Why extended maternity benefits are not enough to push women workforce participation in India

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Heart

India’s new law that expands paid maternity leave and requires employers to provide child day care facilities at workplaces is a step in the right direction. That is likely to improve women workforce participation and somewhat help address the shortage of skilled employees faced by #corporates that have been constraining India’s growth prospects. However, the new law will cover not more than two million women working in the organised sector, and hence it’s a work in progress. Indian corporates would need to do more to attract and retain women employees.

In the recently concluded budget session, Indian Parliament passed an amendment to the Maternity Benefit Act 1961 mandating companies to provide 26 weeks (from current 12 weeks) paid maternity leave to their women employees putting India in the league of wealthy western nations. Companies with more than 50 employees will also have to provide child day care facilities at their offices. That would help working mothers to continue working without worrying about the safety and security of their kids irrespective of whether they have family support or not, and encourage more women to pursue a career.

The official press release says that in addition to the betterment of the health of #children and #women, the move will improve the female workforce participation rate which has fallen to 22.5% at present from 37% in 2005. That shaves off an estimated 2.5% from India’s GDP every year.

Critics say that the proposed legislative enactment expanding maternity benefits will not be enough to fill the gender gap at the workplace as the law applies to the companies in the organised sector only when more than 90% of all workers are employed by India’s unorganised sector. Worse, it may discourage corporates from hiring female employees or encourage wage discrimination to cover the additional cost of providing extended maternity leave or day care facilities. They contend that similar pro-women programs in Chile and Spain have backfired and there is no reason why they can work in India.

Yet, the changed law makes sense. It’s a positive move, though non-inclusion of unorganised sector firms will dilute its impact. But, to be fair to the government, it can only do a limited number of things to ameliorate a lot of women and help them contribute more to the country’s economic growth. It would be really difficult for the government to enforce the new law (even if it wants to) in the smaller/unorganised sector firms which are too difficult to regulate. Besides, extending the law to the small firms/SMEs will unnecessarily expose them to inspector raj and related harassment.

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There is ample evidence to suggest that women workers who have access to maternity leave or reliable child day care facilities at work are more likely to return to the workforce, allowing the firms to not just retain but also attract the top women talent. Amity University Noida by providing good child day care facilities for women with kids has been able to maintain a high proportion of women employees in its workforce.

Similarly, faced with a serious shortage of skilled employees and their high attrition rates, top Indian companies such as ICICI bank and Tata are trying to bring back women employees who have left jobs post maternity by extending all kinds of assistance to them including flexi #work hours and the option to work from home even without any government mandate.

A survey by ASSOCHAM, a New Delhi-headquartered apex business chamber in 2016 found that 25% of urban Indian women quit their #jobs after having their first baby and recommended that extended maternity leave might help change this situation.

Only about 2-3% of India’s #workforce is skilled according to Economy survey FY 2014-15. That is limiting India’s growth prospects. Thus, retaining more women post maternity will help even if in a small way to address the shortage of skilled employees in key sectors such as banking and finance, clothing, FMCG, education and health, information technology services, hospitality, retail and market research which usually have a higher proportion of women employees. That makes sense more so at a time when Indian companies are struggling to cope with technological disruption and competition on a global scale. In such a scenario, finding and retaining talented employees will be crucial for the survival and growth of the companies, and the new maternity law underscores the above realities.

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The Way Forward

India can’t continue to grow at 7-8% for long if it ignores its women who make up one-half of its population. Not more than one-third of university educated women are working in India compared to four-fifth in China according to a Gallop survey (2012). That’s a great loss to the economy as many of them who leave work or don’t work at all may be highly educated and skilled so all the investments in them go waste.

To meet the rapidly growing demand for workers especially educated and skilled ones, India will need to bring more and more women in the mainstream economy by ensuring a supportive work environment to new mothers or women with kids given the increasing nuclearization of families in general and prevalence of small families in the cities that force many women to end their career prematurely after they give birth to their first children.

No doubt, the new maternity legislation is positive and well-intentioned, but it won’t be enough to address gender disparity at work (even at organized sector firms) given the multiple challenges working women face such as blatant discrimination, gender stereotype and of late the growing concerns about their physical safety and security in most parts of the country (NCR/Delhi in particular) that are quite discouraging.

Sexual harassment at workplaces is another important demotivating factor that tends to demoralise women employees and hurt their overall productivity and growth. Despite, the Supreme Court’s strict guidelines on the subject, many companies don’t have a proper system in place to deal with the complaints. Even top companies tend to discourage women not to report or withdraw their complaints.

As a result, many women drop the idea of career and jobs unless forced by financial compulsions. CSO’s National sample surveys reveal that women on an average are paid 30% fewer wages than their male counterparts. Along with wage disparity, the higher unemployment rate in women also discourages women from seeking employment opportunities as there could be less peer pressure than in the case of men.

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Indian corporate environment quite well-known for forcing employees to work after usual office hours may not feel comfortable hiring women for the roles that require sitting odd or late hours especially in places like the NCR/Delhi which are perceived to be unsafe for women and hence usually involves additional cost of arranging for safe transportation of women employees.

Most Indian companies don’t provide paternity leave to their male employees. So they can’t take responsibility for the kids even if they want to. As a result, women end up sacrificing their career prematurely and that may be one of the reasons for lower workforce participation of women in India. In a skill-deficient economy like India, many of these women could be instrumental to a company’s growth because of their special skill or talent and thus something needs to be done either by government or corporates themselves.

It makes sense for companies to provide extended maternity leave and child day care facilities for retaining women employees with or without a legal mandate. However, Indian companies across industries and sectors are cutting corners to survive in an intensely competitive marketplace and many of them would be hesitant to spend extra on providing for day care facilities or extending fully paid maternity leaves. To deal with that government should tweak the new law to allow companies charge nominal fees to recover a part of the additional expenses they will be incurring. Most women won’t mind paying if they are able to retain their jobs.

To overcome the safety issues at offices, companies will need to take tough in-house measures to deal with cases of sexual harassment if they are serious about retaining women employees.

It’s important to realise that in addition to the investment in physical infrastructure (roads, highways and airports), investment in infrastructure for women’s safety and security and child care will be the key to push women’s workforce participation. And government alone can’t do that. Indian corporates will have to do more to be more gender sensitive, non-discriminative and accommodative to retain women employees.

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