To help mothers, rethink the maternity leave policy

Updated on Jan 06, 2023 08:18 AM IST

There is a need to revisit the 100% employer-funded model of maternity leave, question whether the country is ready for paternity and gender-neutral parental leaves.

India offers 182 days as maternity and 14 days as paternity leave. (HT Archive) PREMIUM
India offers 182 days as maternity and 14 days as paternity leave. (HT Archive)

The year 2022 was marked by India’s rise on the global stage as it took over the presidency of G20 and demonstrated the resilience of its economic recovery after the pandemic trough, outpacing several countries. Yet, despite a slew of policy and legislative action, women’s labour force participation rate has not risen, continuing to hover around 32% in 2020-21, among the lowest globally. Government data shows that women continue to spend about eight times the amount of time on unpaid work, when compared to men. The amendment to the Maternity Benefit Act 2017 was widely expected to support the retention of women in the workplace after marriage and childbirth. The amendment doubled the paid maternity leave entitlement from 12 to 26 weeks for all women in establishments with more than 10 employees and permitted work from home for women employees after the maternity leave period.

Yet, the consequences have been mixed. Evidence shows that, despite being well-intentioned, the law may have created additional barriers to women’s labour force participation. The amendment placed the entire cost of the maternity leave on the employer, which, experts fear, will lead to a decrease in the demand for women’s labour. This has now been borne out by data. Recent research drawing on numbers from the Centre for Monitoring Indian Economy (CMIE) shows that women in the high fertility group are less likely to be employed and their average wages are lower in comparison to other age groups, in the years after the amendments came into force. Moreover, the data showed that these effects are more pronounced for those in highly skilled occupations and with higher educational achievements.

Such a scenario shows that there is a need to revisit the 100% employer-funded model of maternity leave, question whether the country is ready for paternity and gender-neutral parental leaves and understand whether the onus of paying for maternity leaves should only fall on women’s or the mother’s employers. Several policy alternatives may be explored in this regard, as evidenced by practices in other countries.

The first deals with instituting gender-neutral parental leave, doing away with maternity and paternity leave distinctions. For instance, in Norway, parents are offered 343 days, and in Sweden, 480 days of shared leave can be split between the couple in a proportion of their choice. India offers 182 days as maternity and 14 days as paternity leave. These 196 days may be offered as gender-neutral, shared leave.

Second, rebalance the cost of shared leave. The cost of the shared parental leave should be borne by employers of the couple, not just the employers of the mother. In the case of single parents, governments or employers may make a matching contribution. Governments may come up with a formula to determine the precise quantum of the cost.

Third, introduce State support for parental leave at micro, small, and medium enterprises (MSMEs). In most G20 economies, governments provide partial financial support and social protection financing for parental leave. The idea of a maternity fund has been mooted. A parental leave fund can be created with public sector contributions, and then expanded to include employers, large corporations, and financial institutions as donors to support the cost of parental leave.

Fourth, incentivise the introduction of parental leave insurance products. Offering subsidised parental leave insurance could be another support mechanism. Families who intend to have children and the government could co-pay the premiums for parental leave insurance products. One such project could be assured monthly income support for up to 12 months to new parents, with each parent receiving 50% of the payments. Parental leave insurance products could be offered by the Life Insurance Corporation or private entities, backed by a clear regulatory framework established by the government.

The amendment to the Maternity Benefits Act was well-intentioned, but may have created an imbalanced framework, where the cost of hiring a male candidate is restricted to salary and other statutory benefits, but the cost to company for a woman candidate includes six months of paid maternity leave, crèches, and the cost of a temporary employee to fill the gap in the woman’s employee’s absence. A re-evaluation of this policy may motivate a change in the cost burden on employers and initiate a re-look at the social norms around childcare as well.

Mitali Nikore is an economist and founder of the economics research group, Nikore Associates

The views expressed are personal

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