Employees’ parental leave has “no measurable effect” on their company’s profits, output or survival, nor does it have a negative impact on the well-being of those employees’ colleagues, according to a study by the U.S.-based National Bureau of Economic Research.
The paper, which looked at data from small firms in Denmark, compared organizations where female employees were preparing to give birth with similar organizations where employees weren’t close to giving birth.
In Denmark, new parents have a total of 52 weeks of paid leave to share, including four weeks of pregnancy leave before the birth and 14 weeks after for new mothers. Women take an average of 9.5 months’ leave after giving birth, the paper said. Instead of receiving compensation from the government, like in Canada, women in Denmark are sometimes paid by their employers during their leave and employers are reimbursed by the government.
While the paper found Danish companies’ total wage payments increased in response to parental leaves, it was entirely due to paying employees who were on leave — and they were later reimbursed for these payments. It also found the co-workers of women taking leave saw temporary increases in their hours, earnings and likelihood of being employed. However, according to sick day metrics, they didn’t experience any significant changes to their well-being in the workplace.
“Overall, our results suggest that employees going on parental leave impose negligible costs on their firm and co-workers,” the researchers wrote.
Nora Spinks, chief executive officer of the Vanier Institute of the Family, says the paper’s findings help provide clarity around the effects of maternity and parental leave. “It relieves fear and dispels myths that these kinds of programs are onerous or have negative consequences. Now, that is Denmark . . . so it’s not necessarily directly transferable, but it certainly is consistent with some of the Canadian research on similar topics.”
Canadian employers face retention challenges around parental leave, due to low income replacement rates, she says. “What we are hearing from families is the income replacement rate is not high enough and the one-week unpaid wait period is frustrating. Most employers pay that but not everybody does.”
When it comes to covering the work of an employee on parental leave, Spinks says it depends on their role. “Where you’ve got an easy to replace role — so there’s plenty of people with the skills and talent to fill that role and the mechanisms to do hiring — then that can be fairly straightforward. Where it’s challenging is if the role is highly specialized and there’s high demand for those skills. If you’re a heart surgeon it may be different than if you’re a nurse or an orderly.”
A tight labour market can also complicate the process of finding replacement workers, she adds.