Question

Examine the topic of mandatory paid parental leave in the USA. What potential economic and health indicators could be expected if a federal law requiring paid leave were implemented? Provide examples from at least two countries that do provide this benefit, and also address how this leave is financed in other countries (government subsidy? covered by employers? a mix?)

Answer 1

Despite being one of the world’s most economically advanced countries, USA has failed to mandate paid parental leave. American parents especially the women have had to go back to work before their children are even slightly ready to face this world. Arguably, one of the crippling factors when it comes to women empowerment who fail to support themselves while raising their children. If a federal law was to be passed to implement the paid parental leave concept, it would certainly have some economic and health related outcomes:

Economic

Women Workforce would go up drastically, giving way to a diverse culture in the workspace. With a full paid maternal leave in place, more women would enter or continue at the workspace as they would not need to worry about taking care of their infants leaving their jobs and other economic activities.

Employee Productivity would improve, the parents coming back from their leaves would be more creative, productive and happier. A similar exercise in Google had also proved the same point. The cost of having an employee on leave for a couple of months is much lesser than the quantified value of losing his/her expertise and the cost of getting a new recruit hired.

Families would be economically self-sufficient, families would be well afloat financially if they got a paid leave stint to care for their children. This is specifically important when a family needs to adjust to the financial burden of a new born.

Health Indicators

It would reduce Infant mortality significantly. Some studies in the journal of PLoS Medicine has found that every extra month of maternity leave saw a 13% reduction in infant mortality rate. Parents get to take special care of their children during those months of paid leave and ensure a healthy upbringing for the child.

Improvement in Parental Mental health. With proper paid leave in place, the parents especially the mothers have much lesser anxiety than the case where they would need to leave the child at the hands of an assistant or a care-taker.

Happiness Index, with families happy with their act of spending quality time with their families, the index to measure the happiness and satisfaction levels of the people would be much higher leading to a peaceful existence. This peaceful existence would further assist the economy as a whole as people would consume more and boost the GDP numbers.

Developing countries like India and some developed nations like Sweden have already implemented the law on paid parental leave especially the maternal leave.

In countries like India, the entire burden of financing the paid leave is on the private businesses in case of Private sector employees. This would certainly lead to businesses discouraged to hire women.

However, in countries like Sweden, two-thirds of parental benefits are funded through an employers’ fee and another one-third is funded through the taxes collected by the government. Employers in Sweden pay a fee to the government which is 25% of each employees’ salary. Out of this only 2.2% is used for parental benefits, the rest covers pension, unemployment, work injury etc.