David Burton is an employment law barrister and a regular opinion contributor.
OPINION: Power companies are more often in the media as a result of their profits and the high cost of electricity.
So a shout-out to Contact Energy for recently introducing a parental leave policy that helps set a benchmark that big business can look to and show support for parents and families in their workforces.
Key features include having the primary caregiver having a salary top-up to full salary for the 26 weeks of government paid parental leave period, which is currently $661.12 a week.
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The primary caregiver will also receive:
- KiwiSaver Employer contributions of 3% for the duration of parental leave.
- When returning to work, the availability of six months of flexible work, including the ability to choose to work 80% of their normal weekly hours and still receive 100% of their normal weekly pay.
- A childcare koha of $5000 as a contribution towards childcare.
Contact says this is all part of its vision to build a better Aotearoa New Zealand and attract and retain the best talent from New Zealand and abroad.
The chief executive of New Zealand Institute of Economic Research (NZIER) said Contact is a role-model organisation and it supports all moves to improve gender equity in the workplace.
He referred to NZIER’s latest quarterly survey of business opinion that indicates a minimum statutory baseline approach for many employers in New Zealand.
Only 8.9% of businesses that employ over 20 people top up the salary of their staff on parental leave for 26 weeks, and only 6.4% of those same-sized businesses contribute to KiwiSaver accounts while on parental leave.
How does New Zealand compare?
A recent report into maternity leave in OECD countries show that, on average, mothers are entitled to just under 19 weeks of paid maternity leave around childbirth.
Almost all OECD countries provide mothers with at least 14 weeks leave around childbirth, the main exception being the US, which is the only OECD country to offer no statutory entitlement to paid leave on a national basis.
The majority of OECD countries provide payments that replace over 50% of previous earnings, with 13 OECD countries offering a mother on average earnings full compensation across maternity leave.
Women are far more likely to be the primary caregivers, particularly during a period of parental leave. Only 1% of paid parental leave is taken by men.
A recent report from Te Ara Ahunga Ora Retirement Commission revealed that the gender wage gap continues into retirement. It showed that women have 20% less in retirement savings than men.
The organisation’s director of policy, Dr Suzy Morrissey, said the disparity was likely a reflection of the impact of gender and ethnic pay gaps, time out of paid work, and more women than men working part time.
Most working people in New Zealand contribute to a KiwiSaver scheme that is tied to their employment. Even six months out of the workplace caring for a child can significantly impact retirement savings.
The effect is exacerbated when the caregiver wants to or needs to return to work part time, sometimes for years. Multiply that by having more than one child and the difference can significantly impact a worker’s retirement savings.
New Zealand is also a nation of small businesses. The Ministry of Business Innovation and Employment defines small businesses as those with fewer than 20 employees.
There are approximately 546,000 small businesses in New Zealand, representing 97% of all firms. They account for 30% of employment, around 680,000 workers.
As at 2020, the average wage of a worker in a small business was just over $55,500. New Zealand also has a higher percentage of small businesses than many other countries.
Contact with its new parental leave policy is leading what New Zealand can do to support parents through those important few months of caring for a new child. Its policy means the primary caregiver, whether male or female, is not advantaged for the first six months.
The caregiver receives their usual salary. Importantly, the caregiver also receives the employer contribution to KiwiSaver (and with the caregiver receiving their usual salary, the employee is also likely to continue with their KiwiSaver contributions).
Will the “big end” of town follow suit? Some will, but more probably, many will not.
At the other end of town, while some small businesses may be more flexible when it comes to parental leave, the statistics show that many small businesses simply cannot afford to provide the parental benefits Contact will provide its workers.
Giving our children the best start in life is important. It would be a good aspiration to see that their caregivers are not disadvantaged, both when caring for the newborn and when the caregiver leaves the workforce and has to rely on their savings and whatever pension the government may provide in the future.