Initial reactions to Tony Abbott's parental leave scheme suggest that (big) business will be opposed to the levy placed on them to pay for it. Here is a quick snapshot of why it would be good for business, as well as the economy and society in general.
The empirical studies into the impact of both pronatalist policies and paid parental leave schemes in Australia suggest there is little capability of policy intervention influencing the increase of fertility rates, supporting the concept that low fertility and low female labour force participation is the result of observed market failure. That is, it is society’s reliance on the tax transfer system which has shifted the economic benefit of having children from the private to the social domain, meaning that those who choose not to have children still have equal rights to the intergenerational transfers from other people’s future tax-paying children. Essentially, those who have children create the future workforce and tax base, largely through their own private sacrifices. Therefore, until greater value is placed on childbearing and rearing by society, and the opportunity cost of having children is significantly reduced, it is unlikely that fertility rates or labour force participation rates by women will increase further.
- The policy will create a level playing field for all. There is growing evidence that women are choosing their employers based on the parental leave entitlements and this occurs a number of years prior to child-bearing intentions.
- Costs may decrease or increase for some organisations and industries, but will be constant and can appropriately be budgeted for.
- Support working mothers provide at least six months of critical infant care without the pressure to return to work
- Female labour force participation is likely to increase, and women will return to the workforce sooner after having children
- Protection for women from loss of income upon having children, employment security, superannuation continuity and engagement with the workforce provides greater equity for women as they age
- Women are over half the population and have greater levels of educational attainment than men, any loss of their contribution to the workforce is a cost to business
- Disincentives to employ or promote young women will be removed
- May increase incentives for some industries to improve their gender balance
- As population ageing increases and the supply of labour diminishes further, women will become increasingly important participants in the labour market, increasing the competition for them.
- Women will have greater opportunity to obtain senior positions and increase board representation (due to continuation in the workforce)
- The fertility rate will likely stabilise or slightly increase, providing insurance for a future supply of labour
The empirical studies into the impact of both pronatalist policies and paid parental leave schemes in Australia suggest there is little capability of policy intervention influencing the increase of fertility rates, supporting the concept that low fertility and low female labour force participation is the result of observed market failure. That is, it is society’s reliance on the tax transfer system which has shifted the economic benefit of having children from the private to the social domain, meaning that those who choose not to have children still have equal rights to the intergenerational transfers from other people’s future tax-paying children. Essentially, those who have children create the future workforce and tax base, largely through their own private sacrifices. Therefore, until greater value is placed on childbearing and rearing by society, and the opportunity cost of having children is significantly reduced, it is unlikely that fertility rates or labour force participation rates by women will increase further.