Cost of maternity, paternity leave

The Malta Chamber of Commerce, Enterprise and Industry and the Malta Hotels and Restaurants Association have continued to monitor the issue of maternity and paternity leave with every development, in particular following the controversial EU legislative proposals. In this regard, a study was conducted through the Malta Business Bureau (MBB) on the economic and social implications.

In fact, the report estimates the costs of the possible introduction of the proposals related to parental leave, including the extension of maternity leave and the introduction of paternal leave.

It was found that increasing the maternity leave from the present statutory 14 weeks to 20 weeks would potentially cost the economy €7.5 million worth of value added in a year, equivalent to 0.18 per cent of GDP. Of this, the cost to business would amount to €5.3 million a year. In addition, introducing two weeks of paternity leave would cost the economy an additional €4.8 million a year, equivalent to 0.12 per cent of GDP. Of this, the annual cost to business would be €3.7 million.

All in all, the annual burden on Malta's economy would be in excess of €12 million every year.

These costs to the Maltese economy will be especially relevant given the predominance of small and micro enterprises, which suffer from disproportionate difficulties in their reliance on their staff. Nevertheless, relatively larger employers are also vulnerable to competitiveness pressures and will be significantly affected by the proposals. Indeed, the manufacturing, wholesale and retail and hotels and restaurants sectors, which together account for about 40 per cent of private-sector jobs, have an especially pronounced dependence on small and micro enterprises and on female employees.

The study furthermore considers the risk that the extension of maternity leave could reduce the female employment rate, which in Malta stands at 37.7 per cent of the working-age female population compared to the 58.6 per cent EU average. Without adequate safeguards and alternative solutions, the proposals will render women less competitive in the labour market. This could be reflected in a widening of the wage discrepancy between female and male workers.

The Malta Chamber and the MHRA believe there may be a number of alternative policy approaches that might be better suited to achieve the objective of promoting an improved reconciliation of work, family and private life without indirectly having a secondary negative effect on female participation and wage differentials. Proposals of alternative measures focus on the improvement in structures that support women and men to better cope with parenthood and manage their increased pressures through better work-life balance.

These support structures include the establishment of temporary workers agencies, a recommendation which we consider to be a main priority. Such agencies mitigate the negative effect on business by providing suitable temporary replacements for workers benefitting from maternity leave. This model is already successful in countries like Ireland and Poland.

Other support structures include increasing nursery and day-care provision or subsidisation of such services, which allow women to return to the workplace after the birth of their child without the need to rely on an ever-contracting extended family for support or incurring the full commercial rate for the private provision of these facilities or, indeed, without opting-out of the labour market. Incentives to promote home working practices could also be introduced

The study has indicated that measures such as longer maternity leave can only be counterproductive to female employment and the economy. We must ensure that no measures are implemented to the detriment of female participation in the economy and our employers, particularly SMEs. We must seek to put in place the necessary safeguards before implementing new legal obligations that are economically and socially counter-productive.

Ms Ellul is president of the Malta Chamber of Commerce, Enterprise and Industry and Mr Micallef is president of the Malta Hotels and Restaurants Association