Employers voice caution on maternity leave proposal

Some 2,000 out of every 4,000 women who fall pregnant every year do not apply for maternity leave. Although there are women who willingly choose to stop working, others are forced by their employer to give up their job, government argued.

Through the new national employment policy, the government is proposing to finance the full 14 weeks of maternity leave. In return, it is being proposed that the yearly social security contribution payable by the employer for both male and female employees is raised.

The proposal was met with different reactions, varying from unequivocal support to those who voiced caution and adopted a wait-and-see approach. Primarily, stakeholders want to know by how much social security contribution will increase.

Economist Karm Farrugia was among those who welcomed the measure, arguing that maternity leave was a policy that “worked against women’s interests”.

“Taken in isolation, the employers were justified in complaining for shouldering the financial burden of maternity leave, especially when a woman leaves for six months. Maternity leave shouldered by the employer was a policy that worked against the interests of the women,” Farrugia told MaltaToday.

He argued that all things being equal, an employer would go for a man unless the woman had far superior qualities than the man for the specific job.

“This proposed measure is ultimately to the advantage of women and it is the best thing that government could do.”

Social contribution as it stands today is split equally among the government, the employer and the employee. All three pay 10% of the basic wage. Although it is not known by how much the employer’s rate will increase, the Prime Minister said the raise would be “minimal”.

While shadow finance minister Tonio Fenech insists that no increases should take place, Karm Farrugia believes that a 12% rate would be “fairer”. On his part, director general of the Malta Employers Association Joseph Farrugia is wary.

“I believe that a 12% rate would make a fair contribution especially since Malta has one of the lowest rates. Ultimately, the government will be relieving the employer of the maternity leave wage,” the economist said.

He argued that the increase should be taken in light of economic conditions and not over maternity leave.

It also transpires that the government does not enjoy the unanimous consent of the Malta Economic and Social Development (MCESD) on the matter.

MEA’s Joe Farrugia appeared wary when asked for a reaction, commenting that the proposal had yet to be studied in detail.

“I cannot tell you whether we are in favour or against the measure given that we do not have the full details as yet. Moreover, the issue was not agreed upon within the MCESD or the Jobs Plus committee,” he said, adding that “no particular discussion” took place.

Farrugia conceded that in terms of fiscal policy, government still had to determine whether it was going to finance the full maternity leave from taxes or social security contributions. The employers have long been lobbying for government to shoulder the maternity leave wage.

However, Farrugia complained that the principle of equality, where the government, the employer and the employee pay the same contribution, will be distorted.

On his part, Tonio Fenech said the Opposition disagreed with increasing the yearly social security contribution.

“When the Nationalist administration proposed for maternity leave to be increased by four weeks, the government shouldered the increase. If government wants to give maternity leave it should do so, without increasing the burden on the employers.”

The former finance minister said the maternity leave proposal raised several questions by the social partners. Fenech reiterated the government should only fund maternity leave once it becomes sustainable for the country’s coffers.

“It’s evident that the government is not proposing to finance it but it will be the employers who will fork out the money,” he said, adding that increasing the employers’ burdens will negatively affect Malta’s competitiveness.

Like Joe Farrugia, Doris Sammut Bonnici, President of the Malta Association of Women in Business, is awaiting further information on the proposal before commenting any further.

However, like economist Karm Farrugia, Sammut Bonnici said the current system worked against women.

“Women are simply not finding jobs because employers, given the choice of two talented people, will go for the man. As long as maternity leave remains a burden for the employer, it will work against the women,” she said.