The case against paid maternity leave

Lately, I have read about many calls by left-wing groups, particularly feminists, for paid maternity leave to be enshrined in law. To be sure, the proposed models for paid maternity leave vary significantly with some, such as the ACTU’s, proposing that all working women be paid the same amount for 14 weeks, usually equal to the full time minimum wage, while others want working women to be paid the full salary they normally earn for six months, no matter how high their normal incomes.

Some models want to include all women, whether they work or they don’t, while others want only women who have worked immediately before they give birth to be included. Some want the scheme to be fully funded by the government, while others want employers to be forced to contribute.

Why have a paid maternity scheme?

Often overlooked in the debate is the most basic part of it - why have a paid maternity scheme? Some advocates say that it will benefit women, others say it will encourage women to have babies.

I find neither of these arguments persuasive. First, often not given enough consideration is that it is always someone who must pay for such schemes. If it’s the government, then people will have to be taxed more to fund the scheme. The more generous the scheme, the greater the tax hike. Since most women who have children are married or are in de facto relationships, the net effect will not be that it will benefit these women. Rather, couples will effectively have to fund a portion of their own paid maternity leave through taxes.

On the other hand, if employers are compelled to fund the scheme, the result will be that women will become less employable. Many smaller and medium-sized businesses struggle, and need to save every dollar they can to keep trading. The last thing they need is an employee taking several weeks off work at their expense. So while feminists would see paid maternity leave as a great advancement for women it would, if funded by employers, effectively encourage discrimination against women. Separate from this, there would also be negative effects on inflation and employment generally - businesses would either employ less people or push the extra costs onto consumers.

Second, serious doubt has been cast on the ability of the baby bonus to increase the birth rate. The vast majority of people who want children are willing to make the necessary sacrifices to realise their ambitions.

Distributive effects

So paid maternity leave would represent an overall distribution of income away from single people and childless couples and in favour of couples and single mothers who have children. On the whole, it is therefore only very marginally pro-women. It’s far more pro-big governments, higher taxes and big spending.

As Jessica Brown pointed out it also flies in the face of the Rudd Government’s other policies:

The one thing all these proposals have in common is that they assume maternity leave will be paid to all working women, regardless of income, and that it will be funded by taxpayers through general revenue or through a special levy.

But how will this be different from what we already had? Farewell the old non-means-tested baby bonus; hello to a new non-means-tested maternity leave payment. The only difference is that the new payment will be even more generous.

It’s just as well that a woman was able to point this out, since any male doing so would run the risk of being labeled anti-women and/or a misogynist.

As Brown correctly points out, there is an undeniable contradiction here: two-thirds of voters favoured means-testing the baby bonus, while most people seem in favour of paid maternity leave. I believe this contradiction exists because few people have given enough thought about how to pay for such a scheme. Indeed, one survey suggested that this was the case, with its finding that an overwhelming majority of women want a paid maternity leave scheme, but at the same time didn’t want to pay extra taxes to fund it.