Submission on Parental Leave and Employment Protection (Six Months’ Paid Leave) Amendment Bill

Submission of the Tertiary Education Union to the Government Administration Select Committee

on the “Parental Leave and Employment Protection (Six Months’ Paid Leave) Amendment Bill”

5 October 2012

For further information please contact:

Suzanne McNabb

Women’s Officer

Jo Scott

Policy Analyst

Introduction

The Tertiary Education Union Te Hautū Kahurangi o Aotearoa (TEU) welcomes this opportunity to respond to the “Parental Leave and Employment Protection (Six Months’ Paid Leave) Amendment Bill”.  As the largest union and professional association representing staff in the tertiary education sector (in universities, institutes of technology/polytechnics, wānanga, private training establishments, OTEPs and REAPs), many of our members have used or will use the current provisions for paid parental leave (PPL), and would welcome an extension to these provisions, to better support them and their families.

Our members are able to use provisions beyond what is currently provided in legislation to support them and their families (such as additional paid leave and maternity grants).  These additional provisions have been negotiated on their behalf by the TEU during bargaining for collective agreements.  However TEU members believe that extended parental leave provisions should be available across sectors because it is such an important part of ensuring that children have the very best start to life.  Extending paid parental leave will also make a positive difference to the health and wellbeing of working families and will contribute to better social and economic outcomes for our country.

International comparisons

When the International Labour Organisation was formed in 1919, maternity protection was one of the first international labour conventions introduced.  At the time, New Zealand did not ratify this convention, however we later voted in support of the revised convention and its associated recommendation setting out the internationally recognised minimum standards that should apply.

More recently (in July this year), New Zealand provided its annual report to the Committee of Experts for the Convention on the Elimination of Discrimination Against Women (CEDAW).  The Committee of Experts urged progress on New Zealand’s obligations under CEDAW maternity protections and ILO conventions, with the recommendation that this country introduce appropriate legal measures to address specific areas currently lacking in PPL legislation (such as paid leave for seasonal/casual/fixed term employees and paid leave for men).  The Committee also recommended ratification of ILO Convention 156, relating to workers with family obligations[1].

New Zealand is well-regarded internationally for our respect of international conventions and our human rights framework, but maternity protection is an area where we are now falling behind.  Our current paid parental leave provisions do not compare well with similar countries and are well below international standards.  Across the OECD, average paid maternity leave is about 19 weeks.[2]  In the United Kingdom, employees can take 41 weeks of paid leave, and Australian employees also have a far more generous provision, with a higher rate of payment over a longer period of time (18 weeks) and broader coverage than the New Zealand scheme.  Ultimately it will be social and economically detrimental to New Zealand children and whānau/families if we continue to fall behind our OECD counterparts.

Inequities in the current provisions

While this Bill is primarily about extending the length of paid parental leave, there are other inequities in current entitlements that should be addressed.  The most obvious of these is the exclusion of most casual workers, seasonal workers or workers who have more than one job.  The exclusion of people who are in casual (and often vulnerable) employment is unacceptable and discriminatory.  This exclusion in particular disadvantages low-income employees who are more likely to be in tenuous employment.  Seasonal and casual employees are not only less likely to be eligible for paid parental leave but they are also less likely to have access to any employer-provided top-up schemes

Unions have had success in improving parental leave provisions in collective agreements for some sectors, particularly in female-dominated public sector collective agreements.   These improvements include ex gratia payments, spousal leave and other forms of paid leave such as lump sums on return to work following paid parental leave.  However employees in more vulnerable employment (casualised and seasonal) and/or in sectors where there is little or no union presence are unlikely to secure these provisions.

We therefore urge the Select Committee to look at extending the coverage of the paid parental leave scheme and to secure this in legislation, to enable casual and seasonal employees access to leave and other provisions, regardless of the sector in which they work.

Improving women’s opportunities in the labour market

Changes in parental leave policy since the introduction of parental leave legislation in 1987 have been in response for dramatic changes in the patterns of paid work by women.

New Zealand, like other OECD countries, has seen rising labour participation rates for women over the past few decades with most women now employed at some stage before having a first child and a high proportion after having had children[3].

The Department of Labour’s 2005/06 evaluation of paid parental leave confirmed that mothers wanted to take longer parental leave than they actually did.  Most mothers were returning to work when their baby was six months old, but wanted to return when their baby was 12 months old.

The OECD reports that there may be negative effects from returning to work before a child is six months but acknowledges that these decisions are not clear cut.  Specifically their analysis suggests that from a career perspective, six months is probably the point at which a woman needs to return to work.  However from the point of view of the child, it is less clear whether six months or 12 months is more beneficial.[4]

Research does seem to indicate that a six month period is minimally optimal for mother and child, to allow time for post-birth recovery and bonding with the child.  However many women are compelled to return to work well before this time, primarily because of financial imperatives.

Improving gender equity

Women earn less than men, are more likely to be in lower level jobs and also more likely to be in part time employment[5].  The OECD’s international data is supported by New Zealand’s own data which has identified all of these issues for women’s participation in the workforce, along with a significant gender pay gap in many sectors.

Paid parental leave is an important way of addressing the financial and career disadvantage that women may face taking time away from work to have and take care of children.

Paid parental leave ensures that when employees take leave at the time of childbirth, that they keep an attachment to the workforce which is an advantage to both employee and employer.

Breaks to care for children limit the opportunity for career progression and are major contributors to gender inequity and the gender pay gap.  Extending the length of paid parental leave will reduce the likelihood that women leave the workforce because they feel they are not ready to return to work.

Additional paid parental leave may also encourage fathers to take more leave and could go some way towards improving gender equity in the home, enabling more equal sharing of domestic and childcare responsibilities.

Benefits to families/whānau and society

The Department of Labour’s 2005/2006 evaluation of paid parental leave found that the biggest barrier to taking the full 12 months (paid and unpaid) leave that is currently available was financial pressure.  Over half of those mothers who took paid parental leave agreed that the end of the PPL payment had a significant impact on their decision about when to return to employment.  Over 80% of those who took paid parental leave said that it lessened money worries and made the transitions from two incomes to one easier.  Of those in this study who did not take the full 52 weeks of unpaid leave, the majority said that it was financial pressures that prompted their return to work.

The 2005/06 paid parental leave evaluation found that most fathers take some sort of leave around the birth or adoption of a child, but very few take unpaid leave[6].  Most fathers used annual leave to cover the period.  Fathers also reported in the evaluation that they thought that parental leave period was not long enough[7].

The extension of paid parental leave is critical in assisting parents to manage the balance of employment and family responsibilities at a time of greater stress and higher domestic workloads.  Flexibility in the allocation of leave may also contribute to better gender equity outcomes in relation to employment and career progression.

Improving the health and wellbeing of children

Given the growing concern about our appallingly bad child health and well-being outcomes for a large proportion of our young children, the extension of paid parental leave must be viewed as a critical way to improve these outcomes.  There is convincing evidence that paid parental leave has an important part to play in improving outcomes for babies and children, with on-going positive effects into adult life.  Research indicates that the first year of a baby’s development, particularly the first six months of its life, is strongly influenced by parental care[8].  Extending paid parental leave will assist parents to provide the best for their children in the crucial early months of life.

The Department of Labour’s evaluation of paid parental leave provisions found that nearly a fifth of mothers who took PPL felt that amount of leave did not give them sufficient time to establish breast feeding, while a third said it was an insufficient period for post-birth recovery[9].  The World Health Organisation (WHO) and the New Zealand Ministry of Health recommend six months of exclusive breast feeding as a way to improve and ensure the physical and emotional health of children.  The strong evidence about the benefits of breast feeding provides a compelling argument that all women should be provided with the opportunity to take a period of paid parental leave consistent with WHO and MOH recommendations to support breast feeding and to give their child the best start in life.

The economic argument for extending paid parental leave

New Zealand’s birth rate rose from 2.0 in 2001 to 2.2 in 2009 – its highest level since 1990. Parental leave and Working For Families are seen as the reasons for this increase.  But the latest statistics (August 2012) show a slowing down of the birth rate, falling to the same level as 2006.

Paid parental leave has been shown to contribute to both higher female labour participation and higher fertility, which have both become policy priorities among countries experiencing rapidly ageing populations[10].  Increasing the birthrate is a critical issue for New Zealand as we grapple with an ageing population and the social and economic challenges that this brings.

Though some women are returning to work earlier than they wish, as shown by the Department of Labour’s 2005/06 paid parental leave evaluation, many women leave the workforce altogether.  This loss of skills and human capital has not been properly considered in assessments of the benefits of extending paid parental leave.  The Australian government has argued that PPL will bring long-term benefits to business by improving the quality of the next generation of workers.  Australian research has also identified that the extra tax revenue associated with higher workforce participation by women who receive paid parental leave would be significantly more than the cost of their parental leave payments. [11]

The Government’s reaction that this Bill, including statements that it is unaffordable and that the Government may use a financial veto to prevent it proceeding is a most regrettable response that focuses on short-term impacts, rather than longer-term benefits.  The actual costs of extending paid parental leave have not been properly calculated, including elements such as the potential savings from not paying child care subsidy for a longer period of time.  There is also no consideration of the potential revenue from a higher tax take, which has been noted by other jurisdictions as a considerable longer-term advantage.

The benefits that derive from better outcomes for children must also be given the highest priority, as noted by the Government’s Chief Science Advisor by Sir Peter Gluckman:

Social Investment in New Zealand should take more account of the growing evidence that prevention and intervention strategies applied early in life are more effective in altering outcomes and reap more economic returns over that life course than do strategies applied later[12].

Conclusion

There are compelling reasons to support an extension of paid parental leave, including improved gender equity outcomes, improved health outcomes for mothers and children, retention of skilled employees in the workforce and maintaining New Zealand’s excellent record for our commitment to international human rights and labour rights.

Opponents of this Bill have over-focused on potential costs of an extension to paid parental leave, and have presented inaccurate figures, without also taking into account other social and economic advantages.  We hope that the Select Committee process provides an opportunity to better debate and consider issues relating to an extension of paid parental leave.