Vishal Sinha
On 20th March 2017, Rajya Sabha approved the Maternity Benefit (Amendment) Bill 2016. The iconic bill intends to alleviate the working conditions for females in India by doubling the paid maternity leave period, increasing it from 12 weeks to 26 weeks.
This improvement has catapulted India to a position just behind Canada (50 weeks) and Norway (44 weeks) when it comes to the grant of plentiful benefits handed out to new mothers. The period is significantly more than what is prescribed by the International Labour Organization (14 weeks).
This bill’s cause is being widely acknowledged as championing the natural constraint limiting women from working: childbirth. But does an extended leave period necessarily mean that working mothers are made better off and is it good for the economy?
26 Weeks maternity leave: The Good
Benefits of enhanced maternity leave are acknowledged to be plentiful, backed by data from all over the planet: grant of paid maternity leave reduces chances of infant mortality[1] and ensures healthy nutrition for the child by improving breast-feeding durations and rates.
It has also been established that maternity leave of atleast 12 weeks leads to significant stress reduction for the mothers[2]. Economically, it is widely accepted that maternity leaves have a positive effect on the economy: it ensures that female workers return to offices, thereby enabling workforce continuity for firms. The costs incurred by the employers in the form of temporary replacements or over-time workers are considerably negligible.
Experiences of other countries: The Bad
However, there are several instances wherein an enhancement of maternity leaves didn’t have the result aimed for. Economists. Chinhui Juhn and Kristin McCue[3] found that enhanced maternity leaves, like in the Scandinavian countries, did lead to increase in welfare for the female workforce, but at the cost of women being employed on a part-time basis.
This theory, establishes an inverse relation between enhanced maternity leaves and stability of work. This propsosition is supported by a Cornell study which scrutinized data across 22 countries and found that enhanced maternity leaves did ensure that women return to the workforce but they were more likely to have unstable contractual jobs. As Juhn and McCue noted, the women in these countries were less likely to hold managerial occupations than women in the United States which only mandates a period of 12 weeks’ maternity period.
A research study[4] conducted by the National Bureau of Economic Research, suprisingly found that an extended paid maternity leave had “no more benefits to children’s welfare, the economy, or workforce continuity than a shorter one” and termed extra leaves as “a pure leisure transfer”.[5]
The research also noted that higher paid leaves cost the taxpayers enormous amounts of money and have a detrimental effect on the economic efficiency of the country. It was found that an extra week of leave imposed a cost of $687 on Norwegian taxpayers in 2010. The extended maternity leave of 35 weeks had the effect of a loss of estimated $1 billion, amounting to 0.5% of its GDP.
Unintended consequences of pro-women policies
There are several other instances wherein pro-women legislations have had consequences which were never intended. For example, when the Chilean government directed all companies to provide free childcare, it was found that companies did the same by reducing salaries of the female workers by 9 to 20%. (It is pertinent to note that a similar development make take place in India as companies with a minimum of 30 female workers are required to establish a crèche.)
In 1999, when Spain passed a legislation whereby employees having children below the age of 7 were eligible for fewer working hours, it was found that only females were looking for benefits under the scheme. Accordingly, fewer women were hired by companies. In a study conducted by the IE Business School in Madrid, it was found that as women progressed towards the childbearing age, there was a 45% higher chance of them getting fired.
These findings prove that an extended leave period for mothers may lead to an adverse effect on the stability of work they’re hired for.
High Unemployment
ASSOCHAM (Associated Chambers of Commerce and Industry of India) in 2016 found that a quarter of urban Indian women left their jobs after their first child. An enhanced maternity leave may affect this positively. But the question which is to be asked is whether this will be enough to alleviate the struggles of the Indian working-mother? Also, will an enhanced maternity leave make things worse for her by affecting the stability of quality of work she is hired for?
As per the latest data available, in 2012 only 27% of Indian women worked as compared to 63% in East Asian countries and 55% in OECD countries. As per some statistics, this is a deadweight loss amounting to 2.5% points which could have added to the country’s GDP. Also, as per the statistics of the International Labour Organization (ILO), women participation declined from 34.1% in 1999-00 to 27.2% in 2011-12. This makes India one of the few countries were female employment has declined with time.
Furthermore, there is a stark divide between urban and rural circumstances. Between 1972 and 2011, female composition of the rural workforce fell from 31.8% to 24.8%. Composition in Urban circumstances increased slightly from 13.4% to 14.7% in the same time period.
These worrying numbers remain explained in spite of sharp economic growth in the last few decades and increasing school enrollment for females. According to the ILO, a complex web of socio-economic factors is the cause.
Firstly, adequate numbers of jobs are not handed out in the rural sector to women. Secondly, even if jobs are available in the market, few women find the incentive to work as household incomes are on the rise. Several social factors, such as wage inequality, exploitation, sexual harassment, norms limiting women’s role to a housewife, etc. can also explain the falling numbers.
Thus, it can be fairly held that India should not only look to draw back women into the office post childbirth. It has to bring them to the office in large numbers, in the first place. Resolving women-unemployment will need more than just enhanced maternity leave, but it’s a good start point .
References:
[1] Increased Duration of Paid Maternity Leave Lowers Infant Mortality in Low- and Middle-Income Countries: A Quasi-Experimental Study, March 29, 2016 http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001985
[2] Maternity Leave Duration and Postpartum Mental and Physical Health: Implications for Leave Policies, December 4, 2013 http://jhppl.dukejournals.org/content/39/2/369
[3] Specialization Then and Now: Marriage, Children, and the Gender Earnings Gap across Cohorts, February 2, 2017 https://www.aeaweb.org/articles?id=10.1257/jep.31.1.183
[4] WHAT IS THE CASE FOR PAID MATERNITY LEAVE?, October 2013, http://www.nber.org/papers/w19595.pdf
[5] The economic case against extended maternity leave, November 05, 2013, https://qz.com/143780/the-economic-case-against-extended-maternity-leave/