While the proposed amendments to the Maternity Benefit Act have been welcomed, will the private sector find them financially viable or will it be reluctant to employ women in future?
By Swati Prasad
Since the formation of the Modi government in May 2014, perhaps the best news for women is the proposed amendment to the Mater-nity Benefit Act, 1961. The percentage of women in India dropping out of white collar jobs mid-career is as high as 48 percent compared to the Asian average of 21 percent.
“Clearly, more is needed to be done for working women,” says Ronesh Puri, managing director, Executive Access (India). “Twelve weeks (of maternity leave) was too less,” he adds. The proposed amendments to the Act include an increase in maternity leave for working women from 12 weeks to 26. There are several other measures too—such as providing 12 weeks of maternity leave to women who use surrogates to bear a child, as well as to working women adopting a baby less than three months old. The proposed Bill also mandates the provision of a crèche in office premises (or within 500-metre distance from the office).
The Labor Ministry is reportedly giving final touches to the draft amendment Bill, which will be sent for inter-ministerial consultation and then to the cabinet for approval. Given the uncontroversial nature of the Bill, it is unlikely to face resistance from opposition parties when placed in parliament.
The International Labor Organization (ILO) recommends a minimum standard (paid) maternity leave of 14 weeks, encouraging states to increase it to at least 18 weeks. Once the Bill is passed, at 26 weeks of maternity leave, India is set to join the league of 42 countries where maternity leave exceeds 18 weeks.
Countries like Ireland, Poland, Slovak Republic (34 weeks), the UK (39 weeks), Bulgaria (58.6 weeks) and Croatia (30 weeks) grant their women employees 26 or more weeks of paid maternity leave. The US, on the other hand, is infamous for mandating no paid maternity leave to women employees, leaving the matter for self-regulation to individual companies. Among the emerging economies, Brazil tops the current chart with 180 days (or 26 weeks) of paid maternity leave. At 14 weeks, both China and Russia just about meet the ILO minimum standard.
Some provisions of the Bill are gender-neutral, such as granting paternity leave and allowing fathers to take on the responsibility of bringing up children. Countries like Bel-gium, France, the Netherlands, Portugal, Sweden and Luxembourg among others, offer substantial paid leave to fathers.
By granting leave to women adopting a child less than three months old and to women who opt for surrogacy, the Bill has ensured that mother and baby get time to bond. “These proposals are in tune with the times, given the rampancy of surrogate births and adoptions in urban India,” says Sudhi Mishra, director with a KPO in Gurgaon.
Moreover, there is also a provision that gives mothers (who bring their children to the crèche) 15 minutes of special leave before and after lunch hour to take care of the child. This provision encourages women to breastfeed their babies for longer durations. While the WHO recommends first six months of exclusive breastfeeding, in India, only 46 percent of mothers are known to follow this recommendation.
Once the Bill is passed, at 26 weeks of maternity leave, India is set to join the league of 42 countries where maternity leave exceeds 18 weeks.
In neighboring countries like Bangladesh, Nepal and Sri Lanka, this proportion is substantially higher —at 64, 70 and 76 percent respectively.
At present, the central government (women) employees in India get six months of paid maternity leave. With this amendment, the private sector will be equally generous, doling out twice the amount of money to women employees who proceed on maternity leave.
While some large companies are voluntarily giving more than 14 weeks of paid maternity leave (such as Godrej, Accenture, Flipkart, Axis Bank), besides offering a flexible work environment, small and medium-size companies may find it financial unviable to double paid maternity leave.
“These measures may cause some pain to smaller companies who are used to the present ecosystem. I think there will be isolated cases where companies may not hire women,” says Puri. Companies with thinner margins and no long-term vision may look for loopholes. “But the more prudent ones won’t shy away from their responsibility,” he adds.
The provisions of the proposed Bill also mandate firms that employ 30 women (or a total of 50 employees) to have a crèche. Firms can also join hands to form a common crèche. While this could lead to mushrooming of day-care centers around business districts, the additional wage burden and the extra cost of allocating real estate to a crèche while also employing staff to take care of children could act as another deterrent for small companies to hire more women.
Maintaining gender diversity has been a huge challenge for India Inc. According to ILO’s “Global Employment Trends 2013”, India’s labor force participation rate for women fell from just over 37 percent in 2004-05 to 29 percent in 2009-10, rapid economic growth notwithstanding. “Out of 131 countries with available data, India ranked 11th from the bottom in female labor force participation,” says the report. “Maintaining gender diversity is a greater challenge for IT and ITES companies, given the long working hours and the requirement to work in shifts,” says Mishra.
A recent McKinsey report pegs women’s workforce participation even lower—at 24 percent. Indian women’s contribution to the economy is the lowest on a global scale—at 17 percent. Women are not joining the workforce or dropping out mid-career due to factors like gender inequality and discrimination at the workplace, lack of childcare facilities, social pressures and rising crime rates.
The bigger problem, however, is with the unorganized sector, where this law does not apply. In fact, 94 percent of our workforce of around 487 million workers works in the unorganized sector. This proposed regulation would apply to women among the 11.97 million workers in the private sector. At 24 to 29 percent participation, we are talking about only 2.87 to 3.47 million women, out of which an even smaller proportion would be planning to start a family.
Also, societal mindsets need to change so that working women with children are not discriminated against at the workplace. And on the domestic front, their men folk need to take on more responsibilities.
According to the “2015 McKinsey Glo-bal Institute Report”, Indian women have the potential to add $2.9 trillion, or 60 percent, to the annual GDP, by 2025, if allowed to participate in the workforce with equal rights as men. These proposed changes to the Maternity Benefit Act are a step in that direction.