The Maternity Benefit (Amendment) Act 2016, which doubles paid maternity leave to 26 weeks, is being hailed as a historic benefit for working women across the country. However, the Act could lead to a reduction in demand for female employees, and increased discrimination.
The Amendment places the entire cost of the increased maternity leave, as well as of the cost of crèches on the employer. Consider the choice of a prospective employer, especially if male and female candidates possess similar experience and educational qualifications. While the cost of hiring a male candidate would largely be restricted to salary and other statutory benefits, for women the incremental cost to company would now include the 26 weeks of paid maternity leave, cost of creating crèches, as well as the cost of a temporary employee who would need to be hired to fill the gap in the female employee’s absence of nearly six months. The likely consequences of this “motherhood cost” include the following:
i. Fall in demand for female employees, and increased preference for hiring lower cost male employees
ii. Reduction in upfront salary offered to female employees, for compensating the increased cost to company
iii. Increase in contractual employment (potentially for both men and women) even in the formal sector, at multi-national corporations, start-ups and other services based companies, to avoid statutory obligations
iv. Increase in informal employment for women in the secondary sector, as well as in construction and agricultural labour owing to the increased statutory requirements
A comparison of parental leave policies with the BRICS economics and selected developed economics shows two trends:
Nearly all developed and BRICS economies offer shared parental leave which can be shared between both parents. In some cases (e.g. Sweden), a specific proportion of the parental leave is mandatory for fathers.
In both developed countries, as well as BRICS economies, the government provides financial support for the parental leave, largely through social security programmes. In these cases, the entire duration of the maternity leave is not covered at full pay, but at a proportion which varies across countries.
Therefore, to ensure greater parity in parental leave, the law should be amended as follows:
1. Following examples of Norway and Sweden, the distinction between maternity and paternity leave should be dropped:
- The law should entitle parents to shared leave, which can be split between a couple in the way they choose.
- While the onus of financing could continue to remain on employers, the respective employers of the couple should share the total cost of the parental leave, even if all the leave is availed by one spouse.
2. Firms should allow both male and female employees to visit their children during the day at crèche facilities.
The law needs to lead society in recognising that child-care is not the mother’s responsibility alone. Increased parity in parental leave is therefore a necessity to prevent women from being disadvantaged, and to ensure that there is a continued movement towards sharing the responsibilities of child-care.
Author’s note: This article has not accounted for the implications on single parents, particularly single fathers, or same-sex couples, as I do not find myself to be qualified to comment on their situation. However, given the reinforcement of gender norms in this law, I would imagine the detrimental impact would be magnified.
About the author: Mitali Nikore is a New Delhi based economist, focusing on urban infrastructure development and public private partnerships in the transport sector. She completed her master’s degree in Economics at LSE in 2012, and has advised the United Nations, the World Bank, the Asian Development Bank and PwC India.
Another version of this article by the author can be found on the LSE South Asia Centre
Views and the contribution are the author’s own. Picture Credit: Udayavani.com