The Economic Impact Of Parental Leave

The economic impact of parental leave an evaluation of the benefits and the costs.

A study by Prof Edward Scicluna MEP.

The paper is intended to rebalance the stated costs and benefits assumed by the MBB report by referring to some of the extensive scientific studies carried out in countries around the world over the last 30 years, and the projected outcomes for Malta.

The benefits are shown to be quite significant, while the costs are much lower, by about half the sum estimated in the MBB report. The sum is further reduced when corrects for the mis-placed assumption that considers births can apportioned by equal probabilities for active and inactive young women.

It is not the intention of the paper to quibble with calculations based on assumptions most of which can be ascertained by a properly carried out Labour Force survey, which could measure the actual number of women on maternity leave, their level of take up and the wages they receive during their leave. At this stage one can understand the precautionary approach taken by the employers in view that at present it is they who are shouldering the cost.

Prof Scicluna strongly recommends that such a special Labour force survey on females who have experienced motherhood and who have adopted over the last year be carried out as a matter of importance in view of its economic and social policy implications. However, as of now, if one were to take the MBB estimates as a valid starting point, then the probable aggregate cost of a 6 week extension, for paid maternity leave and a 2 week extension as paid paternal leave, would be found in the region of €5 million.

At present the full cost of the financial burden for paying wages to new mothers for a 13 to 14 week period falls on the employer. This is most unfair to both employer and employee for two reasons. In the former case certain jobs require a higher proportion of females than the national average. The employers in these sectors are hit unduly harder than others. For the young female persons seeking work this risk is carried with them and may play a role in their being chosen, and the wage rate they are offered.

It is very strange that while financial risks related to pensions, sickness leave, health services are spread over the whole working population through funded insurance schemes or similar, no such scheme exist in Malta to finance the “risk” or probability of having a child. Any diffusion of this social obligation, together with the introduction of paid paternal leave
helps significantly in reducing the actual or potential discrimination against the recruitment of young women of child-bearing age.

Prof Scicluna’s paper has shown in a convincing way that any financial outlays incurred for this purpose can have a considerable return to the Maltese economy, including the business sector. Besides the proven positive benefits on infant and maternal health, the implications for jump-starting Malta’s record low female labour force participation rate (FLFPR) are indeed noteworthy. Malta has the opportunity to see a significant jump in its current abysmally-low (FLFPR) of prime-age women (25-54) by up to a maximum 9 percentage points.

The economic returns of such an increase in Malta labour force participation rate have not been evaluated in this short paper but Prof Scicluna contends that the economic effects are known to be staggering. Malta’s productive capacity and its fiscal possibilities are clearly curtailed by Malta’s low active-to-inactive population ratio.

Prof Scicluna’s own conclusion is that given the Maltese economic aspirations, the cost is well worth undertaking. In fact, more than that, it should be seen as money well invested.

Note: This paper is being presented (31 July 2010) as a discussion paper meant to enhance the policy debate in Malta with regards to benefits and costs of extending paid maternity, paternity or parental leave in Malta. The opinions expresses are those of the author.

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L-Impatt Ekonomiku tal-Parental Leave: Evalwazzjoni tal-Beneficcji u l-Ispiza.

 Studju mill-Prof Edward Scicluna MEP.

Din il-Paper giet ipprezentata waqt Seminar li trattat il-Parental Leave organizzat minn Fondazzjoni IDEAT ghall-Imsiehba Socjali nhar is-Sibt, 31 ta’ Lulju, 2010 fic-Centru Nazzjonali Laburista, il-Hamrun. Kelliem iehor kien is-Sur Joe Tanti tal-Malta Business Bureau. Is-Seminar gie iccerjat mis-Sur Joe Gerada.

 Dan l-istudju huwa mahsub biex jirribilancja dak li assuma rapport tal-Malta Business Bureau (MBB) dwar l-ispiza u l-beneficcji tal-parental leave u li pprogetta dak li jista’ jirrizulta f’Malta. L-istudju ta’ Prof Scicluna huwa bazat fuq kwantita ta’ studji xjentifici li saru tul dawn l-ahhar 30 sena f’diversi pajjizi madwar id-dinja.

 Prof Scicluna juri li l-beneficcji huma sinifikanti, filwaqt li l-ispiza hija ferm inqas ta’ dak stmat mir-rapport tal-MBB. Tant li huwa kkalkulat li din l-ispiza tkun madwar in-nofs ta’ dak li jghid ir-Rapport tal-MBB. L-ammont ikompli jonqos meta jkunu meqjusin assunzjonijiet barra minn lokhom meta jikkunsidraw li sew ghan-nisa li jahdmu u ohrajn li ma jahdmux il-probabbiltajiet ta’ twelid huma l-istess.

 L-istudju tal-Professur Scicluna m’ghandux l-intenzjoni li joqghod joggezzjona ghal kalkulazzjonijiet bazati fuq assunzjonijiet li hafna minnhom jistghu jkunu accertati permezz ta’ survey adekwat ta’ dawk li jahdmu (Labour Force). Survey bhal dan jaghti rizultat attwali ta’ kemm nisa jkunu fuq leave tal-maternita, kemm jiehdu leave u kemm salarji jircievu waqt li jkunu bil-leave. F’dan l-istadju wiehed jifhem l-istimi ta’ dawk li jiehdu dawk li jhaddmu huma bbazati fuq principji ta’ prekawzjoni, meqjus il-fatt li fil-prezent huwa huma li jridu jgorru l-piz tal-ispiza.

Prof Scicluna jirrakkomanda bis-shieh li dan is-Survey ghandu isir fuq kampjun ta’ nisa li kellhomm tarbija jew li adottaw tarbija tul is-sena li ghaddiet fid-dawl tal-implikazzjonijiet ekonomici u socjali. Madankollu, fil-prezent, jekk wiehed kellu jiehu l-kalkoli tal-MBB bhala punt validu ta’ tluq, il-probabbilta hija li l-ispiza globali ghal zjieda ta’ sitt gimghat imhallsa ta’ leave tal-maternita u z-zjieda ta’ gimghatejn imhallsa ghal leave paternali tkun tlahhaq ghal madwar €5 miljuni.

 Fil-prezent l-ispiza kollha tal-pagi ta’ bejn 13 u 14-il gimgha ghal nisa li jahdmu u li johorgu tqal jgorrha kollha min ihaddem. Dan huwa ingust, ghal zewg ragunijiet, kemm ghal min ihaddem kif ukoll ghall- haddiem. Fil-kaz ta’ min ihaddem hemm xoghol li jirrekjedi aktar haddiema nisa mill-medja nazzjonali. F’dan is-settur, min ihaddem jintlaqat b’mod sproporzjonat u aktar minn haddiehor. Ghal nisa zghazagh li jkunu qeghdin ifittxu x-xoghol ikunu qed jgorru maghhom dan ir-riskju li jista’ jilghab parti meta jigu biex jinghazlu jekk jinghatawx xoghol jew le kif ukoll fil-pagi li jkunu offruti.

 Huwa stramb hafna li filwaqt li riskji finanzjarji relatati ma’ pensjonijiet, leave ghal waqt il-mard, servizzi ta’ sahha huma mifruxa fuq il-popolazzjoni kollha li tahdem permezz ta’ diversi skemi ta’ assigurazzjoni, ma tezisti ebda skema f’Malta li tiffinanzja “ir-riskju” jew il-probabbilta li mara li tahdem ikollha tarbija. Kieku obbligazzjoni socjali bhal din kellha tinfirex u maghha ikun introdott leave paternali mhallas, tkun ta’ ghajnuna kbira biex tonqos id-diskriminazzjoni attwali u potenzjali fil-konfront ta’ haddiema nisa f’eta li jistghu jkollhom tarbija.

 L-istudju ta’ Prof Scicluna juri b’mod konvincenti li kull finanzjament ghal dan il-ghan jista’ jfisser rendiment konsiderevoli lill-ekonmija Maltija, inkluz lis-settur tan-negozju. Apparti l-benficcji pozittivi, u diga’ pruvati, fuq is-sahha tal-omnm u tat-tarbija, huwa mill-aktar notevoli l-effett li jista’ jkun hemm biex ninqalghu mir-rekord baxx li ghandna fejn jirrigwarda partecipazzjoni femminili fid-dinja tax-xoghol. Malta ghandha l-opportunita li tara zjieda fil-percentwal ta’ nisa bejn (25-54) li jahdmu sa massimu ta’ disa’ punti percentwali.

 Ir-rizultati ekonomici ghal Malta minn zjieda bhal din fin-numru ta’ haddiema nisa ma gewx evalwati f’dan l-istudju, imma l-Prof Scicluna innifsu jikkontendi li l-effetti ekonomici huma sinifikanti. Huwa evidenti li l-kapacita produttiva tal-pajjiz u l-possibiltajiet fiskali huma mxekkla mill-proporzjon baxx ta’ popolazzjoni attiva ma’ dik inattiva.

 Il-konkluzjonijiet tal-Prof Scicluna huma li meqjusin l-aspirazzjonijiet ekonomici ta’ Malta, l-ispiza hija wahda ta’ min jidhol ghaliha. Aktar minn hekk, ghandha titqies bhala investiment tajjeb.

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