Entrepreneurship Policies through a Gender Lens

Germany

By Friederike Welter, University Siegen and IfM Bonn

Background

Between 2007 and 2018, the number of women entrepreneurs in Germany increased by 6.1% (from 1.25 million to 1.33 million) while the number of men entrepreneurs decreased by 1.8% to 2.6 million (IfM Bonn, 2020). In 2018, women entrepreneurs made up 6.8% of the total women’s labour force, compared to 12.0% for men (IfM Bonn, 2020).

Women tend to pursue different forms of labour market participation and entrepreneurship than men. Many women, predominately in West Germany, prefer part-time employment, whether as waged or self-employed work. Women are more likely than men to be hybrid entrepreneurs (i.e. move between self-employment and waged employment or periods of non-employment, or be simultaneously self-employed and wage-employed) (Suprinovic, Schneck and Kay, 2016). Moreover, women-led firms are less likely to carry out technology-based innovations, although the share of women entrepreneurs in knowledge-intensive professions and innovative sectors is growing (Kay and Günterberg, 2019). This is likely partly due to tax regulations and family policies which reinforce implicit traditional cultural norms on the occupational role of women. This may prevent more women from entering the labour market, setting up or growing their own businesses, and entering non-traditional sectors.

Policy issue: How to change traditional gender role models

Germany has an established regulatory environment for entrepreneurship, yet some economic policies implicitly favour a traditional gender role model and promote entrepreneurship as a less desirable career choice for women (Welter, 2006), thus reinforcing conservative family norms (OECD, 2016). For example, the spousal splitting system favours married couples with one primary bread winner with a high income (traditionally the man in heterosexual couples) and one (part-time) employed person with a lower income which is primarily responsible for household and family duties (mostly the woman due to work-time and industry preferences, and the gender pay gap). The tax model, therefore, reinforces traditional gender patterns of men working and women staying at home. It is estimated that if Germany were to tax the individual incomes of married couples, the labour market participation of women (including self-employment) would increase by 2.4 percentage points, and their average working hours by 7.4 percentage points (Bach et al., 2011).

Family policies compound normative institutions, as they impact women’s ability to reconcile family obligations with employment, as employees or entrepreneurs. For example, although progress has been made in recent years, there is still a lack of public day care for children. Since 2013, the state has committed to providing day care for every child between the ages of one and three years. Despite this, in 2018, only 33% of children under 3 years old were in day care (BMFSFJ, 2019). There were substantial regional variations, with these figures reaching nearly 60% in some of the East German states. To some extent this may still reflect former socialist gender norms that fostered women’s labour market participation, facilitating this through a comprehensive state child care system. Interestingly, the impact this may have had on women’s entrepreneurship in the early years after reunification (Welter, 2006a) seems to have decreased over time, with women self-employment quotas in West and East Germany converging (IfM, 2020). Furthermore, the opening hours of childcare facilities are more favourable in East Germany compared to the Western part of Germany (BMFSFJ, 2019): 87% (57%) of facilities in East (West) Germany open early (before 7.30 am), and only 8% (44%) close early (at 4.30 pm). In addition, social benefits oftentimes continue to favour men as breadwinners. This is true of the initial schemes offering benefits for families and childcare. The basic parental leave scheme “Elterngeld” (“parental allowance”) favours women staying at home: it allocates 12 months of parental leave financial support to one partner (mostly women) and an additional 2 to the other (mostly men). More recent family policies such as “ElterngeldPlus” (“parental allowance plus”, which offers higher financial support if coupled with part-time work during parental leave time) or the “Partnership Bonus” (offers an additional two months financial support if both partners equally split their parental leave months), both also applicable to (women) entrepreneurs, aim at fostering a more equal distribution of parental leave between men and women.

Although women’s employment and entrepreneurship are accepted widely, German society implicitly continues to perceive entrepreneurship as something that is predominately undertaken by men, and women entrepreneurs are an exception to this norm (Welter, 2006b). Women are still predominately responsible for combining work and family responsibilities rather than sharing them with men (BMFSFJ, 2019). Indeed, where “women feel that employment is incompatible with being a good mother, they may feel considerable role-conflict and strain” (Sjöberg, 2004, p. 111), and as a consequence, they refrain from entering the labour market and setting up their own business. Hence, it is not only the lack of day care facilities that hinders women’s entrepreneurship but also the implicit understanding that women still are the main carers in the family. Although over the past decades, women have come to spend less time on household tasks, recent research still shows a marked gender difference with regard to the distribution of paid work (which men pursue for more hours than women) and unpaid work at home and in the family (which is mainly incurred by women) (Samtleben, 2019).

Studies analysing the images of women entrepreneurs as represented in the German public media (for example, newspapers) show how traditional role models are reinforced by positioning the work-family balance as a “women-only” topic (Ettl, Welter and Achtenhagen, 2016), and by showing women entrepreneurs as mothers first, and entrepreneurs second, with entrepreneurial success subordinated to the image of a good family person (Achtenhagen and Welter, 2011). In the past, Germany has introduced a number of programmes or other means that promote women entrepreneurs as role models. For example, in the “FRAUEN.unternehmen” (“Women Entrepreneurs”) initiative, women entrepreneurs mentor young girls and women, including a series of workshops and meetings around the theme “StarkeFrauen – Starke Wirtschaft” (set up as a hashtag on twitter, meaning “strong women - strong economy”). These initiatives are a step forward in creating more gender-equal role models in Germany, albeit in the long-run.

Conclusions and recommendations

Much has been done at the federal level to support women’s entrepreneurship. Still, traditional gender role models continue to – implicitly – promote entrepreneurship as a less desirable career choice for women; they also still underpin existing economic and family policies.

Recommendations for Germany

• Promote a gender-equal image of women in the labour market and in entrepreneurship. Current federal policy initiatives such as “Frauen.unternehmen” should be continued, scaled-up and accompanied by additional public campaigns.

• Minimise the impact of the unpaid gender care gap on women’s entrepreneurship. Continually evaluate policies aimed at fostering a more equal distribution of child care through supporting parental leave to ensure that the current design motivates gender-equal child care.

• Use tax policies more effectively to support gender-equal entry into the labour market. Abolish or update the spousal splitting system for taxing spousal incomes to provide greater incentives for women’s entry into the labour market.

References

Achtenhagen, L. and F. Welter (2011), “‘Surfing on the ironing board’ – the representation of women's entrepreneurship in German newspapers”, Entrepreneurship & Regional Development, Vol, 23, No. 9-10, pp. 763-786.

Bach, S., J. Greyer, P. Haan and K. Wrohlich (2011), “Reform des Ehegattensplittings: Nur eine reine Individualbesteuerung erhöht die Erwerbsanreize deutlich”, DIW Wochenbericht No. 41/2011, pp. 13-19.

BMFSFJ (2019), “Kindertagesbetreuung kompakt: Ausbaustand und Bedarf 2018”, Berlin, https://www.bmfsfj.de/blob/156236/faeb6a19a33244fe91af8543db56bade/kindertagesbetreuung-kompakt-ausbaustand-und-bedarf-2018-ausgabe4-data.pdf.

BMFSFJ (2019), Agenda 2030 – Nachhaltige Familienpolitik, Berlin, https://www.bmfsfj.de/blob/142626/e593258f01dcb25041e3645db9ceaa5b/agenda-2030-langfassung-data.pdf.

Ettl, K., F. Welter and L. Achtenhagen (2016), “Das 21. Jahrhundert ist weiblich: Unternehmerinnen in der Presse”, IfM-Materialien, No 249, Bonn: IfM Bonn.

IfM Bonn (2020), “Self-employed/liberal professions”, https://www.ifm-bonn.org/statistiken/selbststaendigefreie-berufe/#accordion=0&tab=0.

Kay, R. and B. Günterberg (2019), “Existenzgründungen von Frauen – Aktuelle Entwicklungen”, Daten und Fakten, No. 24, Bonn: IfM Bonn.

OECD (2016), “Supporting Women Entrepreneurs in Germany: Rapid Policy Assessment”, http://www.oecd.org/employment/leed/Rapid-policy-assessment-Germany-final.pdf.

Samtleben, C. (2019), “Also on Sundays, Women Perform Most of the Housework and Child Care”, DIW Weekly Report, Vo. 9, No. 10, pp. 86-92.

Sjöberg, O. (2004), “The Role of Family Policy Institutions in Explaining Gender-Role Attitudes: A Comparative Multilevel Analysis of Thirteen Industrialized Countries”, Journal of European Social Policy, Vol 14, No. 2, pp. 107-123.

Suprinovic, O., S. Schneck and R. Kay (2016), “Einmal Unternehmer, immer Unternehmer? Selbstständigkeit im Erwerbsverlauf”, IfM-Materialien, No. 248. Bonn: IfM Bonn.

Welter, F. (2006a), “West and East German Women Entrepreneurs: (Why) Are they still different?”, in Welter, F., D. Smallbone and N. Isakova (eds.), Enterprising Women in Transition Economies, Aldershot: Ashgate, pp. 171-200.

Welter, F. (2006b), “Women`s entrepreneurship in Germany: progress in a still traditional environment”, in Brush, C., N. Carter, E. Gatewood, P. Greene and M. Hart (eds), Growth-oriented women entrepreneurs and their businesses, Cheltenham, UK; Northampton MA: Edward Elgar, pp. 128-153.