Originally published in ABC The Drum on April 23, 2008

Originally printed in ABC News.

It’s a good thing for our communities if working parents are able to take time out to spend with children. This should be the guiding principle for the Productivity Commission’s upcoming inquiry into paid maternity, paternity and parental leave.

The second principle is to accept that many parents want or need to participate meaningfully in work while raising a family. However many lack choice, and face barriers such as a lack of affordable good quality child care, limited employment opportunities, inflexible work and gender bias in the framing of entitlements.

We think there should be a new policy option for parents: the creation of ‘leave accounts’ that roll up long service and annual leave into portable accounts that can be drawn down by parents for the first five years of a child’s life. More on this later – first let’s look at the problems to show why leave accounts would work for families, government and employers.

Today’s labour market provides a weak foundation upon which to build an enduring policy framework for parents.

Although there is a system of universal entitlements to leave for parents, these policies are poorly aligned with how most people work because they only apply to workers that are in secure, permanent employment. However, women are more likely to be casuals, have poor job security and/or work in second-rate part time employment.

Consequently many women never build up enough time in a job or employer goodwill to access even the most basic right to unpaid leave. Similarly the vast bulk of women working in private sector employment don’t have any paid maternity leave entitlement.

At the same time, full-time male workers are often working longer hours with little scope to participate in life outside the workplace. This has a lot to do with workplace culture which doesn’t acknowledge men’s roles as fathers, and does little to encourage men in their public lives to increase their share of the parenting load.

Importantly, when men do take paternity or parental leave it is usually from a pool of paid entitlements.

Childcare costs

Child care and family payments are also critical in influencing whether women return to work after childbirth. Australia’s complex family payment system, the high cost of child care and a lack of regulation of fees can create a disincentive for women especially when their wages do not compensate for these costs.

Increasing childcare subsidies will not work because these increases are inevitably absorbed into higher fees.

This policy malfunction is causing a widespread and depressing amount of dissatisfaction across families and causing high levels of stress.

Policy reform is not only vital for families, it is necessary to address our shrinking labour supply rates. This is set to get worse as our population ages.

Increasing the pool of available workers is an important part of the policy. To date, the public policy debate about increasing workforce participation has focused on mature aged workers. This resulted in a number of incentives that have cost taxpayers millions and have mostly benefitted highly superannuated older workers who were already in work.

The next step will need to focus on increasing the participation rate of women. Australia has a very weak participation rate of women with children and we are unique across OECD nations in our low levels of full time employment among mothers.

‘Leave accounts’

To address some of these issues, a system of ‘leave accounts’ should be established for all workers, which would complement but not replace paid maternity and paternity leave entitlements.

Leave accounts would roll up long service leave and accrued annual leave into an account that moves with workers from job to job over the course of their working life. While annual leave could be cashed out when leaving a job or rolled over into the account, the long service leave component would continue to accrue for a qualifying period, after which it could be drawn down to provide paid breaks from work for parents. This would allow workers greater control over taking paid periods of leave to care for children.

This is not a new employment right as it is analogous to existing long service leave entitlements.

Portable long service leave schemes have operated successfully in the construction industry for years. Similar schemes are finding favour in other sectors, such as contract cleaning in some states. These schemes are not difficult to administer, and because people move from job to job the costs are minimal as they are spread across firms. Schemes can become self-funding over time which makes them an even more cost-effective option.

Crucially for women, any system that helps them take periods of leave will also help them to return to work which benefits employers and government and boosts local labour supply while retaining skills in the labour market.

A leave account scheme may have the added benefit of equalising caring responsibilities. Because men are more likely to work unbroken patterns of full time work, their leave accounts will prosper. This should allow more access to paid leave for men and hopefully increasing choice and equality in child-rearing within households. It also helps the household to maintain a higher male wage for a period following childbirth.

To embrace such a scheme, the Productivity Commission will need to look beyond unit cost measures of workplace productivity. This sees absences (such as for parenting) as negative productivity costs. Instead the Commission should look for ideas that value the social benefit of recasting the work-life balance so that people can reconcile their lives as parents outside the workplace with their jobs at work.

Jo-anne Schofield is executive director of Catalyst Australia – a new not for profit network supported by trade unions and progressive researchers and individuals.

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