More than 15 Lakh women may lose job after Maternity Law changes: Survey

A survey conducted by Team Lease Services Ltd showed that a new law to improve maternity benefits for women in India’s workforce and encourage them to further pursue their careers may likely to have the opposite effect.

The survey was conducted among 300 employers across sectors like e-commerce, manufacturing, banking and financial services, aviation, real estate, information technology and IT-enabled services, education, retail and tourism. It showed that while large and professionally managed companies will back the reform measure, which is fully funded by the employer, small and medium sized companies would resist hiring women as they find the costs prohibitive.

That is bad news for a country where the share of women in the workforce has shrunk to around 24 percent in the fiscal year ended 2016 from 36 percent a decade earlier. McKinsey and Co. estimates more than $700 billion could be added to the country’s gross domestic product by 2025 if more women were in jobs.

What is the Law?

Prime Minister Narendra Modi’s government introduced the law that entitles women working in the organized sector to 26 weeks paid maternity leave, up from 12 weeks.

The law, which will make India the most progressive country after Canada and Norway in enabling women to stay on in the workforce.

What’s the problem?

In India the Workforce is shrinking as in socially conservative India, women are often discouraged from pursuing a career. Better-educated women from wealthier families aren’t encouraged to work and it’s usually when a man’s salary falls short that a woman seeks a job. Many drop out to take care of older family members or children. The World Bank estimates that in the eight years since 2004, about 20 million women — the size of the combined populations of New York, London and Paris vanished from India’s workforce.

Post-maternity retention could cost 80 percent to 90 percent of the annual salary for white collar employees, and up to 135 percent of annual salary for blue collar employees, the survey said.

How the law will affect Women?

This law will have a negative impact as small and medium sized companies will resist hiring women employees. An estimated 1.1 million to 1.8 million women will lose their jobs across 10 sectors in the financial year to March 2019 because of the law, the survey showed.

If this estimate is computed across all the sectors, the job loss number would be an estimated 10-12 million across all sectors, according to the survey by the staffing and human resources company.

“These kind of reforms are essentially supported by proactive governments across the world with complementing tax concessions, which are missing in India,” said K. Sudarshan, managing partner for India at executive search firm EMA Partners International. “Small and medium sized companies generally operate with less staff. If two of five women employees opt for maternity leave, that can cripple the firm itself.”