Prolonging maternity leave doesn’t damage future earning potential

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A mother sits on her bed holding her baby. She works on a laptop at the same time.
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Australian women who take paid maternity leave after having a baby aren’t suffering any long term salary loss, a new University of Melbourne study has found.

Dr Barbara Hanel, from the University of Melbourne Faculty of Business and Economics, investigated to what extent employer-provided paid maternity leave schemes prolong a mother’s absence from work, and whether their earning capacity then takes a hit.

Her work — published in the Melbourne Institute of Applied Economic and Social Research  — determined the effect was negligible.

“There is virtually zero impact on long-term employment or wages after the child’s first birthday,” Dr Hanel said.

Under the Federal Government’s Paid Parental Leave Scheme, new parents are eligible to receive the minimum wage for up to 18 weeks.

Before the Federal scheme was introduced, about 38% of all female employees were covered by an employer provided paid maternity leave policy, which can offer them up to 18 weeks off work.

Dr Hanel’s research found mothers who were not eligible for employer provided leave were almost twice as likely to return to work before the child was six months.

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In contrast, mothers with employer provided entitlements usually returned to work when their child was between six months and two years old.

Dr Hanel said those women commonly returned to more highly paid jobs.

“They’re also typically older, better educated, and work more hours in larger companies,” she said.

The research found paid maternity leave cheaply achieved its goal of enabling mothers to spend time with their children.

“Short, paid maternity leave costs little and has virtually zero long-term costs in terms of mothers’ labour market position,” Dr Hanel said.

Source: The University of Melbourne

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Date Created: September 19, 2012