Sunday, August 25, 2013

What's so good about Abbott's paid parental leave scheme?

Anyone would think Tony Abbott's paid parental leave scheme was an economic disaster.

We are told it’s unaffordable, we are told it's unfair because it gives the most to the workers who earn the most, and bizarrely we are told that it’ll make employers discriminate against women of childbearing age and hire men instead.

(On that last point, that’s what we were told at the end of the 1960s when the so-called equal pay decision make it illegal to pay women for less than men doing the same job. Employers complained they would have to sack women and take on men. Yet in the past 35 years they have taken on an extra 3.2 million more women and only 2.4 million more men. And the equal pay decision actually did make it more expensive to hire women than it had been before. The whole point of Abbott's parental leave scheme is that it would not impose an extra penalty on employers who hire women, it would remove the penalty.)

Let’s talk about fairness first.

Louise, a participant in Wednesday's leader’s debate asked Abbott why we needed a scheme that would pay some women $75,000 for six months leave when most women never earned that much in an entire year.

She could have asked the same question about sick leave. Highly-paid men and women get sick leave at their standard rate of pay. It’s a workplace entitlement. So too is annual leave and bereavement leave.

“Ah, but this is different,” Louise might have responded. “Parental leave is welfare paid by the government, the other types of leave are in employment contracts.”

The other types of leave are only in most employment contracts because government puts them there. Yes, they are paid by the employer. But so too would parental leave be under Abbott’s plan.

The extra cost of Abbott’s scheme is 100 per cent funded by the employers if we are to believe the Coalition’s numbers. A fact check published Wednesday goes through the maths. But instead of being paid by the individual employer who happens to find him or herself with a pregnant worker (which might discourage employers from hiring women) it is paid by the lot of them - well, the biggest ones anyway.

Employers would be made to pay the workplace entitlement just as they are other entitlements, except that for this one the burden would be shared among all (big) employers rather than paid by only the ones with pregnant workers.

The scheme has been designed that way because for small employers pregnancy is “lumpy”. Some get it, some don’t and it affects their costs big-time. Spreading the lumps among the biggest employers would mean no employer would need fear taking on someone likely to get pregnant.

Abbott’s proposed maternity leave system is no less fair than is the superannuation system of which Labor is proud. Both are paid by employers, and the rate of payment is determined by the wage. It’s the special tax treatment in the super system that makes super really unfair. It massively advantages high earners compared to low earners. Abbott’s proposed maternity system has no such flaw.

If $5.5 billion per year sounds like a big bill, that’s because Australia’s annual total wage bill is enormous. The levy on big companies would cover the extra cost. Labor and the Shareholders Association have expressed outrage that shareholders will end up paying the bill. Of course they will - they own the shares. On the bright side those companies will no longer need to fund their own parental leave schemes, so its not all bad for them.

And their shareholders’ children and grandchildren are more likely to be breastfed for the recommended six months rather than the presently funded three at the minimum wage. They will typically develop higher intelligence, greater emotional resilience, better teeth, resistance to colds and flu and protection against diabetes and obesity.

Would these sorts of shareholders and companies have complained about having to pay a proper wage to women back in the 1960s? Yes they did. They got over it and now regard giving their female employees as much respect as their male ones as a normal cost of doing business.

Yes, they could escape the cost by going overseas. That’s true of any improvement in working conditions, although in this case less than most. The cost is offset by the benefits of having all employable women available to work for all employers.

Six months at full pay would make Australia’s scheme one of the world’s most generous. Medicare is also generous. It has helped rather than hurt Australia.

In The Canberra Times and Sun Herald 

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. Half true. Paid Parental leave "fully funded"

. Mostly false. An average female earner $21,000 better off

. Parental leave. Swan, Rudd and Tanner are their own worst enemies