Paid parental leave a boost for both business and employees, study finds

Is paid parental leave a worthwhile policy for employers? If they want to attract and retain the best female talent it certainly is.

And according to new research from the University of Melbourne, mothers who take paid parental leave are not seeing their long-term employment and salary prospects suffer as a result.

This is even though those mothers who are eligible for such leave from their employers were almost twice as likely to wait until after their baby was six months old before returning to work, compared to those mothers who were not covered.

The results are surprising, with researcher Dr Barbara Hanel telling Women’s Agenda she had completely different expectations – particularly when it came to the impact of prolonged leave on salary. She said that after the child’s first birthday, there was “virtually zero impact” on the mother’s long-term employment and wages once she returned to work — if she received the paid leave.

Those who are covered by paid leave are usually in higher paying positions and work longer hours, according to the research based on data regarding infants born in 2003. The most common time for mothers receiving employee-funded parental leave to return to work was around when their baby was 11 months old.

The data suggests that with the right structures and support in place, women can take extended leave without suffering a direct hit on their career prospects and earnings potential. It’s positive news for those seeking more options, and for the long-term consequences of the Federal Government’s parental leave scheme, introduced last year. “Short, paid maternity leave costs little and has virtually zero long-term costs in terms of mothers’ labour market position,” said Hanel.

As for organisations, the business case for offering paid parental leave is still clear: As EOWA (Equal Opportunity for Women in the Workplace Agency) outlines, such leave sends a powerful signal to employees that aids job satisfaction, productivity and employee loyalty. Employers are increasingly seeing the retention benefits of providing leave, which ultimately cuts down on recruitment and training costs.

Hanel’s study was based on a sample of 1,860 mothers who had their babies between March 2003 and February 2004.

Read the full report.

This article first appeared on Women’s Agenda.