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Current Issues
Paid Maternity Leave
E-Brief: Online Only issued 13 September 2002; updated 11
August 2004
Steve O'Neill Analysis and
Policy
Economics, Commerce and Industrial Relations
Section
Interest in widening working women's access to paid maternity
leave (PML) has received prominence as a result of the Human Rights
and Equal Opportunity Commission (HREOC) discussion paper
Valuing
Parenthood: Options for paid maternity leave - Interim paper
2002 released in April 2002, and the
Workplace Relations Amendment (Paid Maternity Leave) Bill put
to the Australian Parliament earlier this year by Senator
Stott-Despoja. This Brief provides some background to the debate,
including the moves in the 1970s to introduce maternity leave
through industrial relations tribunals. It reviews the spread of
PML and forms which PML may be provided to employees; the expected
cost of a safety net scheme funded by government, as well
canvassing some of the many possible cost-benefit scenarios which
may (or may not) justify such a proposal.
Maternity leave: early standards
Provisions to allow unpaid maternity leave of 52 weeks following
the birth of a child (where the employee had 12 months continuous
services with the one employer) were inserted into federal awards
as a result of Conciliation and Arbitration Commission test case in
1979 following an Australian Council of Trade Unions (ACTU)
application for awards to provide such leave. Maternity leave
followed earlier reforms to promote the interests of working women
such as the equal pay cases (1969-74) and abolition of the marriage
bar in the Australian Public Service (1966). In the current debate
over paid maternity leave, it is often claimed that pregnancy is a
social issue (even a personal issue), but not an industrial issue.
A similar debate took place over 20 years ago producing the outcome
that pregnancy at work came to be regarded as an industrial issue.
As the Australian Labour Law Reporter put it:
… it is not the pregnancy as such that is being
regulated but rather the leave entitlements of an employee who is
pregnant. It is now accepted that maternity leave and related
matters do come within the jurisdiction of industrial
tribunals. ( 31-175)
State industrial jurisdictions followed the 1979 decision.
Earlier, the
Maternity Leave (Commonwealth Employees) Act 1973 provided
Commonwealth public servants with paid maternity leave for 12 weeks
(with 40 weeks unpaid). Its provisions were amended in 1978 which
removed the entitlement to (limited) paid paternity leave and made
other changes. Maternity leave provisions in a few federal awards
did precede the Commonwealth law, however at the time, the new
model public sector maternity provisions were intended to be
'pace-setters', i.e. to be emulated by the private sector. (See S.
Deery and D. Plowman, Australian Industrial Relations,
2nd ed. 1980, p.121).
In 1990 the Australian Industrial Relations Commission (AIRC)
reviewed its 1979 test case decision. While not significantly
enhancing the basic unpaid maternity leave entitlement, the concept
of parental leave (paternity, maternity and adoption leave) was
introduced into federal awards, and other issues such as returning
to part-time work were addressed in an AIRC 1990/91 test case.
These provisions formed the basis of a 'last resort' national
standard implemented via the Industrial Relations Act
1988, and currently found under s.170KA
and Schedule
14 of the Workplace
Relations Act.
Towards paid maternity leave
The current debate on extending these provisions to
paid maternity leave (PML) has moved considerably
from a minor reference in HREOC's 1999 report Pregnant
and productive, It’s a right not a privilege to work while
pregnant (pp.226-229). Its
recommendations included a proposed review between HREOC and
the Department of Employment and Workplace Relations (DEWR)
of funding options for paid maternity leave.
Since then, the debate has been revived in Parliament, through,
for example, questions of non-government parties seeking the
Government's response to Pregnant and productive. In
turn, the Government has supported certain recommendations of
Pregnant and productive, reflected in its
Sex Discrimination Amendment (Pregnancy and Work) Bill
2002. The ACTU developed a policy for the 2001 federal
election on women's employment issues, adopting the parameters for
assistance found in the revised Maternity Protection Convention,
ILO
Convention 183. Related to this Convention is Recommendation
191 which
proposes additional standards. Australia has not ratified the
Convention. However, Article 11.2(b) of the United Nations
Convention
on the Elimination of all forms of Discrimination Against
Women, which Australia has ratified
(with a reservation: note
Joint Departments Submission to the PML Bill, below) commits
signatories introducing "maternity leave with pay or with
comparable social benefits".
HREOC's sex discrimination commissioner Pru Goward presented
five options for extending paid maternity leave in
Valuing Parenthood: Options for paid maternity leave - Interim
paper 2002 in April 2002. The Australian Democrats
developed a paid maternity leave proposal for the 2001 election,
and tabled the Workplace
Relations Amendment (Paid Maternity Leave) Bill in May 2002
(see its
Explanatory Memorandum) as a
proposed amendment to the Workplace
Relations Act..
Who gets paid maternity leave?
Appreciating the variety of instruments listed above for
providing maternity leave, it can be seen that focus on any one
bargaining level, may miss the others. At the higher end of
estimates Dr Barbara Pocock estimates that 39 per cent of
female employees have access to paid maternity leave of
some form (about 7 weeks on average):
- 39 per cent of female employees in Australia can take an
average of seven weeks’ paid maternity leave, up from 28 per
cent in 1997.
- Although 77 per cent of women in the finance and insurance
industries have access to paid maternity leave, only one per cent
are covered in the retail sector, and 2 percent in hotels and
restaurants.
- Among developed countries, only the US and Australia have not
legislated for minimum paid maternity leave across the workforce.
Sweden provides 15 months of parental leave at 75 per cent of
salary. ('Work
and family: the crunch: A better life can be legislated').
Another source of data on entitlements is the the
Joint Departments' Submission. It made reference to unpublished
data from the ABS Survey of employment arrangements and
superannuation (ABS Cat. No. 6361.0), conducted over 2000,
which found:
- 38 per cent of female employees responded that they were
entitled to paid maternity leave (51 per cent of full time
employees and 21 per cent of part time employees)
- women in casual employment had almost negligible access to paid
maternity leave (0.4 per cent of self-identified casuals responded
that they were entitled to paid maternity leave, compared to 53.6
per cent of other female employees)
- the highest coverage of paid maternity leave (percent of female
employees) occurred in the following industries: Government
Administration and Defence (68.1 per cent), Communication Services
(59.1 per cent ), Finance and Insurance (59 per cent) and Education
(57 per cent )
- the lowest coverage of paid maternity leave was found in the
following industries: Agriculture (4.5 per cent), Accommodation,
Cafes and Restaurants (13.4 per cent), Retail (20.2 per cent of
female employees) and Cultural and Recreational Services (28.2 per
cent)
- the highest incidence of paid maternity leave was recorded in
the following occupations: Managers and Administrators (65 per
cent) and Professionals (54 per cent)
- the lowest incidence of paid maternity leave was recorded in
the following occupations: Elementary Clerical, Sales and Service
Workers (18 per cent) and labourers and related workers (21 per
cent) and access to paid maternity leave was higher the greater an
employee’s length of service with an employer.
Senate Committee Review 2002
The
Workplace Relations Amendment (Paid Maternity Leave) Bill has
become subject to a Senate Employment, Workplace Relations and
Education Committee inquiry, (see
Report).
Submissions to that inquiry provide useful information. Most
canvass funding options for paid maternity leave, but many express
concern over the limited extent of the possible provision. PML
proposals from the
ACTU and the Australian Democrats
PML Bill (and separately from HREOC) reflect the basic
parameters of the ILO C. 183, i.e. some form of payment generally
for 14 weeks, although HREOC intends to firm its proposal in a
subsequent report. The costings for the proposal mentioned below
adopt a payment for 14 week framework.
Submissions from business generally oppose PML if business
is required to pay for it, while otherwise being supportive of the
need for PML, and most business submissions recognise the
contributions to PML and work and family policies already being
made either via company policy or workplace agreements.
Of special importance is the joint submission by the Department
of the Prime Minister and Cabinet, the Department of Employment and
Workplace Relations and the Department of Family and Community
Services (the
Joint Departments Submission, July
2002), particularly in light of the excellent data provided
therein. However the submission avoids putting a view on a funding
option for paid maternity leave. It shows that there are four
instruments for funding paid maternity leave:
- Workplace Agreements (as well as individual contracts)
- Company Policy
- Legislation, and
- Awards
Thus, there has been no one bargaining level to pursue maternity
leave. As Justice Munro of the AIRC observed:
Many significant employee benefits, for instance maternity
leave, accrued rights protection, and severance pay are evolutions
of national policies pursued by unions at all available negotiation
levels. (T1982, 16/10/2000)
Workplace Agreements
HREOC's 1999 Pregnant
and productive, It’s a right not a privilege to work while
pregnant provided evidence of the incidence of PML in a survey
of certified agreements (Enterprise Bargaining
Agreements (EBAs - upon certification by the AIRC are
referred to as Certified Agreements, CAs). Paid maternity leave
appeared in only 7% of CAs.
Subsequently, HREOC's
Valuing Parenthood: Options for paid maternity leave - Interim
paper 2002 reported that only 6.7% of current enterprise
agreements mention paid maternity leave. This encompasses 21% of
all public sector agreements and 3.4% of private sector agreements
and 0.7% of Australian Workplace Agreements (AWAs, which are
registered individual employment contracts) mentioned paid
maternity leave. This information drew upon survey work of
agreements undertaken by ACIRRT and reported in its March 2002
ADAM
Report. The public sector, community services and utilities set
the standard, while the finance sector, once known as a leader, had
only 7.4% of agreements mentioning paid maternity leave. The
ADAM
Report found also that that occurrence of paid maternity leave
in CAs had declined marginally from 6.7% to 6.5% over 1998-2001.
However as the
Joint Departments' Submission notes, a small number of CAs can
cover a large number of employed women.
Company Policy
Company policy often provides a particular entitlement, or
allows time-off without disciplinary penalties under particular
circumstances. Large organisations and public sector agencies may
have extensive 'Human Resource' policies which are likely to
address a range of issues such as conduct and behaviour, dress
codes and the like. The attraction of this form of arrangement is
that such policies are not legally binding, since they are not
formalised under an EBA or other instrument. However it may be that
a company policy manual be referred to in an applicable EBA or
other instrument, and overall the extent to which company policy
represents a legal obligation is grey. Also, eligibility to a
company policy benefit may be varied according to the
candidate/applicant. For researchers, over-reliance on internal
policies may make assessment of the extent of a provision or
entitlement difficult, short of a major survey such as the Australian
Workplace Industrial Relations Surveys.
Legislation
Paid maternity leave may be legislated by the
Commonwealth and./or the States in respect of their public servants
and employees covered by State awards. Legislation providing for
paid maternity leave applies to Australian Public Servants (and
then only those employed under public service legislation).
Privatising an APS service, eg the Commonwealth Employment Service
in 1998, effectively removed paid maternity leave, as observed in
the
CPSU-(PSU) submission.(see also
attachment). According to the CCH Australian Labour Law
Reporter, New South Wales, Victoria, South Australia,
Queensland, Western Australia and the Australian Capital Territory
provides employees in those States with a standard entitlement to
(unpaid) maternity leave (see also the
Joint Departments' Submission). Note that other forms of leave
have been legislated for under State industrial jurisdictions, eg
annual leave and long service leave, depending on the State.
However it is clear that the States also use award and agreement
provisions for paid maternity leave for their public servants, but
the standards generally trail the Commonwealth's 1973 standard (12
weeks pay at the employee's salary) in respect of their public
services (see table below).
Awards
Federal awards tend to incorporate the 1990/91 unpaid parental
leave test case clause. Maternity leave is an allowable matter
(s.89A(2)(h) under the Workplace
Relations Act.
Parental leave in federal awards was revisited under the award
simplification process (Print Q5596). The
Joint Department's Submission informs that 87 awards (out of
2169 currently) contain a paid maternity leave
provision. It can be presumed that these arrangements were made
prior to the WR Act coming into effect. There is no clear reason
why federal awards cannot be used to pay maternity leave. Indeed
the
National Farmers Federation in its submission on PML alerts to
the possibility that an application to the AIRC for PML to be
included in federal awards 'could be made at any time'. Unpaid
maternity leave has been recently extended to casuals with
requisite service employed under federal awards following the
Parental Leave Casual Employees decision (and extended by
legislation in New South Wales and Queensland).
The table below compares paid maternity leave
standards across the public services with reference to the 'major'
industrial instruments (legislation, awards and EBAs).
Paid Maternity
Leave Standards - Public Sector
|
Award/EBA Provisions |
C’wealth |
Vic |
Qld |
WA |
Tas |
SA |
NSW |
| Paid Maternity
Leave |
|
|
|
|
|
|
|
Community and Public Sector Union State Public Services
Federation Group:
Submission to the Senate Employment, Workplace Relations and
Education Committee' s
Inquiry into the Workplace Relations Amendment (Paid Maternity
Leave) Bill 2002
How do awards, EBAs, company policies and legislation
intersect?
One of the recurring debates in industrial relations is the
degree of intervention of third parties in relations between
employers and their employees. An industrial award and indeed laws
governing workplaces (eg in health and safety matters) may be seen
as an unwanted interference, and for higher productivity,
workplaces should be able to self-regulate. In other words, under
this scenario, either a relevant EBA or company policy would be
dominant in setting conditions of employment.
The
Finance Sector Union (see attachments
1,2,3)
has provided to the Senate Committee its survey of work and
family measures in key institutions within the banking/insurance
industry and the method (award, agreement or company policy) as to
how the following measures are provided to staff:
- Use of sick leave to care for family
- Specific paid leave to care for family
- Unpaid leave to care for family
- Work from Home
- Paid maternity/paternity/adoption leave
- Further unpaid maternity/paternity/adoption leave
- Time off in lieu
- Job sharing
- Part-time work
- Career break
- Pay Averaging (48/52)
- Child care subsidies (or provision)
The major institutions surveyed include the National Australia
Bank (NAB), Westpac, ANZ, NRMA, AXA, in all eleven institutions
(credit union conditions are considered but not according to the
institution). The table comparing work and family provision and the
source of the entitlement prepared by the FSU shows that company
policy is significant in the NAB and the St George Bank. However
comparing the source of work and family provision across the 11
financial institutions, collective agreements account for 45 per
cent of such provisions, awards are a source of 35 per cent (with
overlaps) and company policy accounts for the balance of about 20
per cent. Note that in this comparison, the role of legislation
(the WR Act) is not included. For these financial
institutions, the role of legislation is replaced by the applicable
award/agreement parental leave provision, (as is required by the WR
Act, s.170KA(4)).
Pros and Cons for Paid Maternity Leave
Arguments supporting PML have been canvassed in
Valuing Parenthood: Options for paid maternity leave - Interim
paper 2002. Some of these are:
- A national paid maternity leave scheme would go some way to
addressing the male/female wage disadvantage and compensate for the
period of childbirth and time shortly after when women take time
off work or reduce their labour force activity.
- Maternity leave is generally restricted to long term, permanent
employees. Industries with high proportions of women and casual
workers, such as retail and hospitality, are generally less likely
to offer paid maternity leave
- For couples who save money to afford each child, a period of
paid leave would enable them to bring forward their decision to
have a child. It may also encourage some couples to have an
additional child.
- Paid maternity leave would assist with the direct costs of
having children, especially the increased costs faced at the time
of the birth of a child;
- Paid maternity leave encourages women to participate in the
labour force and promote their economic security by enabling them
to retain skills and expertise and maintain income
- Paid maternity leave would assist to reduce attrition rates,
particularly for women, and encouraging women who have had babies
to maintain their attachment to the workforce (benefiting the
employer by reducing retraining and staff replacement costs.
The arguments against introducing paid maternity leave funded by
government or by business is that it is no guarantee as a remedy
against falling fertility rates.
Senator
the Hon. Nick Minchin has made the following points:
- Fertility rates have been falling in Australia and the
developed world for the past 30 years. Births are forecast to
exceed deaths in Australia for at least another 30 years while the
total population is forecast to continue to increase through
immigration until 2063. So with one of the highest fertility rates
in the OECD, Australia is in far better shape to manage than many
nations)
- Most experts acknowledge that the government can do little to
affect fertility rates
- Paid maternity leave will cost between $415m and $780m per
annum depending on the rate of pay and eligibility. This would be a
major new burden on taxpayers. Little justification for
taxpayers contributing an additional half a billion dollars to
mothers in the paid workforce while ignoring all other mothers
-
Senator, the Hon. Amanda Vanstone
has noted that PML is one of a number of work and family measures,
but by itself is unlikely to offer a solution to the multiple
pressures which parents will face in deciding to commit to raising
children.
The key elements of the costing of PML which is contained in the
Australian Democrats' Bill's follows:
- 250,200 births and 514 adoptions (250,714 maternity events) x
.72 participation rate = 180,514 x .781 in non-government
employment ( = 140,981) x .754 for those in current job for more
than a year = 106,300.
- Of these, assume 36.3 per cent (or 38,587) earn less than
minimum wage at an average of$229/week.
- Net of the Maternity Allowance and the Maternity Immunisation
Allowance, these are eligible for an average Maternity Payment of
($229 x 14 weeks) less $1007 = $2199. Estimated cost for those
earning less than minimum wage is $2199 x 38,587 = $84.85
million.
- For those earning above minimum wage, or 63.7 percent of
106,300 = 67,713, net of the Maternity Allowance and the Maternity
Immunisation Allowance, ($431.40 x 14 weeks) less $1007 = $5033.
Estimated cost for those earning less than minimum wage is $5033 x
67,713 = $340.80 million
- Total approximate cost, before tax = ($342.09m + $85.58m) =
$425.65 million, after tax = $352.14
million.
- The ACTU believes that women should receive 100% of their
pre-leave income during the period of leave. As a work
related entitlement, maternity leave is no different from sick
leave, long service leave, jury service leave and defence forces
leave which are funded at 100% income replacement.
- In view of the societal benefits accruing from maternity leave,
and in light of the Commonwealth’s role in addressing
discrimination, the ACTU supports a Commonwealth payment capped at
federal minimum wage. Forty-eight percent (48%) of women
workers earn less than $500pw, and 35% earn less than $400pw.
Payment to the federal minimum wage would ensure full income
replacement for the lowest paid women.
- In recognition of the benefits to employers, the ACTU calls for
employers to fund the gap between the federal minimum wage and
women’s pre-leave incomes. The ACTU calls for
legislation introducing a levy on employers to fund the gap between
the federal minimum wage and the average weekly earnings (currently
$897). If such a levy were introduced with this cap, paid
maternity leave would deliver full income replacement for 87% of
all women accessing the scheme. If capped at AWE the scheme
will meet the ILO requirement for 2/3 of pre-leave income for 97.5%
of Australia’s working mothers.
- The ACTU proposes that the new maternity payment be of
equivalent value to the Commonwealth contribution to paid maternity
leave i.e. up to $6034.00 (pre tax). Clearly this is a
significant increase on the existing Maternity and Immunisation
allowances. However, a re-allocation of the funding for the
baby bonus, plus the allocation for family tax benefits payable
during the first year of a child’s life, would go a
significant way towards meeting the cost. The payment could be
available around the time of the birth or spread across the
child’s early years.
"The following are indicative costings of various schemes of
paid maternity leave, based on those outlined in the Sex
Discrimination Commissioner’s discussion paper. The estimates
are for 14 weeks (International Labour Organisation recommendation)
of paid maternity leave based on eligibility of (a) women
employees with one employer for 12 months or more, or (b) women
employees with one or more employers for 12 months or
more.
The estimates assume that family payments such as Maternity
Allowance would continue unchanged and that each option would apply
to all women who have been employees for the 12 months prior to the
birth of their child.
Option 1: No Cap (Full wage replacement) 14
weeks of paid maternity leave at the rate of the mother’s
current wage and salary (i.e. uncapped); (a) $680m, or (b)
$780m.
Option 2: $1000 per week Cap 14 weeks of paid
maternity leave at the rate of the mother’s current wage and
salary but capped at the same level as the Baby Bonus ($52,000 per
annum); (a) $605m, or (b) $715m.
Option 3: $754 per week Cap 14 weeks of paid
maternity leave at the rate of the mother’s current wage and
salary but capped at the rate of a midway point between the Baby
Bonus current cap and the Federal Minimum Wage; (a) $575m,
or (b) $660m.
Option 4: $431 per week Cap 14 weeks of paid
maternity leave at the rate of the mother’s current wage and
salary but capped at the rate of the Federal Minimum Wage;
(a) $415m, or (b)$475m.
Can the costs be justified?
The role of maternity leave is, put simply, to maintain the link
between a woman, post child-birth and her employment and career.
There are likely to be a number of approaches to funding a PML
safety net scheme, few of which have been put into the public
arena. For governments, the analysis of the potential costs of
government funded universal (safety net) PML scheme are difficult,
since it is not clear from the evidence of a declining birth rate
(and marriages), that government will net a 'return' from any
additional safety net PML scheme cost.
The justification for the assistance provided to the unemployed
used by DEWR and its predecessors may be relevant here.
Essentially, the argument runs that if the cost of an employment
assistance program generates outcomes for, say, 20 per cent
additional placements, then if one unit of assistance equals, say,
$10 000, the 'cost per net impact' of the assistance may be $100
000 or more, per outcome. In other words, the cost of getting one
extra employed person would 'cost' on average $100 000. This is
because of the 'deadweight' factor, i.e. X-20% of unemployed would
have found jobs without the assistance.
In the case of births pre-universal PML, a reference group is
already available, i.e. last year's number of births (249 600) born
without the benefit of a safety net PML system. The model crucially
hinges on births being higher under the PML safety net scenario,
but even assuming a reversal the decline in births, the 'net
impact' of this PML safety net scheme could easily be a $1 million
per baby, assuming the cost of a PML scheme is say $500m, but only
500 extra babies are born in the first year of a safety net
scheme.
A possible solution would be to isolate any (hopefully positive)
change in the birthrate to among just the 120 000 or so mothers
with a connection to the workforce, and then of these, those who
currently do not benefit from any form of PML but who will benefit
under the proposed safety net scheme. Another possible
justification for the cost might be in the mitigation of an
otherwise more severe decline in fertility rates. It is true that
current Commonwealth assistance for families is over $16 billion
(Valuing
Parenting, Appendix 4), and thus there are other support
schemes impacting on decisions to plan families. Against this, is
the overwhelming body of evidence concerning the costs of child
rearing, particularly to a dual income childless couple. Government
policy would need to impact on their preferences to have any
meaningful result, at least within the PML debate.
Developments in 2004
In the lead-up to the 2004 federal election, the major political
parties have stepped up commitments to family-friendly workplaces.
However (as of July 2004) both the Coalition and the ALP have
announced enhanced maternity allowances/baby care payments rather
than pursue paid maternity leave.
The ALP announced its baby-care payment on 31 March 2004. It
proposes a 14 week maternity payment to mothers of $3000 (for 14
weeks, or $3000 spread over a year) rising to $5300 in 2010
(1). Another element of ALP work and family
policy is a proposal to facilitate easier access to part-time work
for mothers returning to work following childbirth (2).
In respect of the Government, the Commonwealth Budget 2004
introduced a new Maternity Payment of $3000, which will be
increased to $4000 on 1 July 2006 and then again to $5000 on 1 July
2008. The cost of the maternity allowance starting at $750m. per
year and increasing, is about double the median estimates mentioned
for PML in this brief. It is offset by terminating the former
maternity allowance (as at 30 June 2004) and the baby bonus.
More information on these measures and other work and family
policies is available in the Parliamentary Library Research Paper
2004-05 Work and Family policies as industrial and employment
entitlements.
Endnotes
Further Reading
For copyright reasons some linked items are only
available to Members of Parliament.
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