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Employers concerned over cost of extending parental leave

Employers are questioning the timeliness of extending the paid parental leave scheme.

And the issue, according to Employers and Manufacturers Association senior manager David Lowe, is how the Government will pay for it.

Parliament will hear a private members bill from Labour's Sue Moroney, proposing extending the leave period from 14 to 26 weeks.

Labour Minister Kate Wilkinson says the extension would cost the Government an extra $150 million a year.

According to Inland Revenue, the scheme cost $154 million in the 2010/11 tax year, with about 26,400 women on leave.

Of those who took paid parental leave, 40% returned to work within six months, and 70% were working 13-18 months later, according to Labour Department figures for the 2002-05 period - the most recent available, even if out of date.

An evaluation of the leave scheme undertaken by the department in 2005-06 showed two-thirds of those who returned to work after taking leave, went back to the same employer.

Mr Lowe supports the move in principle.

He says if parents are able to spend a bit longer with their child and then return to work, it could work out better for the parent, the child and the employer.

“When you have people coming back to work with a very young child, the caregiver needs time to care for them. 

The issue is how the Government will pay for it, Mr Lowe says. 

 Business NZ chief executive Phil O’Reilly says the existing leave scheme has been well supported by the business community.

 “It encourages people to return to work because they don’t have to make alternative economic arrangements,” he told NBR Online.

Mr O'Reilly questions if this is a good time to extend the leave.  

"It’s one of those policies that’s good to do when they country’s going along well”, he says.

More by By Caleb Allison

Comments and questions
6

One more reason NOT to have a business here in NZ

The biggest problem employers will face of course is the temporary replacement of a skill loss.

I think the idea is sound - it's happening overseas but we need to go in with our eyes open and fully understand the impact.

My daughter in the UK has just had two babies over the last few years, and in both cases had 6 months full pay (she is a VP at an investment bank and so full pay is substantial). The first time she took 12 months off i.e. an additional 6 mths unpaid, the second time she just did the six months on pay. It was good for her and I am sure an investment bank can pay for it.

But smaller businesses (which abound in NZ) may struggle a little.

It would make employers deliberately not choice women of potential child bearing age. They are already a hassle due to all the sick leave, popping out of the office to drop them here and there. I am a mum, I know I cant be as flexible as before, I cant stay beyond 3pm no matter what etc.

Yawn, another silly idea from Labour. Always looking to spend money we don't have. Lord help us if they ever get back in.

Just more of the never ending social programme madness that gets us and keeps us in deep financial trouble.

We are trying to unwind this stupidity not expand it.

Please ask yourself: how can employers afford to pay a 6-month parental leave.

We can't afford this crap. If this bill gets through, I'll think of a way to fire any expecting employee. It's ridiculous to shell out $50k per employee for absolutely no work done for my company.