Maternity Benefit Act still left with gaps: Female labour force participation slumps further

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Published: January 4, 2019 1:13:39 AM

While seemingly reformist, by placing the responsibility of providing benefits solely on the employer, the amendments turned the tide and female labour force participation slumped further.

On the other hand, the ESIC Act mandates that all employees earning wages of Rs 21,000 or less shall be covered under the ESIC Act, which means that women earning wages of Rs 21,000 or less, who are employed in non-implemented areas, shall not be entitled to benefits.

Ambedkar said, “I measure the progress of a community by the degree of progress which women have achieved”. Today, India aims to be an economic superpower with the fastest growing economy, hence the case for change to improve women labour force participation has never been stronger. According to the World Bank, India ranks 120 amongst 131 countries in female labour force participation rates. It is no more just a debate of social equality and women’s independence, but about economic progress as well.
In India, women constitute 48.5% of the total population however 96% of working women are employed in the informal sector.

India’s female labour force participation rose to 31% when we started reforms in 1991. It then dropped abysmally low to 19% and it is now up to 26%, which is less than half of China’s 60%. As per the research conducted by McKinsey in 2015, statistics reveal that India can increase its 2025 gross domestic product (GDP), estimated at $4.83 trillion, by anywhere between 16% and 60% by increasing women participation in the labour market.

At the same time, no single policy measure can improve the outcomes for women in India. When The Maternity Benefit Act was amended in 2017 to increase maternity leave entitlement from 12 weeks to 26 weeks for the first two children, it had two objectives—prevent declining women labour force participation and improve the quality of labour market opportunities.
However, good intentions don’t always make good laws. While seemingly reformist, by placing the responsibility of providing benefits solely on the employer, it turned the tide and woman participation in the labour force further slumped.

Manufacturing (estimated at 23,266 lakh), education (estimated at 14,494 lakh) and retail (estimated at 12,450 lakh) are the top three sectors with the highest number of female workforce participation in India and, keeping in mind the amendments of the Maternity Benefit Act, it can lead to significant job losses.

Also Read: How Microsoft CEO Satya Nadella led company’s biggest turnaround in 2018

Most start-ups, SMEs and medium-sized multinationals perceive the amendment as a deterrent and are likely to reduce their intake of women. Given the growth challenges, resource constraints and margin pressures, the forecasted job losses in sectors like manufacturing and retail are expected to be between 3-5%, while real estate will see a moderate job loss of 1-2.5%. Sectors like IT/ITES, e-commerce and BFSI have witnessed a positive impact and are expected to have a constructive demand in the next fiscal as well.

A 2014 ILO report on maternity laws and practices around the world states that 58% of all countries, including Brazil, Russia and South Africa provide paid maternity leave funded through social security, and around 16% of countries fund the same where costs are shared jointly by the employer and the state. Only 25% of all countries impose the funding liability solely on the employer. The government should consider some measures for mitigating the limitations, which could be through themselves funding the costs partially through public funds, tax rebates for maternity wages or by the setting up of an insurance scheme to pay maternity wages and the consequent sharing of the premium with the employer. Another option could be to break up the 26 weeks into 13 months of maternity and 13 months of paternity leave, in an effort to negate any possibility of gender bias where work is being shared equally by both parents.

The government is evidently aware of the unintended consequences of the well-meaning amendments. However, the recent changes proposed in the yet to be finalised policy by the ministry of labour and employment still have some gaps. The policy aims to reimburse only 7 weeks, out of the 26 weeks, to employers with a wage restriction of less than `15,000. On the other hand, the ESIC Act mandates that all employees earning wages of `21,000 or less shall be covered under the ESIC Act, which means that women earning wages of `21,000 or less, who are employed in non-implemented areas, shall not be entitled to benefits.

The government should also set up creches with all the attendant facilities as proposed in the Maternity Benefit (Amendment) Act 2017 and allow employees eligible for such benefits to use these “creches” at a nominal cost.To maintain uniformity and balance, it would be advisable to bring the Maternity Benefit Act under Central legislation.

To conclude, empowering women and providing fair representation will play a vital role in the economic growth and sustainable development of our country. In the absence of support from the government, timely intervention or necessary incentives the endeavour will remain unfulfilled. As long as half the population of India is at a disadvantage in the labour ecosystem, it is imperative for concerted efforts, both from the government and the industry, to allow more women to participate and to promote decent work opportunities for women across social strata.

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