four months on the grounds of birth or adoption of a child, until the child reaches a given age up to eight years (leaving Member States the possibility to specify a lower maximum age). Whereas the right of parental leave is an individual right and in principle non-transferable, Member States are allowed to make part of it transferable. The social partners had agreed that at least one month should be provided on a non-transferable basis, i.e. could not be transferred to the other parent and would be lost if not taken. The Directive does not impose any obligations in relation to pay during parental leave. In addition it is up to Member States or social partners to define the detailed conditions and rules for parental leave – they are free to decide whether this leave can be taken on a full-time or part-time basis or whether it can be taken in a piecemeal way, i.e. in several blocks. When returning from parental leave, parents have the right to request changes to their working hours and/or patterns for a certain period of time and to have such requests duly considered by the employer, taking into account both employers’ and workers’ needs. The Directive provides protection against dismissal and less favourable treatment on the ground of applying for or taking parental leave. It also provides that workers have to be entitled to limited time off work for urgent family reasons (force majeure) in case of sickness or accident making the immediate presence of the worker indispensable. The Pregnant Workers (Maternity Leave) Directive (92/85/EEC) sets out the basic rights of all female workers before and after pregnancy. The general objective of the Pregnant Workers (Maternity Leave) Directive (92/85/EEC) is to implement measures to encourage improvements in the health and safety at work of pregnant women in the workplace and women who have recently given birth or are breastfeeding. It provides for maternity leave paid at least at the level of sick pay for at least 14 weeks . A minimum of two of those weeks are compulsory. The Directive also grants special protection against dismissal from the beginning of the pregnancy until the end of the maternity leave. During that period dismissals are in principle prohibited and admissible only in exceptional cases not connected to pregnancy or maternity leave which are permitted by national legislation and/or practice. In the event of any such dismissal the employer has to cite duly substantiated grounds in writing. At EU level, there is currently no individual entitlement to paternity leave (Article 16 of Directive 2006/54/EC only provides for dismissal protection and the right to return to the same or equivalent job after having taken paternity leave in the Member States where it exists ). With regards to carers' leave, there is only the right to time off for urgent family reasons in cases of sickness or accident making the immediate presence of the worker indispensable (Clause 7 of Directive 2010/18/EU, "force majeure"). In relation to flexible working arrangements, EU legislation provides the right under the Parental Leave Directive, for people returning from parental leave to request changes to their working hours and/or patterns for a certain period of time and to have such requests duly considered by the employer, taking into account both employers’ and workers’ needs. The Directive on Part-Time Work (97/81/EC) has the purpose of eliminating discrimination against part-time workers, the vast majority of which are women, and improving the quality of part-time work. The social partner agreement annexed to the Directive suggests that employers should give consideration, as far as possible, to requests by workers to transfer from full-time to part-time work that becomes available in the establishment and to requests by workers to transfer from part-time to full-time work or to increase their working time should the opportunity arise. It also provides for protection against the termination of employment due to the refusal to transfer from full-time to part-time or vice versa.

The Directive on Working Time (2003/88/EC) provides for adequate rest periods for all workers and thereby also contributes to their work-life balance. By entitling workers to a maximum weekly working time as well as daily, weekly and annual rest periods, the Directive provides workers with greater possibilities to balance their professional and caring responsibilities. Relevant EU legislation also exists in the area of equal treatment between women and men in employment and occupation. The Directive on Gender Equality in Employment (2006/54/EC) guarantees the right to return to the same job or an equivalent job after maternity leave (Article 15), as well as protection against dismissal and less favourable treatment for workers taking paternity or adoption leave (Article 16), where such leaves are provided under the law of Member States. The case-law of the Court of Justice in relation to Directive 2006/54 (and its predecessors) has clarified that any less favourable treatment of a woman related to pregnancy or birth of a child constitutes prohibited discrimination on grounds of sex; dismissals for such reasons, even where they take place after the end of the period of maternity leave, are therefore also prohibited. 2.2 Background of the 2008 proposal to revise the Maternity Leave Directive In 2008, the Commission proposed a revision of Directive 92/85/EEC on maternity protection. The proposed revision included an increase in the minimum duration of maternity leave from 14 to 18 weeks, an increase in the mandatory period of leave from 2 weeks to 6 weeks, to increase the flexibility for women to decide when to take maternity leave, whether before or after birth and to improve employment protection for women on, or returning from birth. The proposal had a two-fold objective of strengthening health and safety and equal opportunities of women and men in the labour market; it sought to assist women in recovering after giving birth and to facilitate women's return to the labour market after having a child. In its position at first reading adopted on 20 October 2010, the European Parliament was in favour of revising the Directive to a greater extent than the Commission's proposal. It took the view that maternity leave should last at least 20 weeks, arguing that the period of 20 weeks is recommended by the World Health Organisation and that such a right should be accompanied by full pay. The Parliament however considered a "passerelle" clause when Member States where maternity leave is shorter than 20 weeks offer family-related leave that fulfills the criteria set out in the Directive. The Parliament’s opinion also set out that the Directive should give an entitlement to at least two weeks' paid paternity leave. The Council Working Party on Social Questions held several meetings to discuss the file and the Council held several policy debates to clarify the delegations' views on the Proposal. While all delegations supported in general the proposal’s objectives, a large majority of the delegations stressed that the Community rules were only minimum standards. In the policy debate held on 6 December 2010, after the adoption of the European Parliament's opinion at first reading, it was clear that the length and pay for maternity leave were the most controversial elements. Several Member States have stressed that extending leave entitlements only for women could risk further entrenching women's roles as primary carers and have a detrimental impact on women's employment and career progression. Furthermore, in the context of the economic crisis, a very large majority of delegations were not in a position to accept the Parliament's amendment extending minimum maternity leave to 20 weeks and to extend the minimum payment level to full pay. Many delegations also rejected certain amendments in the area of prevention of discrimination/protection against dismissal, which they considered to be adequately covered elsewhere in the EU legislation. The Commission engaged in intensive efforts to break the deadlock and on several occasions urged the Council to re-enter discussions with the European Parliament, which expressed a will to compromise on its earlier position. However, in view of the lack of progress by the co-legislators, and as the Latvian Presidency of the Council informed the Commission that there was no prospect for an agreement, the Commission decided to withdraw its proposal on 1 July 2015,. It stated that it wished to break the current stalemate and to open the way for a new initiative to lead to real improvements in the lives of working parents and carers. 2.3 Enforcement and Evaluation of existing legislation 2.3.1 Enforcement of existing legislation In its role of Guardian of the treaties, the European Commission monitors the state of transposition of the existing directives and supporting enforcement at national level. Discussions with Member States and, if necessary, infringement procedures, have ensured that national laws transpose correctly the EU Directives. This includes the requirement that discrimination based on applying for or taking existing leaves is prohibited and that national gender equality bodies are in place and have the competence and resources to be able to assist such victims of discrimination. For example, infringement proceedings on the basis of non-conformity with Directive 2002/73/EC were launched in 2006 against 23 Member States. Regarding Directive 2006/54/EC, questions were raised with 26 Member States on the conformity of their national legislation with the Directive’s novelties. In this work the Commission draws on the expertise and assistance of a network of independent national legal experts. The Commission participates also in cases referred to the Court of Justice, to assist the Court of Justice in ensuring that EU law providing for leaves and prohibiting related discrimination is properly interpreted. Moreover, in terms of supporting enforcement at national level, the Commission funds ongoing training for judges and legal practitioners to ensure enforcement and correct application at national level. The Commission supports the work of "Equinet", the EU network of Equality Bodies, on how to promote the enforcement of equality legislation and supports the sharing of best practices between equality bodies as well as between Member States. The Commission has also invested in awareness-raising activities, including, for example, brochures on "Know Your Rights in Equality and Non-Discrimination" and on 'How to present a discrimination claim", which explain in simple language what victims of discrimination should do when their rights are violated. Nevertheless, as explained in detail below and in Annex 5, there is evidence that despite these efforts, problems of discrimination still exist. Moreover, there is still a gender employment gap and a gender pay gap, notably between women and men with caring responsibilties.

2.3.2 Evaluation of existing legislation (Maternity Leave Directive (92/85/EEC) and Parental Leave Directive (2010/18/EU)) The following section summarises some of the main findings of the Evaluation which can be found in Annex 5. The objectives of the maternity, in the areas relevant to this initiative, and parental leave Directive have not been fully reached. In the context of this initiative, the relevant maternity leave Directive objective is that the protection of the health and safety of pregnant women and women who have recently given birth should not lead to women's unfavourable treatment on the labour market nor work. The relevant parental leave Directive objectives are to facilitate the reconciliation of parental and professional responsibilities for working parents and to promote a more equal sharing of family responsibilities between women and men. This evaluation has shown that the existing framework, e.g. the maternity leave and parental leave directives fulfil to some extent the objectives but to a large extent is not an effective and efficient tool to achieve the pursued objectives. Several factors contribute to this: with regard to maternity leave, despite the legal framework for dismissal protection, the evidence shows that all employers do not respect the legal rules transposed by the Member States in this field. Even though Member States did comply when transposing the provisions of the Directive, in practice the transposed EU rules are not achieving the objective of combatting dismissal and discrimination of pregnant women. Hence, the problem of dismissals of pregnant women remains despite the initially intended role of the dismissal rules by the legislators to serve as a mechanism that effectively prevents discrimination and dismissals in relation to pregnancy. The effectiveness of the dismissal protection rules is limited by the fact that some employers do not comply. This hampers this objective of the maternity leave Directive, even though all Member States comply with the transposition of these rules as laid down in the Directive. With regard to parental leave, part of the objectives set by the Directive 2010/18 are not sufficiently met and addressed, such as the objective of achieving work-life balance through a better balancing of the caring responsibilities between women and men. The current design of the leave for parents leads in practice to an unequal uptake between women and men, with a vast majority of women taking leave. This was identified as being due to a lack of payment in many Member States and rules allowing one parent to transfer his or her individual entitlement to the other parent which all reinforce the take-up by women instead of reserving their individual entitlement to each parent. It can be observed that Member States have chosen various models for their legal transposition of the requirements of the two directives under assessment, while these directives included the core substance of the level of protection for workers in the area of work-life balance. The assessment of efficiency for both Directives was hampered to some extent due to a lack of systematic European monitoring data. In order to be better able to assess the performance of legislation in this field, monitoring arrangements on EU and Member State level need to be strengthened in future. With regard to parental leave, the need for minimum standards as such remains highly relevant today. EU action is also still relevant in the area of maternity leave, considering the need to ensure the principle of non-discrimination and a high level of protection for pregnant women in order to prevent still prevailing discrimination based on sex. In terms of coherence, it can be concluded that the evaluated directives are in principle coherent. Both Directives are coherent both internally and with other EU policy actions. It is however recommended to reinforce the interaction between provisions within and between legal instruments in order to achieve coherent outputs. In terms of EU added value, it has to be underlined that, EU action as regards maternity and parental leave created additional value and triggered even further action in Member States that would not have occurred without EU intervention. The EU added value can be seen in the causative effects of EU intervention to provide all working parents in the European Union with family-related leaves such as maternity or parental leave. 2.4 Non-legislative measures In addition to legislation, the EU has been addressing work-life balance issues and obstacles to parents’ labour market participation through the European Semester , and country-specific recommendations (CSRs) have been issued to several countries with the greatest challenges. Such recommendations include providing affordable and adequate childcare and long-term care services and removing economic disincentives to work. Moreover, the guidelines for Member States' employment policies adopted by the Council in October 2015 highlight the importance of increasing female labour market participation and ensuring gender equality including equal pay, and refer specifically to the reconciliation of work and family life. The European Structural and Investment (ESI) Funds , in particular the European Social Fund (ESF) and the European Regional Development Fund (ERDF), have focused inter alia, on the reconciliation of private and professional lives and supported work-life balance policies and investments to improve access and quality of childcare services. For instance, the reconciliation of work and family life is included in the 'Equality between women in men in all areas" investment priority for the ESF programming period 2014-2020 to which approximately 1.5 billion euros are allocated. The ERDF is additionally supporting the development of early childhood education and care infrastructure for children below 6 years of age, with 1.28 billion euros allocated for this purpose for the 2014-2020 programming period. The EU has also set targets and provided some policy guidance in areas relevant to work-life balance. The 1992 Council Recommendation on Child Care encouraged initiatives for an enhanced provision of childcare, special leaves for employed parents, parent-friendly working environments and a more equal sharing of upbringing responsibilities between women and men. In 1996, the European Commission Network on Childcare and other Measures to reconcile Employment and Family Responsibilities presented quality targets in services for young children. The Commission’s Education and Training 2020 strategy includes a target on 95% participation rate for children between age 4 and the start of compulsory schooling by 2020. The Commission’s 2013 Social Investment Package (SIP) urged Member States to remove barriers to women’s labour market participation by addressing workplace discrimination, offering reconciliation measures (such as childcare services), adapted workplaces, including ICT-based solutions and removing tax-benefit disincentives for second earners to work. The SIP also contained a Commission Recommendation on Investing in Children , calling on Member States to support the employability and participation of parents – notably single parents and second earners - in paid work, and to provide accessible quality early childhood education and care services (ECEC). The Commission has also worked to facilitate European consensus on approaches towards ECEC and steered development of an EU Quality Framework for ECEC representing an agreement between experts from 25 Member States. This framework covers all areas that require action to improve access to and quality of early childhood education and care services. Moreover, the 2014 Report on Adequate social protection for long-term care needs in an ageing society, prepared by the Social Protection Committee and the Commission services, calls on Member States to ensure adequate access to affordable quality care and to make it easier for people taking care of elderly, dependent or frail family members to reconcile employment and care responsibilities. Finally, the Commission organises awareness-raising events and exchanges of good practices between Member States on reconciliation policies and female labour market participation. 2.5 Other relevant initiatives at EU level In addition to the frameworks agreement adopted by Council Decision on Parental Leave and Part-Time work mentioned above, social partners also adopted an autonomous framework agreement on Telework in 2002. Telework, a type of flexible working arrangement, can also contribute to parents and carers' reconciliation of professional and caring responsibilities. This autonomous framework agreement defines a general framework to facilitate the use of telework in enterprises and was implemented through social partner agreements, collective agreements, national legislation, guides and codes of good practice. 3.PROBLEM DEFINITION

As outlined in the Roadmap of this initiative, the problem to be addressed is women’s under-representation in employment taking into account the reality of today's societies where increasing numbers of women wish to work, the increasing number of elderly and other relatives in need of care, and the fact that more men would like to take more care responsibilities in their families but don't feel encouraged to do so. There is a strong connection between the distribution of caring responsibilities between women and men and women’s under-representation in employment. 3.1.Women's underrepresentation in the labour market Women are increasingly well-qualified, even surpassing men in terms of educational attainment in Europe today, yet remain considerably underrepresented in employment relative to men . In 2015 the gender employment gap (age 20-64) in the EU reached 11.6 percentage points (pp) (see Figure 1). Figure 1: Gaps between male and female employment rates (ER) and employment rates in full-time equivalents (FTER) in 2015 Source: Eurostat, LFS (lfsi_emp_a) and European Commission, own calculations. Note: data refer to women and men aged 20-64. There are gender differences in all Member States, with the gender employment gap ranging from 2.1 pp in Finland to 27.8 pp in Malta. The employment rate of women was 64.3% in the EU, compared to 75.9% for men.At the current rate of change, female employment will only reach 75%, the current employment rate of men, by the year 2038 . Women tend to be under-represented in management positions. For example, in business and finance 95% of chief executive officers of the 613 largest publicly listed companies in the EU28 are men, 85% of the senior executives and 75% of non-executives. Women are also frequently working in jobs below their skill level. The probability of being over-qualified for a job among university graduates is higher for women than for men in several countries. A substantially higher proportion of women work part-time (31.3% of women compared to 8.3% of men). As a result, the gender employment differences in full-time equivalents are even larger, with a gap of 18.1 percentage points for the EU as a whole (see Figure 1 above). This initiative aims to address the problem of the underrepresentation of women in the labour market by addressing one of its main drivers, which is the unequal distribution of caring responsibilities between women and men. Additional drivers such as economic disincentives, including the pay gap, are also discussed below as they tend to reinforce the unequal distribution of caring responsibilities between women and men. Other drivers are not addressed by this initiative, which seeks to preserve the intention of the Commission's 2008 proposal to improve the reconciliation of work and family life, while providing minimum protection. 3.2 The addressed driver: the unequal distribution of caring responsibilities between women and men Parenthood and other caring responsibilities appear to be an important driver for the employment differences between women and men. In nearly all Member States, the gender employment gap widens substantially after having children. On average in 2015, the employment rate of women with one child under the age of 6 is 8.8 percentage points (pp) lower than for women without young children, and in several countries this difference is over 30 pp. Mothers tend to be less represented in the labour market than non-mothers across all educational levels and household types. The employment gender gap is particularly high for low-skilled women and single parents . Conversely, parenthood has the opposite effect on the employment rates of men. In all EU Member States, fathers of one child under 6 are more likely to be employed than non-fathers. In 2015, the employment rate of fathers of one child under 6 was on average 12.2 pp higher than non-fathers, and in some countries this difference exceeded 18 pp (see Figure 2). The gender gap in part-time work is also more acute for parents, with 38.9 % of mothers working part-time as compared to 5.8% of fathers. Fathers tend to work more hours than non-fathers, despite the fact that many men report that they want to work fewer than their actual hours, and this is specifically related to the jobs interfering with family life . Figure 2: Employment impact in percentage points of parenthood for one child under 6 on men and women (age 20-49), 2015 Source: EU Labour Force Survey 2015 Women are much more likely to assume the role of informal carers for elderly or dependent relatives than men . In all Member States, the majority of informal carers for people with long-term care needs are women, ranging from 71% in Hungary; 66-64% in Estonia, Italy, Poland, Portugal, Spain, Sweden and the Czech Republic; 62-60% in France, Austria, Germany, Slovenia and Belgium; 58-57% in the Netherlands and the UK; and 54% in Denmark. When informal care is provided, it is most typically performed by spouses, daughters or daughters-in-law. Informal caring responsibilities strongly decrease the likelihood of remaining in employment. This phenomenon is likely to increase further in the context of demographic ageing. Overall, the disproportionate share of caring responsibilities taken by women leads them to take more and/or longer leaves of absences compared to men, reduce their working hours, and in some cases drop out of the labour market altogether. Looking after a child or dependent relative is reported by women as the biggest reason for their inactivity in the labour market, while it is among the less frequently reported reasons for men see Figures 3 and 4 below). Figure 3: Reasons for women's inactivity in percentage of total women inactivity (aged 20-64), EU 28 Source: EU Labour Force Survey 2015

Figure 4: Reasons for men's inactivity in percentage of total men inactivity (aged 20-64), EU 28 Source: EU Labour Force Survey 2015 The underlying causes for why caring responsibilities impact women and men's employment outcomes differently are a mix of attitudes and policy factors. The existence of gender stereotypes and discrimination clearly have an effect on women and men's roles in the workplace and at home. That being said, the design of work-life balance policies can have a strong impact in reinforcing or mitigating the influence of caring on the employment outcomes of women. An explanation of these different root causes is detailed below. It is also explained how these root causes interact - gender stereotypes and discrimination can be reinforced through policy design, while policy reform can play a role in changing attitudes. Economic disincentives, which are most acute for parents and carers, can further reinforce the unequal sharing of caring responsibilities by women and men. 3.2.1. Root cause 1: Gender stereotypes and discrimination Part of the reason for why parenthood and caring responsibilities affect the employment of women and men differently is due to expectations of which gender should be engaged in caring/household work and which gender should remain in formal employment. In a 2014 Eurobarometer survey on gender equality , a majority of respondents agreed that ‘on the whole, family life suffers when the mother has a full-time job’. That being said, gender stereotypes have evolved over recent decades. A larger share of both women and men report today that both genders should contribute to household income and fewer respondents agreed that men’s job is to earn money and a woman’s job is to look after the home. This evolution in attitudes over recent years has been accompanied to some degree by increased female labour force participation, however the shifts in attitudes and in labour force participation has been incremental and tempered by policy factors, as described later on. Gender stereotypes are also closely linked to gender discrimination in the workforce. There is evidence that women can face various forms of discrimination at different stages throughout their career, often linked to the assumption that as a current or potential parent, they would not be sufficiently committed to their job in comparison with men. Such discrimination can act as a barrier for women trying to enter a certain sector/job or in retaining a job once having a child or reaching an age when care responsibilities for other relatives may arise . The lack of effective protection against discrimination and dismissals for women returning from maternity leave strongly affects their participation in the labour market. Although dismissal protection is provided under EU law through the Maternity leave Directive, the Gender Equality (Recast) Directive and the Parental Leave Directive, dismissal of women upon return from maternity leave and unfavourable tratment has been reported in many Member States. One of the most fundamental reasons is that very often existing legislation is circumvented in practice. The crisis has exacerbated this situation which de facto deprives many women of the possibility to exercise their rights. The lack of effective protection against discrimination and dismissals has also an indirect impact on inferring on men's perceptions regarding the risks for their careers of using their entitlements to family-related leaves. While gender stereotypes and discrimination can reflect individual or collective attitudes, they also strongly interact with policies. For instance, unavailable or relatively low paid family leave for fathers makes it more likely for women to take leave and care for the children. This may also lead to employers discriminating against women due to the expectation that they will take leave after giving birth, as opposed to fathers who can be expected to stay in employment after having a child and possibly even increase their work effort. Even in cases where fathers have access to paid leave arrangements or flexible working arrangements, employer attitudes as well as personal attitudes can lead fathers not to take up these measures . This, in turn, can reinforce the expectations of women being the main carer, and can negatively impact their return to employment 3.2.2 Root cause 2: Ill-designed work-life balance policies The provision of policies to facilitate the reconciliation of work and family life has a strong impact in reinforcing or mitigating the assumption that women will carry the bulk of the burden caring reponsibilities and hence can impact on the influence of caring responsibilities on the employment outcomes of women. In many Member States, the persisting deficiencies of work-life balance policies are exacerbating the female employment challenge, while in other Member States, well-designed measures are serving to remove barriers to women's participation in the labour market. Such policies can include family-related leaves for children and other dependents, flexible working arrangements, and formal care services. The availability, or lack-thereof, of leave arrangements can strongly influence women’s decisions to stay at home or return to the labour market after assuming care responsibilities. Inadequate leave arrangements can make it harder for parents to reconcile work and care. As a result, many women end up dropping out of the labour market entirely in order to care for children or other dependents, rather than return to work too early . Conversely, the provision of paid leave tends to boost female labour market participation by allowing women some time off to care for a child or dependent relative while strengthening their attachment to the labour market immediately after child birth as well as several years later. Minimum standards on the length of leave are set out in the Maternity and Parental Leave Directives, and while there are minimum requirements in terms of pay for maternity leave, no requirements exist for pay of parental leave. There is no EU-level provision on the right to paternity leave. That being said, excessively long family-related leaves can also have scarring effects on women’s careers, and make it more difficult for them to re-enter employment after very long leaves of absence . The duration of what constitutes excessively long leave is subject to some academic debate. Some academic research has found that the positive effects of parental leave tend to diminish after 20 weeks. Other academics have found that there is a fairly strong case for leave for approximately six months, after which leave may begin to have an adverse effect on women’s return to the labour market, a negative impact on wages, and on career prospects . The OECD has cautioned against leaves longer than two years because of skill deterioration and large gaps in women’s CVs which make it more difficult for them to re-enter employment . In this context, the possibility to take leave on a flexible basis (e.g., part-time or in blocks), extending the age of the child up to which parents can take leave, as well as providing breastfeeding breaks and/or facilities in the workplace can be effective measures helping the transition of mothers back into the workplace . The availability and attractiveness of leave arrangements for fathers, ie. paternity and parental leaves, also has a considerable impact on the division of work and care between parents, and in turn on overall female employment outcomes. The use of leave arrangements by fathers can rebalance the distribution of care between parents, allowing for women’s faster return to the labour market after having children. Moreover, fathers’ take-up of leave arrangements has a positive impact on their involvement in bringing up children later on, reducing the relative amount of unpaid ‘family’ work undertaken by women and leaving women more time for formal employment. This is true for parental leave, thanks to which the father has the time to effectively engage in the upbringing of the child, but also for paternity leave. While paternity leave is often short and has a minimal direct impact on the sharing of caring responsibilities between women and men, it has a strong leverage effect on the take-up of parental leave by fathers and can therefore in the long run have a strong impact leading fathers to take on caring responsibilities. In Portugal, where entitlements to paternity leave have been significantly strengthened in recent years (including the introduction of an element of compulsory leave), data from the social insurance administration show that 80% of fathers who take-up paternity leave go on to use at least some of their parental leave. In Slovenia, data from the Ministry of Labour show that the take-up of parental leave increased from 2.2% in 2003 to 6.3% in 2009, following the gradual stepping-up in paternity leave entitlements. That being said, the opportunities and incentives for fathers to take leave range considerably across Member States. In 23 Member States, new fathers are entitled to a paternity leave. In those countries where such leave exists, it is usually well-paid, with levels of pay ranging from 70% to 100% of their previous salary. However, the length of leave is typically short, between one day and one week in seven Member States, between 1 and 2 weeks in a further seven Member States. All Member States provide both mothers and fathers at least 4 months of parental leave, in line with the Parental Leave Directive. However, in six Member States, parental leave is unpaid, and in many other countries it is paid at a low level, making it less likely that fathers make use of these entitlements. In fifteen Member States, parents have the possibility to transfer at least part of their parental leave entitlements to the other parent, which contributes to longer absences of women from the labour market and creates difficulties for their labour market reintegration later on. The current Parental Leave Directive facilitates this, as it only requires that at least one month of leave should be non-transferable between parents. Those Member States that have earmarked a significant portion of leave to fathers and paid the leave at a relatively high replacement rate tend to experience higher take-up by fathers and positive results in terms of mothers’ employment outcomes. For example, in Sweden, reserving parental leave to the father has led to a doubling in the number of parental leave days taken by men. Female employment is among the highest in the EU in Sweden, and mothers with young children are more likely to be employed than non-mothers, whereas in the EU28 on average, mothers are far less likely to be in employment. In Germany, a 2007 reform introducing pay for parental leave and bonuses to incentive fathers’ take-up led to a significant and steady increase in the proportion of fathers taking leave as well as improved female labour market participation and increased household income. Portugal has introduced a bonus to couples where both parents take some parental leave, resulting in the percentage of fathers taking parental leave increasing from 0.5% in 2005 to 28.3% in 2013. However overall, fathers' take-up of parental leave is low and, when fathers take leave, periods of leave are usually short. In contrast, mothers generally make much wider use of parental leave options, as shown in Figure 5 below. Figure 5: Level of take-up of parental leave by country and gender Source: ICF national research and calculations

The lack of adequate leave to take care of other dependent relatives also exacerbates the unequal sharing of caring responsibilities between women and men. Where there is no carers' leave provision, it is generally women who will work part-time or drop out of the labour market in order to take care of their relative for a short period of time. No EU-level minimum standards exist for workers with dependent relatives, except for a limited right under the Parental Leave Directive to take time off on grounds of force majeure for urgent family reasons. Most Member States go beyond the minimum requirements and have some form of leave for people with dependent relatives. These can mainly be classified into three main kinds of carers’ leave. Many Member States provide for a short term leave which can allow care for a relative in an emergency situation (beyond the force majeure provisions of contained in the Parental Leave Directive) or to make arrangements for care. A fewer number of Member States provide for longer leaves of several weeks or months to directly care for a relative and some Member States provide for palliative care leave. The level of remuneration also widely varies across Member States: half of the countries do not provide any compensation for at least some of the forms of carers’ leave (usually longer leaves) and 9 Member States provide for leave paid at more than 90%. In general, compensation rates are lower than for other family-related leaves. In addition to inadequate or ill-designed leaves, the unavailability of flexible working arrangements can lead to some people, particularly women, to drop out of the labour market altogether when taking on caring responsibilities. Flexible working arrangements include remote working, flexible working schedules, and reduced working hours (part-time work). Insufficient availability of flexible working arrangements can also lead women with caring responsibilities to change their job to one that is perceived as offering more flexibility or reduced working hours, which is often below their skill level or for less pay. This consequently can lead to or foster gender wage gaps and labour market segmentation. Although flexible working arrangements, in particular telework, are easier to provide thanks to modern technology and have been shown to improve workers overall work-life balance and productivity, the organisation of work tends to remain fixed around on-the-job presence for full working hours or more. Eurofound has reported that an overwhelming share of mothers would be willing to work if they could better choose working hours, and more than half of the inactive mothers would prefer to work part-time . That being said, while such measures can be useful in allowing some women to remain in the labour market after having children, large gender differences in their take-up can result in wider gender gaps in terms of earnings and career progression opportunities, as well as pension entitlements later on, in particular for part-time work. Flexible working arrangements are commonly regulated at company or sectoral level, often through collective agreements, and tend to be prevalent when there is an underlying consensus amongst the social partners or employers that flexibility is valuable and a workplace culture exists that is supportive of flexible working . Some regulation on these arrangements also exists at EU and national level. The Parental Leave Directive provides that parents can request changes to their working hours or patterns for a set period of time and their request needs to be duly considered by the employer. However, this right is limited in time as they can only request that flexibility upon return from parental leave. Some Member States have gone further, extending such rights to all parents and carers or even all workers. Those Member States, such as Sweden, the Netherlands and Austria, who have taken measures to broadly enhance access to such arrangements tend to experience higher female employment. However, women tend to be the main users of flexible working arrangements and in particular part-time work. As mentionned above, in average in the EU, 31.9% of women work part-time compared to 8.3% of men. This leads to large differences in earnings and pension entitlements between women and men. Difficulties in accessing formal childcare services can also lead many women to reduce their working hours or drop out of the labour market. These difficulties are particularly acute for young families and single parents. The availability is however a problem, as the demand for these services outstrips the supply of childcare places in nearly all Member States. Moreover, often a large gap exists between the end of maternity/parental leave and the moment when a childcare place becomes available for parents, compelling parents to find informal solutions where possible in order to be able to both return in employment. Affordability can also be a major barriers to the use of these services; 53% of mothers who declare that they do not work or that they work part-time for reasons linked to formal childcare services consider the costs to be an obstacle, and this figure is higher than 70% in some Member States. The accessibility of these services in terms of physical distance, perceived low quality of these services, and the lack of opening hours that are compatible with parental employment can also present obstacles to female employment. For school-age children, school hours and holidays are often incompatible with parents’ full-time employment: a lack of provision for out-of-school hours may also lead to women working fewer hours. Poor quality of services is also a barrier that needs to be adressed urgently with almost one third of parents not using childcare services due to their unacceptably low quality. Expansion of places, improving quality and providing information on the benefits of early childhood education and care are also needed to bridge the childcare services to all families, including vulnerable families. The EU set targets in 2002 to improve the provision of formal childcare arrangements by 2010 and reaffirmed in the European Pact for Gender Equality spanning until 2020, given that a majority of Member States have still not achieved them. A lack of formal long-term care arrangements can also lead many people with dependent relatives, most often women, to take on the role of informal carers, and lead them to take long leaves of absence from the labour market or dropping out completely. At national level, formal long-term care services are very under-developed in many Member States, to the detriment of women’s employment. Some Member States offer extensive medical and social services to older people in need of long-term care and devote a significant share of GDP to this, while other Member States rely heavily on the informal provision by families and have little public spending. In general, few Member States (Denmark, Finland, the Netherlands and Sweden) have extensive long-term care systems based on public provision. Some Member States like Italy and Austria rely largely on cash benefits which older people can use to organise or purchase long-term care services including informal care from family members. EU-level action in this area has been mainly to promote exchange and mutual learning on the issue through the social Open Method of Coordination. As the share of dependent individuals is expected to increase significantly in the coming years work-life balance challenges for people with dependent relatives can be expected to further increase and could be expected to further negatively impact female employment unless formal care services are further developed. 3.2.3 Reinforcing driver: economic disincentives for women to work Finally, economic disincentives, which discourage second-earners, often women, from entering the labour market, working more hours or remaining in the labour market, can reinforce the unequal distribution of work and caring responsibilities by putting on women the bulk of the burden of caring responsibilities. Some Member States have tax-benefit systems - through joint taxation systems, transferable tax credits or deductions for single earner households - that create high marginal effective tax rates on the second earner in a household, the woman in the majority of couples , thereby discouraging them from entering employment or increasing working hours . Large fiscal disincentives exist for second earners to increase their work intensity in seven Member States , while a much larger number of Member States appear to have some form of tax-benefit disincentive when factoring in allowances and childcare costs. Figure 7: Inactivity trap for second earners (2014) Source : OECD, European Commission calculations Note : Inactivity trap for second earner in two-earner couple with two children, principal earner with 100% of average wage, second earner with 67 % The gender pay gap, by favouring that women rather men take unpaid family leave, also has a negative influence on women’s employment outcomes by disincentivising women to enter or remain in the labour market or increase working hours . That being said, the pay gap is also to some degree a consequence of gender discrimination as well as women’s greater interruptions in their careers and lower career progression due to care. This is explained further in Section 3.3. below. In addition to re-inforcing the unequal distribution of care responsibilities between women and men, economic disincentives tend to be more acute for those with care responsibilities, as such disincentives can interact with other work-life balance policies. For instance, high out-of-pocket costs for childcare and long-term care services coupled with high marginal effective tax rates for a second earner in a household can magnify the financial disincentives for women to enter work or increase their working hours . Moreover, as men earn more than women in the majority of couples, the financial incentives for the man to take leave when it is not well-remunerated, or to reduce their working hours with a proportional reduction of income is limited. It often makes more financial sense for the woman in a couple to make use of these arrangements because the reduction in household income will be less than if the man would do so. Such economic incentives reinforce a gendered division of work and care. Moreover, the provision of cash-for-care arrangements –whereby parents may stay at home and receive an allowance in order to care for their child directly, rather than use formal care services – can create economic disincentives for many women to re-enter employment after having children, especially when out-of-pocket childcare costs are high . 3.3 Consequences

Women's lower participation in employment, higher concentration in part-time work and in jobs below their skill level, and greater gaps than men in their careers, largely due to an unequal sharing of caring responsibilities between women and men, have negative consequences at the individual, firm, and societal levels. 3.3.1 Individual level For women themselves, these problems reduce their career opportunities and their economic independence. When women return to the labour market after having children, their longer leaves of absence due to care relative to men can lead to wage penalties, reduced career progression opportunities and women dropping out of the labour market altogether. In addition these problems lead to women self-selecting into occupations where they will be better able to balance work and family life, which are typically lower-paid occupations. Women's greater career interruptions, concentration in lower-paid work and lower career progression also exacerbate the gender pay gap (which stands at 16.7% on average in the EU). In turn, the gender pay gap reinforces the problem drivers, as it constrains the individual choice to take parental leave: economically speaking, it often makes more sense for fathers to continue working, especially if parental leave is unpaid or is paid at much lower rates than previous earnings. If it is women who take parental leave, the impact on the household budget is often more moderate. This is compounded by the fact that the period around childbirth is often a time of considerable stress on household budgets. Women’s underrepresentation in the labour market also results in their higher risk of poverty and social exclusion, especially in old age. Their reduced earnings, higher concentration in part-time work and gaps in careers lead to lower social security contributions, translating into reduced or non-existent pension entitlements. On average, women’s pensions are 40% less than those of men (gender pension gap ). Evidence in the UK shows that over a career of 52 years, female employees earn £298,064 less than male employees. In average in the EU women without children earn 36% more than women with children. Women in old age are consequently at a much higher risk of poverty and social exclusion (20.2% of women 65+) as compared to men (14.6%). Women’s underrepresentation in the labour market also has negative consequences on their children. Children living in jobless and single-earner households are at a much higher risk of poverty (on average up to 5 times) than in dual-earner households . Beyond women’s economic independence, there are also negative consequences on women and their families. Without adequate policies to help women to remain and progress in the labour market after having children, some women or families choose not to have children or have fewer children than desired. A lack of arrangements to help women reconcile work and care commitments for children and other dependent relatives has also been shown to place substantial stress on women and their families and can also have adverse impacts in terms of physical and psychological health . The prevalence of mental health problems among carers is 20% higher than among non-carers . Moreover, evidence shows that women's greater number of hours of unpaid care and household work contribute to women experiencing substantially greater stress than men. Of that work, the hours spent on caring for elderly relatives are among the most stressful . Finally, the lack of affordable and accessible quality early education and care places have strong negative consequences on children's skills and competencies levels. International data (PISA) shows that students who have not attended pre-primary education have 3 times higher changes of being low performers than those who have for more than 1 year. There are also negative consequences for men. Many men wish to take on more caring responsibilities, particularly for their children. However the design of work-life balance policies in many Member States still discourages many men to take leave and instead encourages women. Men, in turn, tend to increase their working hours after having children. Overall men are more likely to work very long hours than women, even though this is not necessarily desirable for them . In some cases men have been shown to report even higher levels of work-life balance conflicts than women. Inadequate work-life balance solutions for men also affects their children. Evidence also shows that fathers taking parental leave establish stronger bonds with their children that have lasting effects throughout the childrens' lives, and also have positive effects on childrens’ cognitive development. 3.3.2 Business level Women’s under-representation in the labour market has negative consequences on business. Especially as women tend to be higher educated than men, having more skills, diplomas and qualifications, their drop-out of the labour force reduces the available talent pool, which can make it difficult for employers to find the skills that they need . This also exacerbates existing skill shortages for many occupations. Failure to re-design work-life balance policies in an adequate way does not only make European companies less attractive for female and male talents, it also leads to women, especially higher-educated women, choosing to delay or forego motherhood, which will further reduce the skills base available to business in the long term. It may also lead to a difficulty retaining workers who make a positive contribution to a company, leading to costly staff turnover and reduced productivity, as the replacing employee might require training and building in experience before being as effective as the replaced one. Failure to retain knowledgable and trained workers undermines firms' specific human capital and can be a serious burden as staff turnover typically has high costs for employers. Productivity can also be compromised due to increased workers’ stress and/or lack of motivation due to lack of adequate solutions in place to balance work and care. This stress is mainly related to worries about child and back-up care arrangements and frequently occurs when workers are confronted to high demands combined with low control . Greater satisfaction at work is also linked with fewer absence days from work. Both impacts have a positive effect on productivity and ultimately economic competitiveness. In 2010, an average of 6.2 working days were lost per worker due to sickness in the EU28. This figure was lowest in Greece (2), Ireland and Romania (3), and highest in Croatia, Finland, Poland and Slovenia (9). Finally, women’s underrepresentation in the labour market leads to their underrepresentation in decision-making positions. This in turn has costs for businesses, as it can lead to sub-optimal decision-making with negative economic consequences, where decision-makers are not those with the highest potential to do the job and where the pool of available candidates has been reduced. Evidence suggests that companies with female managers/board members could benefit from a higher diversity in perspectives, and could also be better-positioned to serve female-dominated consumer markets . 3.3.3 Societal level Women’s lower labour market participation also has significant economic consequences for the society as a whole. Women’s underrepresentation in the workforce represents a sub-optimal allocation of skills and competences acquired by women, leading to an insufficient return on education, which is often publicly subsidised, and thus a waste of public resources. It also translates into increased pressure on public finances due to lower available labour supply, reduced tax-revenue, and increased social transfers in order to address female