Beyond Double Dippers

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Helen works in communications and recently completed a postgraduate research project on workplace gender equality. To mark International Women’s Day, she writes how Labor should be #SettingTheAgenda on parental leave.

The government is attempting for the third time to reduce paid parental leave (PPL), with the proposal reworked as one of several ‘savings measures’ in the social services omnibus Bill that recently passed the House of Representatives.

First announced on Mother’s Day 2015, the new scheme would deny access to government funded paid parental leave (PPL) for Australian women who also have PPL provided by their employer.

A report from the Senate committee inquiry into the rejected ‘Fairer Paid Parental Leave Bill’ will be released on 20 March. Many of the submissions confirm what we already know - the government’s scheme will fail to achieve its twin aims of fairness and fiscal responsibility, instead entrenching gendered economic inequality and damaging Australia's productivity.

Impact of proposed changes

 

The current PPL scheme introduced by Labor includes up to 18 weeks’ pay at the minimum wage for primary carers, with an additional two weeks of dad and partner pay.

The government's proposal doesn't account for the reality that the scheme was designed as a ‘bare minimum’ benefit that would be topped up by employers, enabling new mums to take the internationally recommended 26 weeks off work at close to their full salary. Rather than being the ‘rorters’ and ‘double dippers’ the government seeks to demonise, these parents are accessing benefits in line with the scheme’s original intent.

The government has revised the savings from the PPL cuts from $1.2 billion down to $490 million, but even this figure is questionable. Current analysis of the financial impact of the Bill only assesses short term savings, with no consideration of the longer term economic costs of reducing women's financial security and workforce participation.

In an attempt to reduce red tape, the Bill also removes the requirement for employers to administer government PPL for their employees. Not only is there no evidence that businesses find this requirement onerous, this approach creates a perception that PPL is a social security benefit rather than a workplace right, undermining the employer/government partnership at the heart of the policy.

PPL as a gender equality tool 

With a stubborn gender pay gap and women currently retiring with half the income of men, Australian mums shouldn’t be forced to choose between caring and workplace responsibilities.

Women continue to perform the majority of unpaid caring work, so employment rights that allow women to spend time with their child without financial stress is critical to achieving gender equality.

Economists estimate that raising children accounts for a 17% loss in lifetime wages for women, so a PPL system that encourages continued workforce participation can help to counter the compounding accumulation of economic disadvantage that starts in childhood.

Time for a new PPL?

As the party synonymous with fairness and worker's rights, Labor should not only oppose these changes, but advocate for further improvements to the current scheme. A progressive parental leave policy would:

  • Move from a welfare model providing the minimum wage towards a wage replacement system, similar to the United Kingdom’s policy.
  • Incentivise parental leave for men: Australia must improve the low take up of paid parental leave among men, as changing the gender-based division of labour is critical to women’s economic participation. Shared care arrangements could be developed based on the experiences of countries like Germany and Norway, where incentivised ‘use it or lose it’ models of paternity leave mean 90% of fathers take this up.
  • Apply the 9.5% superannuation guarantee to PPL contributions: On average, new mothers in Australia miss out on eight months of superannuation per child while taking maternity leave, a major contributor to the gender superannuation gap of 46.6%.
  • Provide additional support for vulnerable workers: Women are overrepresented in low-paying sectors such as childcare, with the construction and retail sectors having the lowest number of organisations offering PPL. The scheme needs to account for these gaps and also make provision for women in low paying and/or insecure work.

Even if the current Bill is defeated in the Senate, we need to remember the existing scheme is not generous by international standards. The OECD ranks Australia's current PPL scheme as the third worst among the 34 OECD countries; only the USA and Portugal give new mothers and their children less. It's time for Australia to lift its game. 


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