Shoddy legislation remains the main reason behind India's persistently low female labour force participation rate
India will never put poverty in the museum unless we raise women’s labour force participation. The Maternity Benefit bill last year had its heart in the right place but unintentionally led to higher caution on the part of the employers, leading to lower levels of hiring of women. The government has been responsive to this criticism and proposed some tweaks to the policy. But the proposals need to be braver and bolder.
Let’s recap. When the provisions of the amendment to the Maternity Benefit Act came into force effective 1 April 2017, it was lauded by industry as a progressive step towards improvement in securing the employment rights of women. TeamLease conducted a study in May on the effects of the amendment on women’s employment and on representation of female workforce in India by surveying employers across 10 key sectors.
According to the study, there could be significant job losses for women in India in the short to medium term. India offers one of the world’s most generous maternity leave policies. But India is also probably the only country where the entire financial burden of the maternity leave is supposed to be borne by the employer. In most countries, the cost of maternity leave is shared across the government, employer, insurance and other social security programmes (Singapore—eight weeks employer and eight weeks public funds; Australia and Canada—100% public funds; France—social insurance scheme; Brazil—mixed contribution from the employer, employee and government).
A few remedial measures suggested in the TeamLease study for addressing and mitigating this issue include cost sharing between employer and government by way of reimbursement once the employer furnishes the proof of payment of maternity leave wage, slab-based tax rebates offered by the government on actual maternity wages paid, setting up a government insurance scheme to pay for maternity wages, and leave sharing in the form of 13 months maternity and 13 months paternity to negate any possibility of gender bias.
On 12 September, the ministry of labour and employment proposed changes that have five drawbacks. First, wages equivalent to only seven weeks shall be reimbursed by the government of India to employers who employ female workers and provide maternity benefits of 26 weeks’ paid leave. Second, to enable an entity to avail the incentive, the female employees working in the entity concerned should be earning wages less than ₹ 15,000. The Employees’ State Insurance (ESIC) Act mandates that all employees earning wages of ₹ 21,000 or less shall be covered under the Act. But the proposal to consider employees earning wages of ₹ 15,000 or less, with the conditions attached to it, does not seem justifiable. This is owing to the fact that the women earning wages of ₹ 21,000 or less but are employed in non-implemented areas are not entitled to the benefits and the employer is forced to bear the entire cost. Yet another important factor to be borne in mind is that large number of female employees, especially in information technology, information technology-enabled services, pharmaceutical, logistics, banking, financial services and insurance, and service sectors, are paid wages of ₹ 15,000 or ₹ 21,000 or higher per month.
The third drawback is that the female worker has to be a member of Employees’ Provident Fund Organization (EPFO) for at least one year and must not be covered under ESIC. The conditions set forth above lack logic or reasoning considering a) entitlement to maternity benefits kicks in once an employee completes 80 days (less than three months) of continuous service, and b) an employee is entitled to the benefits under the proposed incentive only if she has been a contributing member of EPFO for at least a year and is not covered under ESIC.
Fourth, the added provisions such as crèches with certain prerequisites (caretakers, visits by mothers, suitable location) that are mandatory for commissioning mothers lack clarity. Last, the Maternity Benefit Act, 1961, as amended from time to time, is a state government legislation, implying thereby that state governments may amend the Act from time to time to extend benefits higher and incremental to the benefits recommended by the central government.
The seven weeks reimbursement limit must be extended to a minimum of 13 weeks. The period of wages of 13 weeks could also stand to be extended to all female employees who are not covered under ESIC, without any preconditions on wage ceiling or membership of the provident fund organization for one year, etc. Further, the government must set up crèches with all the attendant facilities proposed in the Maternity Benefit (Amendment) Act, 2017, and allow employees eligible for such benefits to use these crèches at a very nominal cost. Bringing the Maternity Benefit Act under central legislation will also help maintain uniformity.
Such changes in the Act will likely encourage employers to provide employment opportunities to women without any gender discrimination and thus bring women into the mainstream of India’s progress. Hiring and employee retention will no doubt improve as well. With such active steps, we have genuine hope of raising India’s overall female labour force participation from the present 26% to a competitive level like China’s 60%.
Rituparna Chakraborty is co-founder at TeamLease Services Ltd and president at Indian Staffing Federation.