DI$UNOMICS

Everything in life is a transaction

006: MATERNITY LEAVE

As a man, the ins and outs of maternity leave doesn’t tend to be high up in your realms of expertise (apart, of course, from the "ins and out" which got the woman there to begin with), which is why I was stunned when I stumbled across the details of the average maternity leave conditions. Those that know me may be surprised at my stance on this topic. Usually, I am highly in favour of cost/benefit analysis and economic independence of individuals. I believe that, if you want children, you shouldn’t be catered to and given housing on a discount - you should have planned for the eventuality. You are yours and your support network's problem, not the state's. The public should not have to fund the raising of your child. HOWEVER, when it comes to maternity leave, my stance is completely different. I will go into detail, but I think it is important to know first what the current maternity leave parameters are for those living in our useless U.K. (I'm still mad over Vote Leave)

 

 

What is Maternity Leave?

 

 

Statutory maternity leave enables a woman to take 52 weeks off after giving birth. This comprises 26 weeks of ordinary maternity leave and 26 weeks of additional maternity leave. If you return to work after additional maternity leave and your employer does not believe it is reasonable to offer you your job back, they have to make arranges to offer you something similar. Your pension will be unaffected.

In terms of payment, by law, companies must at the very least offer the statutory maternity payment (SMP), which is paid up to 39 weeks. Here is the breakdown:

 

·      90% of average weekly earnings (before tax) for the first 6 weeks. So, if your average weekly earnings are £500, you will gain £450 p/w for 6 weeks.

·      Now, for the remaining 33 weeks, it drops down to £139.58 p/w (unless 90% of your weekly earnings is lower than that.).

·      Using the first example of £500 p/w, which is probably about £360 after tax, you are losing out on £220 for the next 33 weeks.

 

 

Should this be changed?

 

 

When you look at the above example, it does not seem to be a very good economical decision. No matter how much you earn by the SMP you are never collecting more than £140 p/w. I immediately ask myself a series of questions:

 

·      What if the future mother in question is financially alone? How will they deal with this cash flow restructuring?

·      What incentive is this giving for women in the work place in terms of progression?

·      Is this implying that the ‘family or career’ dilemma is a choice, or something that can be simultaneous?

·      What can be done to benefit all parties?

·      Do companies offer better deals than this?

 

 

With regards to women in the workplace that have any ambition of having children, I think it is vitally important that we refrain from disincentivizing women from being ambitious in the work place. I do not think it is beneficial to have an environment in which women are weighing up the opportunity cost of having children or chasing certain promotions/positions/careers.

 

Naturally, the counter-argument will be “why should a firm/the government be compelled to pay you for work you are not doing?”, which is totally understandable to a certain extent. When a woman or a man is on maternity/paternity leave, the firm is still paying them a certain amount. On top of that, they are paying the replacement member of staff's salary and their recruitment costs, and we can factor in the reduction in productivity of other members of staff taking on more responsibilities. I would, however, like to propose an alternative angle:

 

Could it be more beneficial to incentivise women to be as productive and ambitious as possible? For an economy to function to its full potential, full employment of resources is required, i.e. every person in that economy maximising their potential. I do not think there should be limitations on women’s economic capability purely due to their biology. It’s not like childbirth is important or anything! Thankfully, most companies offer more than SMP.

 

 

·      For example take law firm Clyde & Co LLP.

·      13 weeks 100% pay.

·      5 weeks £250 p/w.  

·      21 weeks at £139.58 or 90% of weekly pay (whichever is lower)

·      13 weeks unpaid

 

I would therefore advise everyone to make sure that they are fully aware of the benefits packages your workplace may or may not offer. Women especially, the maternity schemes could be drastically different on a firm-to-firm basis so make sure you are well informed before taking a job!

 

Further to the point I made earlier, how can you incentivise women to try to be as ambitious and as productive for business as possible, and cost effective for companies and government alike? I will outline my thoughts below.

 

 

As I have already stated, I do not believe in giving away free money; I do not propose paying 100% of a woman's weekly salary for 40 weeks. I think the government should look at a weighted system: the more you earn, the more your maternity pay is. I think it is unfair that women that earn £450 p/w and women that earn £800 p/w are taking home the same pay. That can definitely influence the incentive for promotion-chasing. It is also possible to argue that the indirect disincentive of having children contributes to the ‘gender pay gap’ (personally, I don’t think the gender pay gap is as straightforward as these lazy politicians would have you believe, but that is for another day). Many studies have shown that unmarried women earn more on average than men!  So, for example, let us for argument's sake say the new policy is something like the following:

 

·      10 weeks 100% p/w

·      29 weeks 50% p/w or £139.58 (whichever number is HIGHER. So nobody is worse off than in previous years).

·      13 weeks remaining can be left for the companies to decide.

 

How can this be funded? Well, I would rather the government invest more of the budget in ventures like this for people who are ALREADY WORKING and contributing to the economy, than on other over-generous benefit expenditures, or reallocate some of the £47billion spent on defence. Also, a possible incentive for the businesses employing this potential scheme could be to offer them extra tax breaks.

 

Of course these numbers aren’t final, nor have I done extensive research YET!!!! But I just want to help you visualise a scheme that could help women in the work place, and hopefully business too! This is a topic that I have randomly become semi-passionate about, and one that I am continuously looking into. So, look out for a more in-depth sequel at a later date, which I cannot share due to unforeseen circumstances.

 

Please let me know what you think and I hope you enjoyed your read!