Sunday, June 15, 2008

18 Months Paid Maternity Leave

There have been a number of articles recently about the need to do more for women in the workplace. Amongst the ideas floated was this one - paid maternity leave for 18 months.

A number of ideas have been put on the table - 80% of pre-maternity wage, minimum wage (perhaps plus a little bit). Some other figure.

It all seems like the type of place we'd all like to live. Somewhere that woman who decide to look after their small children are valued and rewarded for that choice. I certainly think any mother who looks after their own children should be respected. It can be difficult, isolating and demoralizing. I also think those early years are important for forming the bonds of affection between parents and children. In other words, I am all for mothers looking after their own children.

But, who is going to pay? If it is the government, then the 80% of previous salary becomes hard to stomach, because it means the well off end up with more government money that the poor. Not the kind of welfare we normally espouse. If the amount is set at the minimum wage, then it is likely to act as an incentive for the non-working poor to pump out a baby every 18 months to be gain a stable, if small, income, and be excused from looking for employment.

Also, any time the government steps in with "special" payments, attempting to manipulate people's choices (socially engineering us through taxes and benefits), there is trouble ahead. The trouble is, that once the existence of the payments is accepted, there starts a political game of getting different special groups included or excluded. Should adopters get the benefit? Fathers instead of mothers? Other carers? Could it be 3 years for special needs children? And so on.

People should be able to make decisions based on the true costs, to most efficiently allocate their resources. Having the government differentially tax different activities, pay benefits in such a complex and means tested way already means that too many financial decisions are made based on the tax and benefit implications. People are effectively encouraged to make poor choices, because someone else will pick up some or all of the bill.

Okay, rant about tax over, for now. What if private companies were to pay the leave? If anything that seems worse. Large companies with hiring policies and HR departments who do not pay wages from their own pockets are likely to take it as part of the cost of doing business, but smaller concerns where the hiring manager pays the wages cannot help but have the potential for bankruptcy implicit in paying 18 months wages for no help. Or perhaps this is to be yet another penalty imposed on companies for growing too large. There are already a number.

Either way, government or private, the payment comes from everybody else. Either through reduced salary available, reduced profits leading to reduced investment income or directly through additional taxation.

The objective of this policy is to encourage women to remain in the workforce after children. It seems unlikely that this would be achieved. The truly ambitious would not take advantage of the break, too long away from the limelight, not gaining experience. Those wishing to stay home longer, would likely take advantage, only to resign at the end. The only "legitimate" beneficiaries are those who wish to return to work after the available time off. To those families, this plan must seem like manna from heaven. But unlike manna from heaven, someone has to pay, and ultimately it it is poor policy and please, let it not happen here.

No comments: