Paid parental leave under (new) Labour.

• Author: Forbes, Katherine

Abstract

Broad international comparisons of paid parental leave often leave New Zealand's policies looking less than adequate. This paper compares current policies in New Zealand and the United Kingdom. The extent to which either country has been able to implement maternity and parental leave policies has been comparatively limited, but the UK's relationship with the European Union has led to more comprehensive policies than those found in New Zealand. New Zealand will not be forced to comply with a regional or international standard, and it is unclear if there is sufficient momentum for change without such compulsion. However, the UK experience has demonstrated that these types of policies are certainly feasible within the context of the "liberal" welfare state.

INTRODUCTION

International comparisons of paid parental leave policies often leave New Zealand's policies looking woefully inadequate compared to those of the Nordic societies, and certainly less comprehensive than in most other OECD countries (Department of Labour 2007, Families Commission 2007, James 2002, Susan Kell Associates 2007). While these comparisons provide useful information as to what constitutes best practice, the policies being compared often emanate from vastly different political, cultural and economic backgrounds, and may not aid the development of new policies in New Zealand. Comparisons of New Zealand's paid parental leave policies with those of other liberal welfare states, such as Australia, Canada or the United States, may be more instructive in terms of the potential for further policy development and for the evaluation of policy goals in New Zealand.

In this paper I compare the paid parental leave policies of New Zealand and the United Kingdom (UK) in terms of their shared cultural history, their similar economic and political contexts, and their categorisation as "liberal" welfare states (Esping-Andersen 1990). Both countries have in recent years introduced and expanded policies designed to address "new social risks", such as clashes between work and care responsibilities, single parenthood, and non-standard forms of employment (Falkner and Treib 2003). In addition, both countries have in recent years elected Labour governments whose policies have been described as "third way" (see Giddens 1998). (2)

New Zealand and the UK also have similar employment contexts in terms of women's participation in the labour market. New Zealand's labour-force participation rate is slightly higher for women of all ages, but lower for women aged 25-34 (the prime childbearing years). Situated within the context of the OECD, participation rates for women of this age are broadly similar (Figure I). However, New Zealand's employment rate for mothers of children aged under two years is below the OECD average, alongside quite dissimilar countries such as Germany and Japan, while the UK is above average, and in 2005 even above Finland which is known for its family-friendly policies (Figure 2). Although labour participation and employment rates are influenced by many different factors, the availability of paid maternity leave is perhaps one reason why these figures are higher in the UK than in New Zealand.

Fertility rates also have an influence on these figures, and have historically been higher in New Zealand than in the UK (OECD 2007). This in part explains why New Zealand's labour-force participation rates for women of childbearing age have been slightly lower than those in the UK (Baker 2002). Higher-than-average fertility rates and lower participation rates for women of childbearing age may also help to explain why paid parental leave policies have not been considered to be as urgent in New Zealand as they have in other countries. Paid parental leave (and other welfare policies, see Brewer et al. 2007) has been shown to contribute to both higher female participation rates and higher fertility, which have both become policy priorities among countries experiencing rapidly ageing populations (Ruhm 1998). This effect has been seen to some degree in the UK, as there has been a small lift in UK fertility rates in recent years (OECD 2006).

These shared factors suggest that it would be reasonable to expect a similar range of policies to have emerged in the two countries with regard to paid parental leave, but this has not been the case. The Labour government in the UK has been able to introduce a package of policies relating to maternity, paternity and parental leave that is more comprehensive than one would expect to find in a liberal welfare state, while successive Labour-led governments in New Zealand have introduced policies that remain among the least generous in the OECD (Families Commission 2007). This paper will examine current policies in both countries, the influence of the European Union (EU) on policy development in the UK, and implications for policy development in New Zealand.

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PARENTAL LEAVE POLICY IN NEW ZEALAND

New Zealand's provisions for paid parental leave are among the least comprehensive in the industrialised world, second only to Australia and the United States, which have no national paid parental leave scheme at all. (3) Maternity leave was introduced to New Zealand's public sector in 1948, but was not legislated for workers in the private sphere until 1980. The 1980 legislation instituted job-protected leave for up to 26 weeks, conditional upon 18 months of continuous employment working more than 15 hours per week. In 1987 unpaid leave was increased to 52 weeks and leave became gender-neutral and able to be shared between parents. Two weeks of unpaid paternity leave were also added, and eligibility requirements were reduced for both types of leave to 12 months' service of 10 hours or more per week (Callister and Galtry 2006).

In 2001 legislation was passed which introduced 12 weeks of paid parental leave. Eligibility requirements remained the same at 12 months' continuous employment of 10 hours per week, and the leave could be transferred from mother to father (or partner) if he or she also met the employment requirement of 12 months' continuous employment of 10 hours per week. Since 2002 the period of leave has been progressively lengthened to 14 weeks, and eligibility has been extended to include women who have six months' continuous service and women who are self-employed (Callister and Galtry 2006). Extended job-protected leave of 12 months (unpaid) continues to be available only to those parents with 12 months' service, while unpaid paternity leave is available for one week after six months' service, and two weeks after 12 months' service.

Parental leave payments are funded through general taxation and administered by Inland Revenue (Families Commission 2007). Payment is based on replacing 100% of previous earnings, but with a maximum payment level calculated as the average weekly earnings for New Zealand employees. For 2007/08 this is a maximum of $391.28 per week before tax. Women whose employment record does not entitle them to paid parental leave and who are not receiving another government benefit can apply for a parental tax credit, which is currently paid at $150 per week for eight weeks. (4) In addition to maternity and parental leave, all pregnant employees are entitled to 10 days of special leave during their pregnancy to attend medical appointments or to other matters related to their pregnancy. This leave is unpaid. From 1 July 2008 employees with caring responsibilities for children or family members have the right to request flexible working arrangements, and employers have a corresponding duty to consider requests seriously and accommodate them accordingly.

PARENTAL LEAVE POLICY IN THE UNITED KINGDOM

Maternity and parental leave provisions in the UK were introduced on a broadly similar timeline to those in New Zealand, although paid maternity leave existed in the UK 24 years before New Zealand women were accorded this...