Report: Paid Leave Policies Support Workplace Flex in Competitive Economies

By Roy Maurer Oct 28, 2011
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Researchers have found that workplace policies such as paid maternity and paternity leave and paid leave to care for sick children exist in countries that are economically competitive and have low unemployment rates, contradicting the argument that costs associated with paid leave would reduce employment and undermine the international competitiveness of U.S. businesses.

Writing in The Future of Children, a collaborative report between Princeton University and the Brookings Institution, the authors identified 15 countries, including the United States, that have been among the top 20 countries in competitiveness rankings for at least eight of the 10 years ending in 2008. To this group they added China and India, rising competitors in the global economy. The authors found that every one of these countries, except the United States, guarantees some form of paid leave for new mothers as well as annual leave, and all but Switzerland and the United States guarantee paid leave for new fathers.

The authors identified 13 advanced countries that historically have had consistently low unemployment rates, again including the United States. The majority of these countries provide paid leave for new mothers, paid leave for new fathers, paid leave to care for children’s health care needs, breast-feeding breaks, paid vacation leave and a weekly day of rest. The United States guarantees only breast-feeding breaks, as part of the 2010 Patient Protection and Affordable Care Act.

“U.S. policies on parental leave, sick leave, vacation days and days of rest are often in sharp contrast to other developed and developing countries, but those who want to make these policies more supportive of parents and their children face stiff opposition from those who say such policies will harm the United States’ ability to compete economically with other countries,” the report stated.

“The analysis of global data presented here suggests that guaranteeing paid parental leave as well as paid leave when a child is sick would be feasible for the United States without jeopardizing its highly competitive economy or low unemployment rate in the future,” the authors found.

The countries studied were Australia, Austria, Canada, China, Denmark, Finland, Germany, Iceland, India, Japan, the Netherlands, Norway, Singapore, Sweden, Switzerland, the United Kingdom and the United States.

Paid Parental Leave

The United States is the only country studied that has no federal policy providing paid leave for new parents. Leave provided under the federal Family and Medical Leave Act is unpaid. Maternity leave is guaranteed in all of the 15 most competitive countries except for the U.S.

Australia’s paid leave policy took effect in January 2011; under the Paid Parental Leave Act, all workers—full-time, part-time, and casual—who are primary caregivers and are paid $150,000 or less a year are guaranteed 18 weeks of leave paid at the federal minimum wage. There is an income cutoff of $150,000, based on the primary caregiver’s adjusted taxable income in the previous financial year.

All of the countries studied with paid leave for new mothers provide at least 14 weeks of leave. The norm of six months or more far exceeds the recommended minimum. China offers 18 weeks (90 working days) of leave for new mothers at full pay. India offers 12 weeks.

The duration of paid leave for new fathers is far less than it is for mothers in all of the countries studied, but most of the countries do provide paternity leave. The U.S., Switzerland, China and India do not mandate paternity leave.

Paid Annual or Vacation Leave

All of the countries studied except the United States guarantee paid annual or vacation leave. The majority of these countries provide generous amounts of leave at full pay. Half provide more than four weeks a year: Austria, Denmark, Finland, Germany, Iceland, Norway, Sweden and the United Kingdom. China’s labor laws guarantee five days of paid leave after one year of service, 10 days after 10 years on the job, and 15 days after 20 years. In India, workers are provided one day of paid leave for every 20 days worked during the previous year.

Australia and the United States are the only countries from the list that do not guarantee a weekly day of rest.

Leave for Children’s Health Needs

Unpaid leave from work to address children’s health needs is ensured in every highly competitive nation. All but four of the 15 most competitive countries provide paid leave for this purpose. The exceptions are Finland, Switzerland, the United Kingdom and the United States.

Breast-Feeding Breaks

Guaranteeing new mothers a breast-feeding break during the workday is the law in about half of the highly competitive countries studied, including Austria, Germany, Japan, the Netherlands, Norway, Sweden, Switzerland and the United States. India mandates two breaks a day in the child’s first 15 months. China guarantees new mothers breast-feeding breaks totaling an hour a day for the baby’s first year.

Night Work

Policies to restrict or compensate for work at times when school-age children in particular benefit from a parent’s presence—evenings and nights—exist in many of the countries studied. Guaranteeing a wage premium increases the likelihood that a wide range of workers will volunteer for night work and decreases the likelihood that parents will need to work at night merely because of limited seniority. Finland, Norway and Sweden have passed laws placing broad restrictions on night work for workers. Germany, Japan and Switzerland instead guarantee a wage premium for those who are required to work at night. More than half of the highly competitive nations studied allow night work but restrict or ban it for workers who might be harmed by it: children, pregnant or nursing women, and employees with medical conditions that make them unable to work at night. China bans night work for pregnant women. Although India bans night work for all women, some states have lifted it for women working in information technology and telecommunications.

Policy Recommendations

“Few of the policies that would help working parents raise healthy children are guaranteed in the United States,” the authors found. The federal Family and Medical Leave Act allows new parents to take unpaid time off without fear of job loss, but half of Americans are not covered by the act because of the size of the companies in which they work, the number of hours they have worked, or a recent job change, and “many of those who are covered cannot afford to take all the leave they are entitled to because it is unpaid,” the authors said.

The overwhelming majority of countries guarantee paid parental leave through a social insurance system, the authors found. The countries that guarantee paid sick leave finance it through a variety of means such as by requiring employers to continue to pay salary or wages during the leave and by establishing a social security system whereby some combination of employees, employers and government pay into a fund out of which payments are made to individuals while they are unable to work. One two-stage model the authors discuss requires employers to pay wages for short periods of illness but provides benefits from the social insurance system for longer leaves associated with major illnesses.

“As [the report] demonstrates, guaranteeing a floor of decent working conditions and social supports is essential not only to working parents but also to the healthy development of their children,” the authors said. “We believe that evidence is equally compelling that such guarantees are economically feasible for the United States,” they concluded.

Roy Maurer is a staff writer for SHRM.

Related Article:

Australia’s Paid Leave Scheme Supports Working Parents, SHRM Legal Issues Discipline, December 2010

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