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Paid Parental Leave - Good for business, or bad?
The Prime Minister's recently stated intention to introduce 14 weeks of paid parental leave as a statutory right might satisfy (and, indeed, exceed) the International Labour Organisation's recommendations, but what employers will make of it remains to be seen.
Details of the proposal are sketchy at the moment and employers would be wise to ensure their views are heard and taken into account before any legislation is developed or it becomes part of a wider political debate.
Business will be particularly keen to ensure that if such legislation is introduced, the financial and compliance obligations imposed on them are kept to a minimum. Or, at least, provide sufficient benefits to justify the costs because at the same time, employers would be wise not to summarily reject the proposal as an anti-business proposition.
If it's carefully managed, there could be some positive spin-offs for business too.
Business can't be too surprised by Helen Clark's recent pronouncements - it's been on the agenda for some time. New Zealand falls far short of ILO conventions which recommends 12 weeks paid parental leave, but then again so too do many other western countries, including Australia. Indeed, only a handful of Western European countries (particularly in Scandinavia) actually comply with ILO recommendations and those that are most generous, such as Sweden, tend to have significantly higher income tax rates than elsewhere.
As with everything in life, nothing - not even generous parental leave provisions - comes free.
At the moment, the Parental Leave and Employment Protection Act 1987 provides for 14 weeks maternity leave, two weeks paternity leave and extended leave of up to 52 weeks - all without pay - for employees. In 1999, the National Government introduced the parental tax credit scheme provided a maximum of $1,200 for each newborn child which was payable to the principal caregiver at the rate of up to $150 weekly for up to eight weeks for lower and middle income families.
Helen Clark's proposals are an extension to this - at this stage it appears she proposes to fund parental leave out of general taxation.
So what does this mean for business? At this stage it's unclear. The answer will depend on how the payments are calculated, how much the entire bill will be and, more importantly, whether they are funded through a general taxation, a special levy on employers (as proposed recently by Womens Affairs Minister Laila Harre) or a mixture of both.
What's important is that business lobbies hard to minimise the impact. The last thing business needs is another special levy or increased compliance costs to deal with what might appear to cynics to be an ILO-sponsored initiative. Nor would business welcome an increase in taxation to pay for paid parental leave.
This is particularly the case because many businesses will already be providing their own levels of parental leave provisions as part of their general employment and HR procedures.
Because, whatever labour organisations may believe, more enlightened businesses recognise the value of looking after employees in all circumstances, including providing parental leave.
It's not in a business's interests to lose valuable staff due to parental leave and any measure which makes it more likely to retain staff will be welcomed, providing it doesn't impact too heavily on the business in other areas.
Business will need to assess the proposals carefully and make a judgement on this issue. Business will also need to consider the impact of the proposals in light of their overall impact on sexual discrimination in the workplace. This is a grey area - it's impossible to ignore the possibility that some employers are more reticent about employing women in their 20s and 30s because of the likelihood they will leave to become mothers. There is too much anecdotal evidence of some employers asking inappropriate questions at interviews or preventing promotions because of this to ignore.
The impact of the proposals on this issue need to be taken into account. Will any legislation make it more likely or less likely that this hidden discrimination will disappear. The answer, of course, is we don't know how the Prime Minister intends to pay for and implement the initiative.
Until then, we're very much in the dark.
