EU proposals to extend maternity leave and introduce paternal leave would cost the Maltese economy more than €12 million a year, according to a study by the Malta Business Bureau.
A copy of the report was this afternoon presented to Chris Said, Parliamentary Secretary for Consumers, Fair Competition, Local Councils and Public Dialogue.
MBB president John Huber said that the burden on the economy, particularly on Maltese businesses, of the proposed extension to parental leave would harm Malta's competitiveness and could be "very damaging" to local businesses.
"Businesses - and the economy - are not in a position to afford to carry the burden of such proposals."
Dr Said said that in light of the discussions being held at EU level on the parental leave directive, the government was consulting all social partners, with the aim of making the best decision for Malta. This meeting with The Malta Business Bureau formed part of this consultation process.
He pointed out that despite the global economic and financial recession, the Maltese government had continued to invest in numerous initiatives to encourage more women to seek employment. To date, 3,652 mothers had benefited from tax deductions when they rejoined the workforce, or retained their employment, following the birth of a child. In total, these families saved €3.2 million in taxes.
At the same time, the government had also committed itself to safeguarding the interests of employers and of the commercial sector so as to ensure that the private sector was not overly burdened to the detriment of both employers and employees.
The MBB report argues that the possible economic benefits of these proposed legislative changes on the Maltese economy would be relatively marginal.
The report indicates that extending the maternity leave from the current 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 private business would amount to €5.3 million worth of value added in a year, equivalent to 0.14 per cent of private sector GDP.
In addition, introducing two weeks of paternity leave would cost the economy €4.8 million in terms of value added in a year, equivalent to 0.12 per cent of GDP.
Of this, the cost to private business would be €3.7 million in a year in term of value added, equivalent to 0.1 per cent of GDP. These costs are subject to issues of take-up of leave and substitutability of workers. In total, these measures would dent the economy's GDP by 0.29 per cent, and reduce the value added of private business by 0.25 per cent.
These costs in the Maltese economy would be especially relevant given the predominance of small and micro enterprises which would be especially hit in terms of the difficulties they face to substitute absent workers on parental leave.
It was also found that firms which were relatively large employers and were especially vulnerable to competitiveness pressures would also be significantly affected by the proposals. The Manufacturing, Wholesale and Retail and Hotels and Restaurants Sectors, which together accounted for around 40 per cent of private sector jobs, had an especially pronounced dependence on small and micro enterprises and on female employees.
The proposed changes to the Directive would render women less competitive in the market-place for jobs and would overall lead to deteriorating employment prospects for everyone by increasing the costs of operation to business. There was also a serious risk that the wage discrepancies that exist between female and male employees may widen as employers factor in the potentially increased burden of employing a woman.
The report proposes alternative measures such as nursery and day-care provision or subsidisation of such services to 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 high expenses for private provision of these facilities.
It also suggests incentives to promote home working practices to allow women to better juggle their family needs with meeting work deadlines without the necessity of being at their work place and incentives to encourage private firms to provide better family friendly measures such as on-site nursery care, keeping women on maternity leave informed of work matters and introducing creative work solutions such as part time, flexitime, home working, compressed working week, job share, annualised hours, term-time work and shift working.
The report was drawn up with the technical assistance of economists Gordon Cordina and Jana Farrugia. The MBB is composed of the Malta Chamber of Commerce and Industry and the Malta Hotels and Restaurants Association.