“The six-month maternity leave has had very wide and positive acceptance among large organisations. Even medium-sized organisations (Rs 50-100 crore turnover) have accepted this and have budgeted for provision in their payouts for 10-12% of their employee base to be on maternity leave at any given point of time. Unfortunately, this is not the case with micro and small enterprises.”
For some of the companies, cost implications are now turning out to be greater than the intention of pursuing an inclusive policy'
In the midst of several divergent voices on the Act, a study by TeamLease presents stark statistics that provide a rather grim view on women’s hiring in the short term after the Act
A year ago, when the Maternity Benefit (Amendment) Act came into force, it was considered a landmark reform that positioned India among the top progressive nations, enabling women to stay in the workforce after childbirth.
The well-intentioned amendment entitles working women to a 26-week paid leave, up from the earlier 12 weeks, something that progressive companies were already offering. With India’s women workforce participation rate dwindling from about 37% in 2005 to 27% in 2013, the Act is aimed at bringing women back into employment to boost the country’s income. However, for some of the companies, cost implications are now turning out to be greater than the intention of pursuing an inclusive policy.
In the midst of several divergent voices on the Act, a study by TeamLease presents stark statistics that provide a rather grim view on women’s hiring in the short term after the Act. While in the long term, women’s workforce participation rate may get a fillip, the TeamLease report shared exclusively with TOI has estimated a net job loss of 11-18 lakh women for the fiscal year (FY) 2018-19. This is over and above the average annual attrition rate of women employees in the workforce.
The study was conducted among 300 employers across 10 key sectors — aviation, BPO/ITeS, real estate, education, e-commerce, BFSI, IT, manufacturing, retail and tourism. TeamLease Services co-founder and executive VP Rituparna Chakraborty said, “Historical data shows that the Indian workforce has been losing women workers at the rate of 28 lakh per year for seven years from 2004-05 to 2011-12. The net job loss (11-18 lakh for 10 sectors for FY19) over and above this number is attributable solely to the Amended Maternity Act.”
Chakraborty said if the job loss, attributable to the Amended Maternity Act, is estimated for all the sectors in the country, the number would go up substantially to an estimated 1-1.2 crore. “Our mission at TeamLease is to put India to work. The endeavour is unfulfilled if half the population of India is at a disadvantage in the talent market,” she said.
In FY17, the net job creation for women was 60 lakh. However, in FY18, there was a net job loss of 50 lakh (out of this, 24 lakh women exited the workforce between January 2017 and April 2017), which is an exception and attributable to demonetisation, according to the report, which relied on CMIE data. A comparison, thus, cannot be drawn between the job loss numbers estimated for 2018-19 and the numbers computed for 2017-18.
On the other hand, employers have indicated in the study that post-maternity attrition, which used to be a staggering 56%, would come down to 33% over the medium term after the amendment. While the post-maternity retention cost (at 80-135% of annual salary for each beneficiary woman employee) is seen as a judicious investment by some employers, others see it as a prohibitively expensive proposition. The 100% employer-funded model of the Act is seen as unviable by some sections of industry.
Saundarya Rajesh, founder of Avtar Group, a leading diversity and inclusion consulting company, said, “The six-month maternity leave has had very wide and positive acceptance among large organisations. Even medium-sized organisations (Rs 50-100 crore turnover) have accepted this and have budgeted for provision in their payouts for 10-12% of their employee base to be on maternity leave at any given point of time. Unfortunately, this is not the case with micro and small enterprises.”
During her interactions in several small business forums and entrepreneur/startup circles, Rajesh found that a key employee’s absence of 26 weeks tends to weigh heavily on businesses that operate with thin margins, that too amid aggressive competition. “Businesses that have a turnover of up to Rs 10-15 crore find it very difficult to afford six-month paid maternity leave, along with identifying (and paying for) temporary replacements. I suspect that if women’s workforce participation rates are tracked state-wise and town-wise, a pre- and post-six-month maternity leave scenario will show a distinct dip after 2017. In non-metros, there is still evidence of male domination and patriarchy and this, combined with the six-month maternity leave, has dealt a double whammy to women’s employment,” said Rajesh.
Experts believe the government could provide sops to the industry to improve women’s participation in the workforce. Chakraborty said, “The government could come up with an amnesty scheme or additional benefits to encourage employers to hire more women.” Rajesh said if the government could provide a tax benefit or some kind of incentive for micro and small enterprises that employ women on their rolls and, therefore, make provision for a six-month maternity leave, the situation would improve.
The direct impact on women’s hiring is positive for sectors like BPO/ITeS, e-commerce and IT in the short term. However, it is negative for aviation, education, retail and tourism. In the medium term, the move is expected to benefit most sectors.
Neeraj Sharma, senior director (HR) at FourKites, a startup that provides supply chain-visibility solutions, believes diversity is more of a mindset issue. “For a company that has created value by investing in women talent for more than two years, there’s a greater loss if they lose that talent. For those organisations, which have a lesser number of employees and demonstrate a bias against hiring women, the opportunity cost is more than being cash-positive. Such companies should look at moving away from the bias and build on value-creation from the talent perspective,” said Sharma.