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Australia falls behind OECD on paid parental leave

21st October 2019

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Belinda Townsend is a Research Fellow at RegNet. She earned her PhD in political science at Deakin University and has undergraduate degrees in political science (Honours), anthropology and public health.

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by Belinda Townsend and Lyndall Strazdins

Labor has recently announced it is looking to Nordic countries for inspiration to overhaul Australia’s Paid Parental Leave scheme, which has been called out for being miserly compared to Australia’s OECD peers. Advocates say changes to the scheme could reduce the carer and housework gender gap, increase parent-infant bonding, reduce the gender pay and Superannuation gap, and improve overall health and wellbeing for families. In today’s analysis, Belinda Townsend (@BelTownsend) and Lyndall Strazdins, both of ANU and the NHMRC Centre for Research Excellence on Health Equity (@crehealthequity), provide some history and context for how the Paid Parental Leave Scheme came to be, outline some of its strengths and weaknesses, and provide guidance for how to improve it going forward.

Paid parental leave is important

Australia’s first national paid parental leave (PPL) scheme was announced ten years ago on Mothers’ day in 2009. It meant that the primary caregiver (either parent) is entitled to eighteen weeks government-funded pay at the minimum wage. In 2013 an additional two weeks ‘dad and partner pay’ was added, also at the minimum wage. This freed many parents from the financial dilemmas of taking time after a birth to recover and care for their baby without an income, many of whom had no access to employer funded parental leave. Australia was the second-last OECD nation to implement a national PPL scheme.

PPL has made a major difference - not just to a family’s financial survival but to parents’ and babies’ well-being. The first six months after birth is critical for how children develop, and for parents’ well-being as well. PPL also supports parents in combining jobs with care, a boon to the economy and to equality. Evaluations of the scheme have shown that the PPL delivered. There have been improvements for women’s labour force participation and for maternal and child health, especially for women in low paid work. Nevertheless, Australia still lags well behind other OECD countries on the length and amount of paid leave available for parents, with growing class and gender inequities.

Australia compared to the OECD

The OCED Family database illustrates how Australia is falling behind other OECD nations on a number of measures for PPL.

First, the length of available paid leave (both maternity and parental) in the OECD is, on average, 53 weeks for mothers and 8 weeks dedicated leave for fathers. This is generous when compared to Australia’s government-funded leave, which provides 18 weeks for the primary caregiver, and 2 weeks dedicated to fathers.

Second, compared to other OECD countries, Australia’s public expenditure on PPL is much less - less than half the OECD average of US $12,000 per live birth. This gap can partly be explained because Australia has a hybrid scheme, with expectations that employers will voluntarily provide employer paid leave in addition to the government-funded scheme. However, ten years on, more than half of employers in Australia provide no additional employer paid leave. This creates large gaps in coverage which directly impacts families and children’s well-being.

There are significant differences by industry sector in what employers offer. For example, WGEA shows that while more than 70% of financial sector employers offer some form of employer paid leave, more than 80% of retail trade offers no employer paid leave. This deepens class and income inequities amongst Australian families. It leaves behind those on low income or in low-paid jobs which are the families that desperately need support.

As a result, many families in Australia can only access the eighteen weeks at the minimum wage, which is below the World Health Organisation’s guidelines of 26 weeks for optimal infant breastmilk feeding. This creates inequalities, at birth, for Australian babies that could play out in their health and well-being throughout their lives.

Finally, the scheme inadvertently reinforces gender inequities in caregiving. In most families it is women who use the government-funded scheme, for many reasons. However the options for fathers makes it almost impossible for these men to take significant time from their jobs to bond with and care for their baby. There’s almost no incentive in the current scheme to help or encourage fathers and the WGEA reports reveal what a deficit that is. It shows that when PPL is available men are more likely to take it, and employers play a key role in normalising parents’ utilisation of PPL and of flexible working arrangements for families.

This blog was published on The Power to Persuade on 21 October 2019. Read the full blog post on The Power to Persuade.

Updated:  10 August 2017/Responsible Officer:  Director, RegNet/Page Contact:  Director, RegNet