Select Committee on Social Security Appendices to the Minutes of Evidence


Memorandum submitted by The Fawcett Society (PL 9)


  This memorandum covers the following issues:

    —  Parental Leave—why have parental leave.

    —  Why pay parental leave?—the case for paying parental leave.

    —  Unpaid Parental leave—the case against.

    —  How should parental leave be paid?—why it should be earnings related.

    —  How can parental leave be paid for?—why it should be a three way partnership.

    —  How long should parental leave be?—why it should be three months non-transferable and paid and up to 24/36 months at a reduced rate, and why it must be fully flexible.

    —  Other issues—those without children, small employers and qualifying periods.


  Fawcett welcomes the Government's intention to adopt the European Directive on Parental Leave. We recognise that the principles underpinning the adoption of such legislation go hand in hand with the Government's commitment to work towards more "family friendly" working policies. We would urge the Government to ensure that Parental Leave is paid.


  Evidence from European countries and other countries where parental leave is already on offer suggests that take up by mothers and fathers is greater when it is paid. Where parental leave is not paid the take up is low. Parallels could be drawn with unpaid maternity absence which in the UK has had a low take up. Paying parental leave will give it more status in the eyes of employers and in the eyes of parents, in particular in the eyes of fathers. Fawcett recommends that the whole three month period is paid.


  Whilst unpaid parental leave might be useful for those at crisis point, paid parental leave with the right to return to your job is extremely important for women in vulnerable or low-paid employment. Most women's incomes are now crucial to the family income pool, even in households where both parents are in employment.


  Throughout Europe there are different methods of calculating the amount that should be paid to cover parental leave. Options include a flat-rate amount (sometimes means-tested), a percentage of earnings, a proportion of earnings with a Government top up, or a combination of a percentage of earnings followed by a flat rate after a set amount of leave has been taken. Fawcett recommends that paid parental leave should be earnings related. We suggest that for the Directive's proposed period of parental leave of three months (for other options see paragraph 6) the first month should be calculated at 90 per cent of earnings and the remaining period at 80 per cent of earnings. This makes more sense than a flat-rate amount—which we have seen from other "benefits" tend not to keep pace with earnings. Although the Government would bear a substantial amount of the costs involved it would be extremely popular with parents and would increase take up. In practice parental leave could be paid through the wage packet or like other tax-credits—although efforts would have to be made to avoid a purse to the wallet transfer.


  The options around suggest a number of different ways of resourcing paid parental leave. These include parents making contributions to a kind of "savings account", the Government paying, employers paying or combinations of these. Having looked at all the different options Fawcett strongly recommends a combination approach that sees a real partnership between employers, employees and the State. The simplest way of funding (and collecting) this would be for employee NICs to be increased by 0.22 per cent, employer contributions to be increased by 0.8 per cent, and for Government to top this up with about 300.7 million( a not unreasonable proportional increase in the Social Security Budget/Spending). The "social savings" (and costs associated with social exclusion and the parenting deficit) mean that the benefits of paid parental leave would more than cover the "cost" to the Government.


  The directive allows for up to three months. We would welcome the Government's comments on the possibility of extending this further. In particular the Scandinavian models which allow in some instances for up to three years leave over the first eight to ten years of a child's life are worth investigating. 87 per cent of boys (MORI 1997) say they would like to be able to spend more time with their dads. The opportunity to enable fathers and mothers to spend more quality time with their children especially when they are very young would mean that we would see a gradual reversal in the effects of the parenting deficit. We recommend that the ability to take parental leave is made as flexible as possible for both parents.


  For those without children the idea of increased NICs to pay for parental leave they will never take may be problematic. One possible solution to this is to enable these `credits' to be used for a work-related or study sabbatical. This would be in line with the government's commitment to life-long learning and `credits' could be transferred to individual learning accounts after set periods. One of the principle problems of parental leave is the burden it places on small employers. A link between small employers and the New Deal or other work experience schemes may mitigate against this, in addition tax incentives may help. After the introduction of the Employment Relations Bill, the qualifying period for statutory protection in employment will be one year (rather than the current two). Whilst we have argued elsewhere that employment rights should start from day one, in line with the ERB we recommend that there is a qualifying period of one year for paid parental leave.

Elizabeth Roe

Policy Officer

May 1999

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