Tuesday, August 28, 2007

Time to extend paid parental leave

The Families Commission is recommending a significant expansion of paid parental leave, to a total period of 13 months. Having read their report, it's about time: towards a parental leave policy that gives New Zealand families real choice [PDF], they make a strong case. Currently, mothers are entitled to 14 weeks paid parental leave, with job protection for a year after giving birth. However, the period is too short, eligibility criteria too tight, entitlements inflexible, and payments capped at a derisory 80% of the minimum wage - meaning that 80% of mothers take a significant income cut. And internationally, we are one of the least generous developed countries in the world, both in terms of the duration of paid leave and the level of payments. Together, these put us near the bottom of a combined ranking based on income replacement:

The Commission is proposing reframing entitlements as maternity / paternity leave and family leave. The former would be 14 weeks for women and 4 weeks for men, non-transferrable except in cases of adoption, and payments would be capped at 80% of the average weekly fulltime wage. The latter would start at 12 weeks and be increased in stages to 38 weeks (meaning a full paid year off), with payments capped at 66% of the average weekly fulltime wage (the division between parental and family leave with different rates of payment is a common feature internationally). Eligibility would be extended, and they suggest greater flexibility in taking entitlements, to allow parents to use leave anytime within three years, transfer it, or supplement part-time employment. This would increase costs from $126 million (2007 / 08) to $306 million initially, and $451 million when the scheme is fully implemented, so it would be a fairly substantial policy. But at a time when we have a labour shortage and the government is trying both to reduce inequalities in the workplace and increase participation rates and work/life balance, its one which is well worth doing. And with the government running surpluses, its not as if we can't afford it; its certainly far preferable to tax cuts for the rich, in any case.

As for whether it will actually happen, I think the chances are good. Politically, this is a perfect wedge issue for Labour to use against National - most New Zealanders support it, while National is likely to reflexively oppose it as "bad for employers" and as money that could be used for tax cuts (though at the moment they are remaining noncommital). The smart thing for Labour to do then is announce it in the next budget, with implementation starting in 2009 so that it is effectively held hostage to their remaining in power. National can then either oppose it, thus pitting themselves against the majority of New Zealanders and painting themselves as the same old flinty friend of the rich, or accept it, in which case their space for fiscally prudent maneuvering on tax cuts is considerably narrowed. Either way, the left wins.