Elizabeth Truss MP: Shared parental leave can be good for parents and for business
Liz Truss is Member of Parliament for South West Norfolk. Follow Liz on Twitter.
Yesterday on ConservativeHome Tim Montgomerie worried about pre Queen’s Speech rumours about “extended rights for paternity leave” as being “stuck in the pre-crunch era”. Journalist Gaby Hinsliff referred to it on Twitter as “worryingly fast becoming a policy with no friends”. Yet with “the promotion of a system of flexible parental leave” in the Coalition Agreement it is important Conservatives advocate change in the most flexible and business friendly way possible. This does not have to be anti-enterprise or pro-regulation. Enabling the current rigid and bureaucratic maternity entitlement to be shared between couples and be flexible can be good for both business and parents.
Britain is an outlier on shared parental leave, having among the highest levels of maternity leave and the lowest level of leave fathers can take in Europe. Under the previous Government maternity leave was increased vastly with high bureaucratic costs and little flexibility. Mothers getting time off only received ten “keep in touch days per year.” Developed in the years before Blackberry and working from home this is outdated and has a large cost to the economy in terms of lost skills. Under the Labour government, British women’s participation in the labour market was overtaken by Netherlands and Germany. Together with rising childcare costs and an inflexible labour market with few high skilled part-time jobs it has made life harder for families to cope. As the Resolution Foundation pointed out it is often difficult for families to get by on one salary. And whilst many parents choose to take time out of work to look after their children, flexibility in the system is helpful so that they can maintain skills and contact with the workplace.
In Britain since April 2011, the mother can transfer up to 6 months of her maternity entitlement to the father at the same rate of pay and following a consultation it is expected that there will be proposals for a more flexible system of parental leave available to both parents. Under the current system a mother receives 90 per cent of her pay for the first six weeks, before receiving a standard rate of £129 for the remaining 33 weeks — paid by employers who claim it back from the Government. Unable to afford time off the poorest go back to work quickest: 40 per cent with earnings under £10,000 return to work within 25 weeks compared with 16 per cent with earnings above £40,000.
A flat rate paid directly from Government to parents would provide a fairer and more business friendly system of parental leave. The current £2 billion maternity pay budget would equal around £5,000 per eligible working family and could be paid in installments over 6 or 9 months. [This direct payment already takes place in a number of countries such as Germany and Australia and in a Government study conducted in 2005 was found to be popular with small companies.] This would save employers from administration. With leave separated from the funding of parental time off, employers and employees would be free to come to their own agreements over the amount of time they take off and plan ahead. Employers gain with employees able to do some flexi-work while on maternity/paternity leave, which isn't possible at the moment, while for the mothers and fathers it means an opportunity to top up their maternity/paternity pay by doing a few hours work. This has worked elsewhere with Germany enabling parents to work up to 30 hours a week while on parental leave (even moonlighting for another company). Employers could continue to offer additional benefits to attract and keep top retain staff.
It is important to note that the total amount of time out of the workplace that employers have to cover would not increase, nor would the amount of Government funding. This is about giving the family the choice about who takes that leave and how they take it, benefiting parents and employers alike.