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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 |
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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
- See T. Maguire, ‘$5000
for new mums in ALP plan’ Daily Telegraph, 1 April 2004.
- L. Taylor, ‘Job
rights: Labor opts for soft sell’ The Australian Financial
Review, 7 April 2004, p.3.
Further Reading
- O'Neill, Steve, Work
and family policies as industrial and employment entitlements,
Research Paper, 9 August 2004
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