Adverse Impact Of Maternity Benefit (Amendment) Act 2017 On Female Workforce

When the Maternity Benefit Act was amended in 2017 and maternity leave was increased from 12 weeks to 26 weeks in all establishments with a workforce of more than 10 employees, it was hailed as a historic step towards empowerment of women. The amendment had also mandated the setting up of creches within a prescribed distance of the workplace and permission to female employees to visit their child in the creche four times during the work hours everyday. 

The Expectations

It was believed that the new provisions would ensure better physical and mental health of both the new mothers and their children and also provide greater job stability to female workforce. However, it was anticipated by many that the positive intentions of the govt through this amendment may not actually be as fruitful as they are assumed to be. While the larger establishments with higher financial stability may be able to bear the additional cost of giving six months paid maternity leave to their female employees but micro and small enterprises with lower profit margins will not be able to sustain the additional expense. It was feared that in the longer run this well meaning move may result in a negative sentiment towards hiring women and even retrenchment of pregnant employees.

The apprehensions seem to have come true much sooner.

Findings Of The Study

A recent study by TeamLease has revealed that an estimated 11-18 lakh women have lost their jobs in the year 2017-18 itself and this number is over and above the average annual attrition rate for female workers. The participation of women in national workforce has been on the decline steadily, from a healthy 37% in 2005 it has already dwindled to 27% in 2013. 
The survey interviewed 300 employers across 10 key sectors — aviation, BPO/ITeS, real estate, education, e-commerce, BFSI, IT, manufacturing, retail and tourism and attributed the massive job loss to the amended Maternity Benefit Act 2017. 

Response of Employers To The Amendments

Though many of the large and medium scale enterprises have taken the amendment in a positive manner and incorporated provisions for maternity leave benefits to their female employees in their annual budgets, micro and small scale businesses are feeling the pinch on account of higher expenses and lower productivity due to the enforcement of this Act. While the corporates believe maternity leave at full salary is an investment at retaining skilled and valued female employees and also maintaining much desired diversity at workplaces, the smaller establishments think of this amendment as an undesirable and forced burden which stretches their already narrow profit margins beyond acceptable limits.

Impact On Hiring and Retention Of Female Employees

Many employers believe that performance of women goes down when they get pregnant and deliver a child, they also tend to take more leaves on account of their own poor health and childcare and feel that the legal compulsion to pay their full salaries inspite of their reduced productivity is totally unjustified. If they have to be given six months' paid leave as maternity benefit and creche facility has to be created within the prescribed vicinity of the workplace then they would rather not hire any women at all or dismiss them as soon as they announce their pregnancy since their organization can not afford the expenses related to the maternity benefits. 
Lack of adequate maternity benefits and fear of retrenchment may compel women to even postpone their maternity plans or not reveal their pregnancy for as long as they can hide it.

Maternity Benefits In Other Countries

The good news is that India is now one of the countries who offer the highest maternity leaves. The bad news is that tough some organizations do offer 1-2 weeks of paternity leaves to their male employees but our country is yet to make it mandatory on the lines of Maternity Leave Act. India has also not cared to adopt the concept of shared parental leaves. Not only developed countries like Russia but quite a few smaller countries like Lithuania, Estonia, Hungary, Denmark, Belgium offer shared parental leaves. In fact, Norway and Sweden mandate a certain number of weeks' leave as compulsory paternity leave.

India also doesn't have a social security system to compensate, even partially, the private establishments for providing the mandatory maternity benefits. It doesn't offer any tax benefits to the organizations to encourage them to hire female workers. Thus it places the entire financial burden on the individual organization thereby increasing the total cost to the company (CTC) of hiring a female employee and making it unsustainable for the smaller businesses. A 100% company funded maternity benefit also creates a significant gap between the CTC of male and female employees. This in turn leads to gender bias against women at the time of hiring and also retrenchment of female workers when they get pregnant.

Maternity Benefit Act Places The Entire Responsibility of Childcare on Women And Reinforces Traditional Gender Roles

Providing leave to only female parent and the clause of providing creche at mother's workplace and allowing her to visit the child four times during the day perpetuates the notion that childcare is only the mother's responsibility overlooking the fact that many fathers are equally capable of taking care of the child and may even want to take it up gladly. It also ignores the single fathers who may need to be with their child during the work hours.
The concept of shared parental leaves, on the other hand, promotes equal responsibility of child care for both men and women and also provides the father an opportunity to bond with the child better.

What Needs To Be Done

If the government is really keen to make this well-intentioned amendment a success, it must incorporate the provision of shared parental leaves and mandatory paternity leaves. It must find ways to incentivize the smaller enterprises by providing tax cuts or sharing the financial burden in order to provide an equal footing to the female workforce along with greater job security. This move will certainly help promote gender diversity at workplaces. 
Such positive and thoughtful steps only can ensure that female workers are not discriminated against and are able to enjoy motherhood as well as their work without any fear of job loss.

P.S. This article was first published by Women's Web today with slight changes and can be accessed at the link below.


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