Hamish McRae: If more women go to work, it means we play happier families at home

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The Independent Online

It is good to get away, particularly at a time like this, and a day last week in Sweden talking with trade unionists was a welcome relief from the febrile pre-Budget, pre-election mood in Britain. Come next week, the phoney war will be over, for we will not only have had the Budget but also, my colleagues warn me, the election may have been called. So let's, for one week, stand back from the hurly-burly around us, and think about the longer-term future of the European economy.

The most remarkable thing about Swedish trade unions is how utterly different they are from our own. It is not just that a Unite-style confrontation would be unthinkable; it is that the unions see themselves as having a joint responsibility for the long-term economic prosperity of the nation. So while they were critical of some of the policies of the present centre-right government, in particular the emphasis on tax cuts to boost the economy rather than increased public spending, the differences were minimal when set beside the UK's divisions.

I also heard for the first time anywhere a politician, actually a centre-left one, saying that public finances had to be brought into surplus during the next few years so that the country would be in a good shape to counter the next recession. That is the ambitious aim our own political leaders should have: not to halve the deficit or whatever because the financial markets require it, but to generate a surplus so the country can cope with stresses in the future. That must be the sensible goal for every country; it is just that here is a politician thinking really long-term.

The truly new idea that I came away with, however, was not part of the macroeconomic debate about how best to steer a country through recession, but one that was concerned with improving a country's microeconomic performance. It was about the role of women in an economy, the levels of overall employment, and (this was the new bit) the relationship between gender equality and birth rates. Everyone agrees in the key role of education and training. Everyone agrees that labour participation rates are already crucial in maintaining economic growth as our societies age. Everyone agrees, or at least most of us do, that gender equality is a goal worth striving for in its own right. Greater gender equality does, as you might expect, increase participation rates. That is common sense. But it also seems to be associated with larger families. If women are expected to stay at home and look after the kids, they have fewer kids, not more.

This is hugely important for Europe. Last year, for the first time ever, the German workforce started to decline. By 2018, the EU workforce will have started to decline and though we in the UK should be seeing some growth – partly as a result of inward migration but also because of a rise in the birth rate – if the European economy stagnates, that is bad news for the UK. So what is to be done?

Countries that have a relatively positive view of the role of women in the workplace, including Sweden but also Canada, and a little further down the line, the UK, also tend to have reasonably high fertility rates. On the other end of the scale, countries that are relatively hostile to women working, most notably Poland but also Germany, Japan, Italy and Spain, have low fertility rates. It appears almost as though, if women are told by men to stay at home and have babies, they go on strike and refuse to do so.

Actually, this phenomenon is more likely to be related to what might be called "family friendly" attitudes and policies. Dr Mortvik argues: "In modern societies, attitudes that keep men at work and women at home make it difficult for both to combine family life with other priorities, particularly gainful employment but also education, and ... this holds down the birth rate."

So men gain from family-friendly policies, too. I was chatting to Dr Mortvik last week about this and he made a further point. It was that a country's general sense of well-being was associated not just with gender equality but with a sense of fairness and security in the workplace. You need a sense of security in the workplace because if people are kicked out of work it is hard to get them back. We think of Sweden as having "had a good crisis", but unemployment is higher than in the UK at 10 per cent. We look to Sweden, which had a 12 per cent fiscal deficit in the early 1990s, as a model for how to re-establish fiscal discipline, but that experience has left scars that really have yet to heal. (The world also looks to Canada for such guidance, for it too had a severe fiscal squeeze in the 1990s, and has come through the present recession in relatively good shape.)

This leads to what seems to me to be perhaps the most important question of all for European nations: how does a society improve general well-being, as well as lifting more general measures of wealth, when there are people on much lower wages on the other side of the world, who are just as clever, as well educated and prepared to work much harder than we do?

I did not fly back from Stockholm with any easy answers to that. One thing the UK has been able to do, at least it was before the recession struck, was to create jobs. At one stage during the expansion, we were creating more new jobs than the rest of Europe put together. We seem also to have managed, as we saw from last week's figures, to scramble through this downturn with fewer job losses than anyone expected.

On the other hand, we have, one way or another, excluded millions of people from work. Mind you, so has every European society, many of them more gravely than we have. Where I suggest we can learn from Sweden is not so much in the detail of labour legislation or their active labour market policies – actually labour participation rates in Sweden, though still high, are lower than they were in the late 1980s – but in the bigger idea that balance matters in the workplace as well as in family life.

The more people we can get into employment, or self-employment, the greater the benefits for society as a whole and, as was pointed out to me, the greater the revenues available to the state to provide the services people need. Not all jobs will be "good" jobs. But even less good ones need to be done. So we should respect that. And we should try to understand the big messages of that graph: that there is some sort of link between wider employment opportunities and balanced family life.

Nissan building electric cars in Sunderland? It's a canny move for Britain

A big welcome to the decision by Nissan to build the Leaf, its all-electric (as opposed to hybrid-electric) car, in Sunderland. That, with the building of a battery plant alongside, has been presented as securing jobs in the North-east, and it is that. But the significance is wider. It holds the possibility that Britain will become an important base for building electric cars in Europe.

To see why, think back to Nissan coming to the UK in the first place in 1986. Its Sunderland car factory was the first significant Japanese assembly plant in Europe, and is still the largest in Britain. We did not have the best reputation for car assembly back then, and it seemed a somewhat quirky decision. But the UK was an outstanding market for Nissan (aka Datsun) cars and the North-east had a good reputation for labour relations. That was the clincher. I recall being asked by a Japanese friend in the early 1980s what part of Britain had the best labour relations; it was only later that I realised he was writing a report for the Nissan project.

Because the Nissan investment was successful, Honda and Toyota established UK factories, both crucially steering clear of traditional motor-manufacturing regions. Since then, the Japanese have established other European plants but, thanks to Nissan, they came here first.

What happens next will depend on this latest investment. There is no reason to think that it will be other than successful, for the Sunderland plant has an excellent productivity record. If it does thrive, the UK will become the natural base in Europe not just for other electric cars to be assembled, but also for battery development and manufacture. We don't yet know to what extent electric cars will take over from the internal combustion motors, and transition will take decades. But the technology is simpler and more reliable. So, long term, assuming battery technology advances and costs come down, this head start in Sunderland could be as important as getting Nissan here in the first place.

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