Parental Leave on The Drum

Over at ABC’s The Drum today, I write about the Coalition’s parental leave plan.

Abbott’s leave scheme is a step backwards for women

Tony Abbott’s paid parental leave scheme is widely regarded as a boon for women. But will it do anything to address the larger problem of gender discrimination in the workplace? Joshua Gans says it likely will make matters worse.

Parental leave policy is back in the news. The Coalition is intending to spend billions of dollars a year on a so-called ‘generous’ parental leave scheme.

There have been debates over whether it is too much, but ultimately the issues are deeper than that. What no politician – of either side – seems to be willing to touch on is that the whole scheme likely is a massive step backwards with regard to the position of women in the workplace.

To understand this, we should remind ourselves of what the public policy issues really are here. One of the stated reasons for parental leave is to make it easier for parents to choose to take career pauses to care for children. That is, in fact, why many companies, especially larger ones, actually offer parental leave.

The rationale for government intervention in the labour market is to extend that worker’s right universally. Why? Because there is a desire to make workplaces today more family accepting and friendly. Without intervention, we get stuck in a competitive situation in which being family-friendly is costly for employers, and in a competitive market place, they can’t afford it. However, make it a regulation, and the competitive pressure goes away.

The Coalition’s plan, on the surface, is dressed up to look like it will tackle this. It will give a mother’s replacement wage to families for six months at up to $75,000 or, if the mother isn’t employed, the minimum wage. It seems hard to argue that that is bad for families who will receive that benefit. But it isn’t hard to see a problem if you look at the bigger picture of gender discrimination in the labour market.

Despite massive strides, women still fare worse than men. While starting from the same educational attainment (if not better), women’s pay is lower and they do not progress up the corporate and government hierarchies at the rate of man. It isn’t hard to think of why: women are still far, far more likely to take leave from work – paid or otherwise – when children come along. That shouldn’t harm their career prospects, but it does precisely because employer’s face costs when workers take six month or longer pauses. Those costs are real and what it means is that, at the margin, employers are more likely to hire and promote men than women. So differences persist.

Now, consider what happens when into this mix you plop the Coalition’s big incentive for women to take maternity leave. And I say it is an incentive for women because it is women who can get their replacement wage for six months. Just look at the Coalition’s policy document. This isn’t parental leave, it is maternity leave.

To be sure, somewhat grudgingly, the Coalition will allow a man to be a primary carer but he is only going to get his spouse’s replacement wage. Why? Because the Coalition throws in the breastfeeding card – something I’ll return to in a moment.

Under the Coalition’s scheme, women are more likely to take maternity leave than before; after all, that is the stated intention of the scheme. But it blasts the household bargain as to who stays home with the baby back to the 1950s. All of the incentive is for women to take six months off to get the advantage of the scheme. Employers will know this and so when they are evaluating equally qualified men and women for good jobs, it isn’t hard to see that they will have more reason to choose the man. To be sure, it isn’t as bad as some proposals that mandated employers paying for that leave, but the incentives are still there.

What we really need is parental leave. In Sweden, both parents are eligible and both can opt to take leave at the same time. And they do. There are still costs to employers, but the balance over whether it is a man or a woman going to impose those costs is dramatically shifted, reducing pressures for gender discrimination. What is more, as any parent knows, it matters to have more than one adult around with the baby. This makes it easier for everyone to cope. To be sure, both parties now advocate a couple of weeks off for daddy, but let’s face it, daddy was likely sleep deprived anyway so this is just a straight out gift to employers. The point is that you need to be stringent in ensuring that parental leave encourages just that without entrenching discriminatory roles.

And what of the breastfeeding card? Only women can do that, right? Breastfeeding can be good for children; there is evidence for that. So we want parents to have the choice. But it is at best a second-order issue and there is no evidence whatsoever that when women stay home they are more likely to breastfeed. Indeed, in my experience, breastfeeding is made much easier when both parents are around. Mummy is going to find it much easier to sit down a feed the baby when Daddy is around to take care of the dishes and laundry.

So let’s not presume that throwing money a family’s way is decisive in that equation. And, by the way, let’s calculate what that money is. If you get $75,000 from the government and feed your baby on average six times a day, that is $68 a feed. Now that is some special milk.

There are ways to overcome all of this and change the workplace culture of Australia. A few years ago I proposed that governments give businesses who have workers who take parental leave and successfully bring them back to the workplace a tax rebate on that worker’s wage. This will give businesses an incentive to change workplace practices to accommodate parents and lower labour costs rather than precisely the opposite. You can read more about that here or watch my (slightly wonkish) video exposition. It is amazing to me that the so-called employer-friendly Coalition would rather choose an expensive labour market regulation than a market-oriented policy to tackle this policy.

The essential problem is political. Politicians, especially male ones, are falling over themselves to sympathise and be seen as sensitive to issues facing mothers, but are not at all willing to lead change. Ultimately, that is what is required here.

You cannot just throw money at an issue and think you have it covered and you are being a ‘good guy.’ Instead, you have to change the attitudes entrenched in our workplace culture that makes it difficult to have families and difficult to deal with families at work. That means you have to provide leadership and as near as I can tell there is virtually none of it on this issue in Australian politics.

Joshua Gans holds the Skoll Chair in Innovation and Entrepreneurship at the University of Toronto and is a Research Fellow at the Center for Digital Business at MIT. View his full profile here.

2 thoughts on “Parental Leave on The Drum”

  1. Joshua.. excellent article. Thank you for clearly articulating the sting in the tail .. this is not pro-women.. its a clumsy attempt to appeal to the women voters. I hope Eva Cox reads your piece. and understands the argument



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