Paid parental leave - the facts

From July, New Zealand mothers will be able to take paid time off work to have babies. ANDREW LAXON reports on the implications.

Who will get paid parental leave?

Payments will start on July 1 next year for mothers of babies born or adopted from this date.

Women will qualify if they have worked for the same employer for at least 10 hours a week for a full year (the same standard used now for unpaid parental leave of up to a year).

Women need to keep working until the final six weeks of their pregnancy, unless they leave early for medical reasons.

One difference from some private schemes is that they will not lose the money if they decide during their time off not to return to work.

The Government estimates that 20,000 mothers will qualify - about 5000 who work part time and 15,000 who work full time. It says "up to half" of female wage and salary earners will get 80 per cent of their earnings and about a third will get the full rate.

Who misses out?

About 70,000 self-employed women will not be eligible, because the Government says it is too difficult to tell how much they earn or even whether they are really at work.

About 8000 mothers who are self-employed or casual workers may miss out each year.

Women's Affairs Minister Laila Harre said the Government would be "trying to find some way of providing for those mothers too" when it reviewed the scheme in 12 months.

How much is the payment?

Mothers will get a maximum $325 a week before tax. This works out at $198.25 to $256.75 a week, depending on the woman's tax rate. Women earning less than $325 a week will be paid at their normal full rate while on leave.

Taxpayers will pick up the extra bill of $42 million a year. The total cost will be $57 million as Labour and the Alliance are partly keeping a parental tax credit aimed at low-income families, which they inherited from the last Government.

Will men be eligible?

Yes, but the Government clearly expects the scheme to be used mainly by women.

It says the 12 weeks' leave can be claimed only by the baby's mother. However she can choose to transfer some or all of it to the father (or her female partner if she is in a lesbian relationship).

In theory, some men could miss out altogether. Under the scheme as announced yesterday, there would be no payment for a single man adopting a child or a father whose partner dies during childbirth.

Laila Harre and Labour Minister Margaret Wilson said these potential loopholes would be examined by a select committee.

How does the new scheme fit with existing arrangements - unpaid parental leave and the parental tax credit?

Women who take 12 weeks' paid leave do not have to return to work at the end of this period. They can still take up to a year off without pay, as provided for under present legislation.

The Government is also keeping most of National's parental tax credit, which gives low- and middle-income working families up to $150 a week for eight weeks when they have a baby, regardless of whether either parent is working.

The scheme was conceived by the last Government as a compromise in the face of growing popular support for paid parental leave. National said it was fairer because it targeted families in need and did not discriminate against women who chose not to go back to work.

Labour and the Alliance disagreed but have been reluctant to drop the scheme and penalise their own supporters. The tax credit will continue but about 23 per cent of families receiving it will now be eligible for paid parental leave. They will be able to choose one or the other, but not both.

How did we end up with paid parental leave in this form?

Yesterday's announcement is a hard-fought compromise between the Alliance's $100 million policy of 12 weeks' leave financed by a levy on employers and Labour's $30 million policy of six weeks' leave paid for by taxpayers.

The Alliance wanted mothers to receive up to 80 per cent of the maximum average male weekly wage of $755. It also argued strongly that employers should pay for it but was overruled by senior Labour ministers anxious not to get further offside with business.

So did Labour agree to this to keep the Alliance on side?

Most commentators think so.

Labour has not treated the issue with any great urgency. But getting some form of paid parental leave is an important victory for the Alliance before its annual conference in Auckland this weekend.

The party has struggled to make headway in the coalition and desperately needs to lift its poll ratings of about 4 per cent. It is a particular personal triumph for Laila Harre, who has campaigned relentlessly on the issue since she entered Parliament in 1996.

Will paid parental leave be as popular as the Alliance hopes?

The crucial test will be whether people give the party credit for forcing the law change and vote Alliance as a result.

Reaction yesterday varied from delight at Plunket, which sees benefits for babies - one researcher reported last year that many New Zealand women found breastfeeding and paid work an "untenable combination" - to qualified approval from the Council of Trade Unions.

CTU vice-president Darien Fenton said paid parental leave was now clearly established as an employment right, like holiday pay and sick leave. However, she was concerned that most workers would lose money and the maximum was only slightly more than the minimum wage.

"The issue is, how many workers will be able to afford to take paid parental leave if they are only going to get $257 in their hand?"

The relatively low payment level may not be all bad news for the Alliance politically. Laila Harre is billing this as "stage one", with the prospect of a more generous scheme if the party gets more seats in the next Government.

How will employers cope with paid parental leave?

The main worry for most employers was that they would be forced to pay for it.

However, many small employers still have strong reservations about the inconvenience of losing a female employee.

Employee relations adviser Eddie Mann, who deals with more than 100 small-to-medium businesses, wrote in the Business Herald in May that some of his clients believed some employees would see 12 weeks' paid leave as "just too good to be true" and would apply for parental leave knowing full well that they did not intend to return to full-time work.

He predicted that paid parental leave could disadvantage women who were thinking of starting a family.

"All things being equal, an employer who is looking for a new staff member will avoid women who may apply for parental leave in the future," he wrote.

"I have one client who knows it is illegal to ask a prospective employee if she is planning a family. He does it anyway because he cannot afford the luxury of temporary staff."

Will this make it harder for young women to get a job?

Act women's affairs spokeswoman Penny Webster agreed with Mr Mann yesterday, saying small businesses would be reluctant to take on young women.

But Auckland Chamber of Commerce chief executive Michael Barnett believes it is an overly cynical argument.

"I find that a rather immature perspective. Many employers have discovered that by working closely with those women that they're coming back and there's significant savings from not having to retrain and keeping the good people."

Mr Barnett is fairly upbeat about the Government scheme, saying his main concern is that employers are not tied up in overly complicated regulations to administer it.

But generally he supports paid parental leave as bringing greater equality to the workplace and possibly helping to boost the birthrate.

Do many companies offer paid parental leave already?

The Equal Employment Opportunities Trust says 35 per cent of New Zealand workers have some form of paid parental leave in their contracts, with six weeks as typical.

For instance, Clear Communications offers 14 weeks' paid maternity leave - plus four weeks' extra for mothers who want to come back to work early - flexible work hours, work from home options and a kids' corner in the cafeteria.

At the other end of the pay scale, Woolworths gives its supermarket staff two weeks' paid parental leave, plus three days' domestic leave each year to look after sick family members.

Other companies offering paid parental leave include the ASB and BNZ banks, law firm Simpson Grierson and the Stagecoach bus company, which gives its parents eight weeks' paid leave and a resource kit with a children's storybook.

What do other countries do?

Until now, New Zealand has been one of only three countries in the OECD, with Australia and the United States, with no national provision for paid parental leave.

The European average is 22 weeks on full pay.

Britain has just increased maternity payments to all mothers - whether they are in paid work or not - increased the duration of paid parental leave and introduced a £1000 ($3484) baby bonus for new parents.

Is paid parental leave the best way to help parents?

Many critics, including former Act MP Patricia Schnauer, have argued that paid parental leave is an expensive form of middle-class welfare, which fails to help the families who need it most.

Some add that the money would be better spent on increasing childcare subsidies or providing more creches in workplaces.

Supporters of paid parental leave say it is not welfare - it is a basic employment right. They point out that even the most highly paid workers have sick pay and holidays.

However the Government does seem to have been sensitive to the "middle-class welfare" criticism. It has aimed paid parental leave at low-paid workers as much as possible and kept National's parental tax credit, despite originally having opposed it.