Here’s What’s Wrong With the Maternity Benefits Act

This law is bad for two big reasons. One, it will lead to job losses for women, hurting those it is supposed to help. Two, it perpetuates gender stereotypes.

Among the three failures commonly spoken of–market failure, government failure and societal failure–the last is the trickiest. It takes time to fix. The practice of dowry and the caste system are good examples of this. Any legislation around these social issues merely provides a framework to remove the ills. Actual behavioural change on the ground is driven by individuals within society. The government may have made the practice of dowry illegal, but as long as it has social acceptance, it won’t end.

Another example is discrimination against women. In India, huge inequalities exist between men and women. Women are confined to unpaid work at home, and the labour force participation rate in India is at an abysmal 27%. The government, attempting to change this in a top-down way, recently made changes to the Maternity Benefits Act. Maternity leave was enhanced to 26 weeks from the current 12 weeks, and the provision of a creche at the workplace has been mandated.

Shouldn’t we be hailing this move? Why do I not feel excited and positive about this ?

Good intentions don’t always lead to good outcomes. Any economist could have predicted how the incentives would change for employers, and what the consequences of that would be for women.

Paying full salary for 26 weeks and hiring an additional resource to do the extra work, and providing a creche, would increase costs for the firm. In a competitive marketplace, these added costs would prove to be a burden for businesses. Big companies might absorb these costs, but medium-sized and small businesses would struggle. To avoid this, one rational decision would be to stop hiring women. This may seem extreme, but in the interview-evaluation phase, if all else is equal between a male and a female candidate, this law incentivises businesses to pick the male one. (In other words, a law meant to reduce discrimination actually makes it more likely.)

A recent report by TeamLease bears this out: it estimates that there could be “a net job loss of 11-18 lakh women for the fiscal year (FY) 2018-19.”

Even if the policy worked as intended, it would only benefit a small percentage of women in the organised sector, if at all. It is difficult to bring the unorganised sector under legal oversight, hence compliance would be an issue. If the starting point of a policy is the expectation of low compliance, then what is the point of it?

At a time when policy makers are talking of the “missing middle” and trying to make policy interventions to help medium-sized companies, such provisions deter growth of these small and mid-sized organisations–quite apart from the fact that they hurt women instead of helping them.

The Social Aspect

Leave aside the economic aspects: there are also larger social ramifications in the design of the law. Here’s one big question: While the Act confers these benefits on the mother, why are fathers left out? Doesn’t the framing of the law then shift the entire burden of childcare on to mothers, allowing fathers to wash their hands off childcare responsibilities? As it is, in India, men do not contribute much to the unpaid work of the household. (An example from my own life: I was once told that I am ‘lucky’ and ‘blessed’ when my husband changed the diapers of our newborn child.) Why should our laws perpetuate these stereotypes?

To increase the women’s labour force participation rates from the abysmal level it is at now, we need to have inclusive and integrated workforces. One way of doing that is to remove silos between work done by men and women. While we have moved a fair distance in opening out  jobs traditionally done by men to women, the converse is not true. The new law aimed to push that distance further.

The mandate of a law that seeks to correct a social failure is to enable behavioural change.The amendments to the Maternity Benefit Act miss the point on empowerment and, in fact, work against removing gender inequality. Do we need more instances of a well-intentioned policy working against its stated purpose?