Paid parental leave, including mandatory paternity leave

17 March 2016
By 2015 Human Development Report

Paid parental leave is one of the most important benefits of flexibility extended to working parents, especially when mandatory paternity leave policies are implemented. The correct mix of policies can help ensure high rates of female labour force participation and motivated, satisfied workers with a good work–life balance.

Paid maternity leave benefits are essential for women to return to work after child bearing. About 85 percent of countries provide at least 12 weeks of maternity leave. Of 185 countries surveyed by the International Labour Organization, all but 2 (Papua New Guinea and the United States) allow mothers to receive at least some leave— paid for by the state, by employers or by some combination of both. Though only a third of countries meet the recommended minimum of at least 14 weeks off for new mothers, paid at least at two-thirds their salary and funded publicly, the picture is broadly good in developed countries and is improving in developing countries. (1)

But career breaks due to maternity leave alone have unintended consequences that may adversely impact women’s careers. And such consequences are greater when leave is lengthy. For example, when women return to work after maternity leave, evidence suggests that as with other aspects of flexibility, they are penalized for taking paid maternity leave, particularly when the leave is generous. Time away from the labour market may reduce women’s earning power and pension benefits as they miss chances to gain experience and win promotion. Moving into senior management becomes particularly hard.

In Germany each year of maternity leave a woman takes lowers her earnings upon resuming work by 6–20 percent. In France each year of absence is estimated to lower earnings by 7 percent. (2) The effect is magnified when lengthy maternity leave is combined with policies to encourage part-time work, which tempt more women back into the labour force but keep them in junior positions. In fact, it has been argued that the Elternkarenz, which pays parents to stay home for up to three years in Germany and up to two years in Austria, is effectively destroying career prospects for women who use it. (3)

Despite paid maternity leave, motherhood in the United Kingdom comes with a pay penalty: 60 percent of working mothers with children either at nursery or primary school work part time, as do half those with older, secondary school–age children. Just 10 percent of fathers work part time. Women who work part time average a third less an hour than men who work full time, and 40 percent of part-time female workers earn less than the living wage. (4)

A 1981 child care law in Chile was intended to increase the percentage of women who work, which is below 50 percent. It requires that companies with 20 or more female workers provide and pay for child care for women with children under age 2 in a nearby location where the women can go to feed them. It eased the transition back to work and helped children’s development, but it also led to a 9–20 percent decline in women’s starting salaries. (5)

Policies that effectively define women by their role as mothers affect workplace outcomes for all women, not just those who take long leaves. During the paid absence of a young parent, no employer may hire a permanent replacement. Since women are more likely than men to take long parental leaves, employers have a strong incentive to hire men. Europe’s equal employment laws make such discrimination illegal, but evidence shows that employers differentiate anyway. (6)

The issue of paternity leave has received attention as the role of fathers in childrearing and sharing the care burden has been emphasized. Many countries now offer paternity leave. One approach that promotes balance is parental leave, to be split between mothers and fathers. Several European countries, as well as Australia and New Zealand, already have such a system. The downside is that because child rearing is traditionally seen as a mother’s job, fathers tend not to take any leave, unless it is made mandatory.

In Austria, the Czech Republic and Poland, where all parental leave is transferrable, only about 3 percent of fathers use it. Countries are thus pursuing different approaches to overcome the problem. In Chile, Italy and Portugal paternal leave is compulsory. Fathers may be induced to use more paternal leave through such incentives as relaxing the gender-neutral approach and granting a bonus to parents who share parental leave more equally. For example, through similar measures, Germany saw the share of fathers taking time off rise from 3 percent in 2006 to 32 percent in 2013. (7)

This text was originally punished in the 2015 Human Development Report “Work for Human Development” Please see box 4.3 on page 123

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(1), (2) and (7) The Economist 2015c. “Parenting and Work: A Father’s Place.” 14 May. Accessed 23 July 2015.
(3) and (6) Munk and Rückert 2015. “To Work or Not Shouldn’t Be a Question.” Science 348(6233): 470. Accessed 29 June 2015.
(4) The Pregnancy Test 2014. “Ending Discrimination at Work for New Mothers.” Trade Union Congress, London. Accessed 29 June 2015.
(5) Villena, Sanchez and Rojas 2011; Prada, Rucci and Urzúa 2015. "Unintended Consequences of Childcare Regulation in Chile: Evidence from a Regression Discontinuity Design.” Munich Personal RePEc Archive. Accessed 29 June 2015