Mandatory Maternity Benefits: Help or Hindrance?

In its enthusiasm to enable more women to enter the labour force, the government has taken steps that will ironically deny job opportunities to those women who need them the most. The government has made it mandatory for employers to grant 26 weeks of paid leave to women who have a baby, up from the earlier 12 weeks.

Mandatory maternity leave increases the cost of hiring women. The employer has to pay women even while they are not working, plus has to hire replacement workers for the duration of the leave. In effect the employer will have to spend a two person wage to get a one person job done.

What would employers, who want to maximise their profit, do in such a situation? They would hire men and older women, since these people are not going to take 6 months off to have and nurse a baby. This has been true even in the so called “developed” countries in the west.

For example, a survey in the UK found that at least 40% of the managers avoid hiring young women to get around maternity leave. Keep in mind that 40% admitted to doing this, and the actual number could be much higher, but not reported for fear of prosecution or bad publicity.

But the employer is not at fault. It is the law which forces employers to discriminate against young women by denying them jobs which would enable them to become at least a little bit financially independent. Moreover, employers are forced to discriminate against young women who come from lower income families.

Why? Because of supply and demand. If a woman is born to wealthy parents, she has the best education money can buy. She goes to a great school, a great college, and might even go abroad for higher education. This makes her more valuable to the employer. She would receive maternity leave even without the law mandating it.

Even men who are highly educated and skilled get paid leave when they have a baby. This is because qualified and skilled employees are difficult to replace, and can therefore command a higher price in the job market, either through direct salaries, or fringe benefits such as paid maternity/paternity leave, help with parenting issues, and flexible working options. It is not love for employees or their children that makes employers provide such facilities. They do it because it is profitable.

However, if a woman comes from a poor family; her education will be less than ideal. She goes to a low cost private school, or worse, a government school. Her parents cannot afford to send her to college. Such a woman would qualify only for low skill-low wage jobs, such as factory work, where she can be replaced easily. It is simply not profitable for employers to hire her when they can hire a man for half the cost.

More than the money itself (which is not much), a job would give these young, unskilled women a chance to overcome the hurdles of a lousy education; by learning from experience on the job and eventually moving on to higher paying jobs and making a better life for themselves in the future. But unfortunately this measure by our wise and generous benefactors in New Delhi will deny them that opportunity.

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