Labour Ministry Moves to Ease the Fallout of Extended Maternity Leave
The Maternity Benefit (Amendment) Act, 2017, which extended paid maternity leave for India’s working women, was billed as a way to retain women in the workforce. But soon after it passed, reports came that the move would actually stifle women’s employment. Another poorly thought out law with good intentions, we thought.
In something of a surprise, though, the labour ministry is now considering how to implement the law more successfully, reportedly drafting a proposal to subsidize roughly 25% of a woman’s pay during her six months of maternity leave (if she takes the full leave). The move would allay concerns expressed earlier this year by small- and medium-sized employers, who may lack the resources to pay a full-time salary during a worker’s six-month absence.
The money for these subsidies the under-utilitzed cess fund for labor welfare, “consequently, it has been proposed that this un-utilized amount of cess could be used to reimburse employers of private organisations or of unorganized sector for the maternity benefit paid by them to their women workers,” sources told The Times of India.
But it’s unclear how the unorganized sector would access the subsidy; the proposal, in its current draft form, appears to pilot the subsidy with women working in the private sector in Delhi and Maharashtra, who have had an employee provident fund for at least a year, and who earn no more than Rs. 15,000 a month. (If it’s successful, the plan is to scale the subsidy to the whole country.)
It’s refreshing to see the government double down on its commitment to supporting working women’s maternity leave and, through it, their retention in the labor force. However, a subsidy feels like a short-term solution; subsidies are seldom sustainable, and the minute they become unsustainable and are revoked, small- and medium-sized businesses face the same problem: new mothers (or young women who might become new mothers) become a drain on business resources and, hence, undesirable employees.
A long-term solution is one that doesn’t set women as a class apart: a gender-neutral parental leave mandate. Yes, it will still put small- and medium-sized businesses in a financial crunch, but it will also establish that crunch as a new fact of doing business long-term — for everyone.