The surprising benefits of paid paternity leave

benefits of paid paternity leave
Rachael Brown, HRM Online


written on February 11, 2016

The benefits of paid paternity leave extend beyond giving kids extra time with dad – it also affects gender diversity and company profits.

Mention paid paternity leave in any workplace and most employees would agree that it’s nice to have, but rarely realised. “What about the mothers?” might be the next words out of workers’ mouths, considering not all workplaces, home and away, offer new mothers paid time off either.

However, a new study shows that when men take their leave, everyone benefits. A joint study conducted by consulting firm EY and the Peterson Institute for International Economics, a Washington-based not-for-profit, surveyed almost 22,000 companies in 91 countries to determine whether gender diversity is profitable. The answer appears to be a resounding “yes.”

Paternity leave is a strong indicator that a country supports and provides for working parents, says Marcus Noland, executive vice-president and director of studies at the Peterson Institute, and co-author of the report. “In countries that are more family-friendly, women experience less disruptions in their careers and are more likely to make it to the top,” Noland says.

Places with high numbers of women in top leadership positions, including Norway, Latvia, Finland, Bulgaria and Slovenia, offered on average 11 times more paternity leave days than countries at the bottom. For example, Slovenia’s share of female leaders is 22 per cent of boards and 33 per cent of executives, paired with 15 weeks of paid maternity leave at full salary and 90 days of paid paternity leave.

Compare this to Australia: Of the 1330 firms surveyed, females represented only 8 per cent of board members, 2 per cent of board chairs, 14 per cent of executives and 4 per cent of CEOs. How do we do on paid parental leave? Employees are guaranteed only 18 weeks maternity leave at minimum wage and 14 days paternity leave. Given this, it’s no surprise that we sit firmly in the bottom 10 countries for gender balance.

One important note is that this is correlation, not causation. These numbers are part of a broader commentary on the benefits of paid paternity leave and the ways businesses profit from parity. Companies with policies that encourage and support greater gender equity, particularly at senior levels, rake in as much as 15 per cent more in net profits than companies that don’t, according to the study.

“Women in positions of leadership are associated with superior corporate performance,” Noland says. “The more women in the C-suite, the more profitable the firm is.” He adds that the most important finding of the study was the importance of having a pipeline of female leaders to pull others through to the top. But where’s the roadblock?

One major factor is that women, regardless of position or employment status, are still expected to handle the majority of child-caring duties, and companies and countries that offer significantly more paid maternity leave than paternity leave only reinforce this notion.

Views are changing, though, and more working men who have children or plan on having children are rating paternity leave as a must. In one 2014 study by Boston College and EY, 89 per cent of male respondents wanted to work for a company that offers paid paternity leave. What’s more, one study proved that in Sweden, where fathers must take at least two months off before the child is eight years old to receive government assistance, mothers’ incomes increased almost 7 per cent for every month of paternity leave their partners took.

For the time being, paid paternity leave seems to be the exception and not the rule. However, there is no denying that this fringe benefit needs to move from ‘nice to have’ to a basic need.

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