ILO study

Maternity protection: Good for workers, good for small businesses

Maternity protection and work-family measures can generate positive outcomes for small- and medium-sized enterprises (SMEs), says ILO Specialist Laura Addati.

Comment | 20 October 2014
Laura Addati, ILO Maternity Protection and Work–Family Specialist
GENEVA – For most people, having a child is a joyful, if challenging, event. But let’s be honest, it can also lead to discrimination against women.

Take the example of Noemi, a 26-year-old woman whose contract was not renewed when she told her employer she was pregnant. Losing her job, especially during the economic recession, had an enormous impact on the family’s income and her mental health.

Unfortunately Noemi’s story is far too common. Maternity protection is often still perceived as a financial burden that puts companies at a competitive disadvantage, especially small-and-medium-sized enterprises (SMEs).

There are reasons for this. An ILO report on maternity and paternity at work, issued in May, shows that 25 per cent of 185 countries surveyed still have laws making it mandatory for individual employers to pay maternity leave cash benefits in full. In another 16 per cent of countries, employers share some of the costs of maternity benefits.

Then, in some countries, regulations exempt SMEs from applying maternity protection rights. This is based on the assumption that they may not be able to pay for them.

The perception that maternity is costly for business is also reinforced by the cultural belief that “ideal workers” are available for work 24/7, and that women’s commitment to work declines when they are pregnant or become mothers.

Benefits for both

New ILO research led by the Conditions of Work and Equality Department (WORKQUALITY) and ENTERPRISE departments and carried out with the United Kingdom’s Middlesex University -- Maternity protection in SMEs: An international review -- suggests that maternity protection is not only feasible for SMEs, it can in fact result in benefits for both companies and society as a whole. This is significant because women make up a large share of SME employees, especially in the services sector.

The benefits of maternity protection are multiple and even more pronounced in companies that rely on a small number of employees. For example, with adequate maternity protection and work-family measures, staff members in these companies are more likely to stay with the same company, which means savings on recruitment costs. Absenteeism is also reduced as employees feel more committed and motivated.

But for parenthood to become “a normal fact of business life” we need new policies that take into account the specific characteristics and needs of SMEs. In particular, these regulations would include national laws and policies that protect maternity and support work-family balance at minimal or no cost to employers, in combination with targeted support measures.

How to go about it?

First, it is crucial for maternity leave to be funded by compulsory social insurance or public funds. A few years ago, SME employers in Australia and the US State of California expressed particular reservations about the costs of new maternity regulations that had been voted in. Yet a few years after the legislation came into effect a majority of employers reported positive returns.

Even when maternity benefits are funded by social insurance, this does not mean they are cost-neutral for employers. Financial support and other incentives could be particularly useful for small firms. This is the case, for example, when workplace risk assessments require pregnant workers to go on additional paid leave due to health and safety concerns -- and for the cost of recruiting and training a new staff member. In Mexico, the government subsidizes the maternity insurance scheme on top of employers’ and employees’ contributions. This is a good way to protect low-income employees as well as employers in SMEs.

Governments could also help SMEs cope with indirect costs by simplifying administrative procedures or helping them manage potential cash-flow shortages when benefits are only later reclaimed from the State or social insurance. For example, small firms in the United Kingdom deduct statutory maternity payments from taxes. When taxes are lower than cash benefits, companies can apply for funding in advance of maternity payments. In addition, medium and large employers can claim back 92 per cent of the employee’s previous earnings from public funds, while small employers are entitled to 103 per cent of this amount.

Other support measures could include communicating information to employers on legal provisions and how to comply with them, together with practical advice on how to replace employees on parental leave and managing their return to work. Other tips could cover innovative working practices with new parents and their work teams.

Employers’ and workers’ organizations also have a key role to play in informing members of their rights and responsibilities, providing training, disseminating good practices and measuring their productivity benefits.

No cost, high returns

The ILO study shows that some maternity protection measures can be implemented with little or no cost. Support for breastfeeding at the workplace is a good example of a provision that constitutes a “win-win scenario” for both employers and employees. SMEs can benefit directly through increased staff retention and enhanced staff commitment, and indirectly from the well-documented advantages that breastfeeding brings to the health of women and their children.

Finally, the report calls for more and better research on the outcomes of maternity protection provisions in SMEs, especially in developing countries where large numbers of SMEs operate in the informal economy and the majority of women have no maternity protection.

However, maternity benefits are also being squeezed in high-income countries. This is partly due to the growing number of workers in part-time, casual or temporary work arrangements, who are less likely to qualify for maternity protection rights. Added to this is the burgeoning evidence of pregnancy and maternity-related discrimination, especially as many businesses struggle to stay afloat in economic downturns.

The report’s recommendations are an attempt to turn the tide on disadvantages related to maternity so that women like Noemi anywhere in the world can become new mothers while also retaining their livelihoods, dignity and ability to provide for their families.