The Importance of Paid Parental Leave

The skill shortages being experienced in Australia today are a direct result of a severe reduction in the birth rate since the early 1970s, caused by women participating in the labour market at an increasingly greater rate.

Any policy addressing skill shortages and/or population ageing should therefore not be considered in isolation of fertility related policy.

Paid Parental Leave provides an opportunity for the government to set in place a policy to achieve an increase in both the level of labour force participation rates and increase fertility to replacement rate (2.1 births per woman in her lifetime).

The recently released Productivity Commission Draft Inquiry Report identifies the importance of paid parental leave to the economy and society. It believes such a scheme would:

· Generate increased child and maternal health and welfare benefits
· Stimulate lifetime employment rates of women
· Increase retention rates for business, with reduced costs for training and recruitment
· Promote the normalcy of combining working and a caring role for children

Any potential parental leave policy introduced in Australia should encourage reproduction, participation in the labour market and maximisation of the utilisation of available qualifications and skills.

The blog ‘The extent of segregation between men and women in the labour market’ discusses the current labour market scenario. An appropriate paid parental leave policy has the potential to close the gap between the utilisation of men and women in the labour market.