When the Parliament passed the Maternity Benefit (Amendment) Bill, 2016, into law on March 9, 2016, many women across social media platforms praised the move, especially one provision—increasing paid maternity leave from 12 to 26 weeks. Many spoke of how India was now on par with Norway and Canada in passing a progressive piece of legislation, which would encourage more women to further their professional careers.
Having said that, recent surveys paint a somewhat different picture.
According to a recent survey by TeamLease Services, a leading recruitment and online job portal in India, the provision of extending paid maternity for women for 26 weeks with employers bearing the entire cost, could result in job losses and discourage small businesses, micro-small and medium enterprises (MSMEs) and start-ups. The figures are quite depressing.
An estimated 1.1 million to 1.8 million women could lose their jobs across sectors like real estate, aviation, education, retail, tourism, e-commerce, information technology and IT-enabled services, and banking, among others in the current financial year.
The survey was conducted among 300 companies across the above sectors. Across all sectors, meanwhile, the job loss figures count extends up to an estimated 10-12 million.
Another survey by LocalCircles, an online citizen engagement platform, also found similarly dismal figures. Among the 2987 respondents it reached out to in the small business and start-up community, 11% said that they only hired male employees in the past year since the law came into effect.
More importantly, 43% of the respondents admitted to hiring more male and fewer female employees. What these surveys describe is the unintended consequences of the maternity law, one of which is a potential drop in real wages for women.
There is an unfortunate bias against women that has already crept into employers in these sectors. In a country, where women labour force participation hovers around the 25% mark as per data available with the International Labour Organisation (ILO) and the National Sample Survey Organisation (NSSO), this is discouraging. Delve further into the data on the formal sector put out by the ILO, and one can find that it employs less than 5% of female workers aged 15-49.
Thus, the new maternity law only covers the supposed privileged few working in the organised sector, leaving out millions from its purview. More importantly, it shows that MSMEs and start-ups aren’t too inclined to hire women, especially those in their child-bearing years since the cost of paying their salary over a six-month period without any output is too prohibitive. Large companies meanwhile have largely backed the new law since they can absorb these costs.
Yes, there is gender discrimination in many Indian companies, but such a law may only further encourage it instead of enabling women from furthering their careers.
In a scathing critique of the new law, Rupa Subramanya, a Mumbai-based commentator and researcher on economic policy, makes a very pertinent point about how the Indian economy is not in a position to offer generous maternity leave benefits, unlike say Norway or Canada.
“Countries with generous social protections today most definitely did not have those while they were developing in the 18th and 19th centuries. The best route to strong social protections is through rapid economic development which both creates the infrastructure and tax base as well as the demand for more generous benefits.
Legislating generous benefits in a still-developing country is putting the cart before the horse and is sure to fail. All that will happen are more frustrated women unable to find work, employers unwilling to hire women, and more non-compliance and non-enforcement of existing laws for a state that is already stretched thin trying to do far too many things with too few resources,” she writes for ToI.
With the law in place, however, here are few changes the government could consider:
1) State intervention: Governments could share the cost of paying for maternity leave with an individual employer. Meanwhile, countries like Brazil, Russia and South Africa have adopted a model whereby maternity leave is funded through their respective social security systems. As per a 2014 ILO report, only one-fourth of the world’s nations mandate employers to pay the entire cost of its women employee’s maternity leave.
2) Another popular model is paying a proportion of the salary for the stipulated six months or paying the entire salary in certain months to offset the costs small companies bear.
3) Governments could offer small businesses and start-ups religiously abiding by the new maternity law with tax breaks or other such economic incentives.
Going by data available with the ILO, it is clear that countries around the world are moving towards a model where both the state and employer share the cost and the social security model while shifting away from a model where the employer has to bear all the costs.
Yes, India needs a progressive maternity leave policy but not at the cost of companies that hire the women.
(Edited by Gayatri Mishra)