Paid family leave transformed Australian business – it’s now under threat


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Companies with paid parental leave retain employees and save on recruitment, but proposed government changes could discourage employer-funded schemes

Before the advent of paid parental leave, the majority of new mothers in Australia quit their jobs so they could cash out holiday pay to help fund those first few months at home.

At Westpac Bank, only 32% of mothers were returning to work after having a baby in 1995. Two years later, the figure had shot up to 53% – undoubtedly because the bank launched a paid maternity leave scheme.

Today, almost all (96% of women) return to work, says Shenaz Khan, Westpac Group general manager, enterprise HR, strategy and service. “We are able to retain that knowledge and experience,” she says.

The bank’s offer of 13 weeks’ leave for primary carers (or half pay for 26 weeks) is offset by the savings it has made by plugging the “brain drain” of its talented women.

Khan says it can cost up to 2.5 times a woman’s salary to replace her if she leaves because of the money spent on recruitment, retraining and inducting people into the business. “And in specialist roles, where skills are hard to find, those costs are significantly higher,” she says.

When looking at the value of paid parental leave, Westpac is a good example, as it has one of the longest-running schemes in the country. The business community was agog when Westpac became the first publicly listed Australian company to offer the leave 22 years ago.

“It was quite a shock to the industry because it was revolutionary back in 1995,” Khan says.

The then CEO, Bob Joss, was trying to turn around a struggling bank and a brand that had been battered by financial scandal and a painful run of foreclosures – particularly on famers.

He asked his group executive, people and performance, Ann Sherry (now the chief executive of Carnival Cruises), to find something that would make the bank an “employer of choice” and she convinced him that paid maternity leave would do the trick – and that it could be paid for by the increase in staff retention.

Sherry has said that before paid parental leave women left the workforce because they needed the money they got when they cashed out their benefits.

“Having babies is an expensive business and they couldn’t afford to be off work for 12 months and paying the mortgage, and kitting out the house,” Sherry said in an interview with this reporter, 14 months ago.

Even though there had been longstanding resistance by businesses to pay maternity leave, Westpac’s move changed the landscape.

“It was like a domino effect,” Sherry said. “Other businesses couldn’t bear for Westpac to get a march on them, so lots of major businesses in Australia just folded and all introduced it.”

The chief executive of the Diversity Council Australia, Lisa Annese, is another Westpac alumnus. She was working as a graduate recruit at the bank when the paid parental leave was launched. “It was really innovative stuff at the time,” she says. “And now organisations compete with each other for who has got the best paid parental leave scheme because there is a war for talent in many industries.

“Any organisation could crunch numbers and it is a no-brainer.”

There are some impressive examples out there: the freight company Aurizon’s “shared care” program allows male employees to take primary care of their child for at least 13 weeks at half pay while their partner returns to work. This is on top of the primary carer’s parental leave and is available even when the father (or secondary carer) works for another company.

The real estate advertising company REA Group offers 26 weeks at full pay, along with 12 weeks’ paid leave for secondary carers (comprised of six weeks at half pay and six weeks at full pay). It also pays superannuation for the entire period up to 12 months.

The tech consultancy ThoughtWorks employs 300 people in Australia and has been offering paid parental leave since 2008. In Australia, women make up only 28% of the information and communication technology workforce, but 49% of the workforce at ThoughtWorks is female.

Its regional group managing director, Ange Ferguson, sees the 18 weeks’ leave as a tool to encourage and retain women in the industry. “The cost to source and hire is significant, and the benefit we gain from policies that increase both attraction and retention, as well as the uplift to awareness of our brand as an employer make it easily worthwhile.”

In 2011 the federal government launched its own paid parental leave scheme, paying families 18 weeks’ salary at minimum wage rates. This could be paid on top of employer-paid schemes, for those who had access to them. Around half of private-sector employers have a paid parental scheme, according to the Workplace Gender Equality Agency.

But this “hybrid” arrangement has been under attack from the Coalition government since 2015, when the then treasurer, Joe Hockey, characterised it as “double dipping” and “basically fraud” by parents.

Those employee and employer groups who support access to both schemes say the government’s contribution provides a minimum standard and helps top up employer contributions so they start to approach the 26 weeks of paid leave recommended by the World Health Organisation.

The average leave provided by employers is about 10 weeks and the total amount of paid parental leave provided to Australian families is low by world standards.

Those families who rely solely on the government scheme actually receive less than two months’ pay at the national average rate – because they are paid at minimum wage rates, rather than their actual salary.

The Turnbull government’s latest threat to disallow access to employer and government schemes at the same time appears, at present, to be stymied by the Nick Xenophon’s Team’s decision not to support the government’s childcare and welfare “omnibus” bill.

According to submissions to the Senate inquiry into paid parental leave, if the government was to succeed in the future, the likely result would be that large employers would find ways to make up the difference – which could be an average of $5,600.

Smaller employers, however, would be more likely to scrap their own schemes and allow the government to make all the payments. In those families made worse off, parents may find themselves returning to work earlier than they would have liked – with the added concerns about the wellbeing of mothers and children and the difficulties and costs of childcare.

Annese says the proposed changes are likely to act as a disincentive for employer-funded schemes: “It might demoralise employers from being generous and it will end up costing the government more money because more women will need to access the scheme in a more dependent way.

“There is no advantage to it and, in fact, it could be argued that it could be a disincentive for organisations who are still working out how to attract and retain young parents in the workplace.”

Online Source: The Guardian

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