The Maternity Benefits (Amendment) Bill, 2016, passed by the Rajya Sabha and the Lok Sabha, will become an Act as soon as it receives the President’s assent. The salient features of this Bill include an expansion in the paid maternity leave from 12 weeks to 26 weeks, a leave of up to 12 weeks for a woman adopting a child below the age of three months, and provision of crèche facilities by employers with more than 50 employees. This article aims to make a case for a more progressive and nuanced debate about the pros and cons of the Bill.
The supporters of the Bill argue that it would allow a woman to take care of her infant in the most important, formative months of a child and provide her with much needed work-life balance at a time when she is most likely to drop out of the workforce. They maintain that this would help increase women’s participation in the workforce.
However, it is important to understand that the definition of workforce here is limited to the 10% of women working in the organized sector. A substantial percentage of women in the organized sector already enjoy these, and in many cases far more flexible and inclusive benefits, owing to their companies’ existing policies. The unorganized sector, which employs 90% of the women, remains outside the purview of this Bill. So, while there is reason to celebrate, it is also prudent to not exaggerate the impact that the Bill is likely to have in the present context.
Opponents of the Bill argue vehemently that an increase in maternal leave and a mandate to provide crèches would result in adverse incentives for employers to hire women. This argument is made because the Bill calls for employers to bear the additional costs resulting from the extension in the maternity leave. Economics 101, these critics point out, will show that this move by the government will either lead to more unemployment for women or will drive down their wages.
The economic arguments against the Bill don’t hold for a few reasons.
One, it is unwise to make a blanket argument that employers’ incentives to hire women will be driven down. This will not bear out for women employed in high-skilled jobs or those who are higher up in companies’ hierarchical ladder, who make up a substantial portion of the organized sector under consideration. Studies have in fact hinted that the financial and opportunity cost to companies to recruit another high-skilled worker is higher than retaining an employee through paid maternity leave. That said, women in low-skill jobs might be discriminated against.
Two, there is pressure on the companies, both from within and without, to position themselves as diverse and willing to retain employees. In an employee market, companies can ill-afford to reject one half of the population for worries that it might cost more. It holds to reason that initially, bigger companies will find it easier to hire and retain women, while smaller companies will face an uphill task trying to cope with the additional financial costs. There is no reason to think that this will be a permanent impact.
Three, there is a fair level of unpredictability attached to any such policy changes. There will be multiple cycles of peaks and troughs before a new equilibrium is reached, which is usually true of any new policy. Indeed, as Tim Harford points out through the examples of the Equal Pay Act and the minimum wage changes in the UK, contrary to the predictions of pundits, the Acts did not lower women’s participation in the workforce. There is need for more evidence before it can be said with certainty if the maternity leave expansion actually increased or reduced the women’s share in the workforce.
Critics also point out that India should become economically strong before it apes Western countries in doling out such social benefits to its citizens. This way of reasoning is a slippery slope and can be used to argue against any social policies of the government. Infants’ access to nutrition and care are part of their inalienable human rights. A country’s economic standing should not have any impact on how healthy it wants its population to be. It’s the duty of the state to ensure that health, a fundamental human right, is available to all families, especially for their children.
Finally, there are those who think that this is mere posturing by the government to appear progressive and caring. While it is true that the Bill addresses only a limited set of issues, it opens up avenues for women (and men) to negotiate with their employers to set up a system that would benefit them as a parent and as an employee. It is a strong signalling by the government to show that biological commitments will not be held against a particular gender.
India’s new maternity benefits Bill must be seen as a social and moral revolution, rather than in purely financial terms. Indeed, the directive principles in the Constitution, through Article 42, provide for “just and humane conditions for work and for maternity relief”.
This Bill, while inadequate, is a step in the right direction. What needs to be done now is to integrate various disparate maternity laws in India into a single parental leave law that gives a parental unit the benefit of dividing post-natal care leave. It will go a long way in erasing of restrictive gender norms.
Nidhi Gupta and Priya Ravichandran are researchers with the Takshashila Institution.
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