The Maternity (Amendment) Bill, which has increased maternity leave for women in an effort to boost workforce equality, will deter some companies from hiring women and lead to a loss of about 1.1 to 1.8 million jobs across 10 sectors in FY19, says a new report.
The TeamLease Services report, The Impact of Maternity Benefits on Business and Employment, found that the amendment would have an immediate positive impact on only three of 10 sectors it surveyed, but in the long term companies across the sectors will realise the benefits of the amendment.
The amendment in the Maternity Benefit Act, 1961, which was passed by Parliament earlier this year, increased maternity leave for working women from 12 weeks to 26 weeks for the first two children. The amendment also mandated that establishments with more than 50 employees have to provide crèche facilities for working mothers, and it allows them to make four visits during working hours to look after and feed their children in the crèche.
Women form 48.5% of the population, but their representation in the workplace is only 27%. However, 96% of working women are employed in the informal sector.
The report also says that large companies (both private & public sector) and medium-sized public-sector companies seem enthusiastic about the amendment and are likely to even hire more women as the financial and opportunity cost of replacement is higher than the cost of retention. Small-sized public sector companies, on the other hand, are positive but may not increase the number of women they hire.
However, start-ups, SMEs, medium-sized multinational companies, sectors with legacy HR practices, and closely-held family run businesses across sectors perceive the amendment as a deterrent and likely to reduce intake of women, the report says.
“While currently, only 27% of total workforce in India is women and 14% of the overall women workforce is employed in the formal sector, the bill will significantly hamper the entry of new women into the workforce,” TeamLease says.
A World Bank study that analysed National Sample Survey data says that India saw a sharp decline in the number of women in the labour force between 2004–05 and 2011–12. Their participation during this time period dropped by 19.6 million.
The law will, however, have a positive effect on retention. According to employers, surveyed by Teamlease, the post-maternity attrition rate, which is currently as high as 56%, will drop to 33% in the next four years due to the adoption of the Maternity (Amendment) Bill 2017.
Rituparna Chakraborty, co-founder & EVP, TeamLease Services, says that the law positions India as the third most progressive country after Canada and Norway.
“However, the bill in spite of having intent to benefit the women workforce has been counterproductive to the new women workforce participation in the next one-four years. But the investment employers will make towards this end will go a long way in improving women’s workforce participation and, thereby, boost national income,” she said in a statement.