Could Paternity Leave Help Women Earn More?

In Haiti, as in most nations, social distortions and inequalities make it harder for women to participate in the labor market as much as men.

According to a study carried out by the Ministry of Women’s Affairs and Rights (MCFDF), women make up less than one-third of the formal sector. In addition to having less access to employment opportunities than men, women work in more precarious jobs and the income they generate remains lower. Women hold less than ten percent of management positions.

How to tackle this problem is the topic of a new research paper by Mélissa Torchenaud, project analyst in the Department of Public Investment of the Ministry of Planning and External Cooperation.

The research paper is part of Haiti Priorise, a project in which experts in Haiti and abroad have written more than 40 research papers studying the costs and benefits of solutions to Haitian challenges.

Dr. Torchenaud suggests what may seem like an unexpected solution to the challenge of an imbalanced workforce: establishing paternity leave for new fathers.

The idea is that by inviting men to take paid and non-transferable six week break after the delivery of their child, there will be the opportunity for greater gender equity in the labor market, in particular to improve the participation of women and their access to management functions at all levels of decision-making.

Employers are reluctant to hire women partly because women may be absent for long periods due to maternity. This intervention will undermine that argument, while posing a curb on the almost certain interruption of women’s careers after a birth.

Dr. Torchenaud anticipates that 90 percent of fathers’ leave will be taken, and the percentage of women working in the formal sector will increase by 6.8 percent annually; the gender pay gap, currently 32 percent in Haiti, will be reduced; and free time at home is created for men.

The paternity leave itself will cost 2 billion gourdes, while the employment displacement for men imposes a cost of 71.9 billion gourdes.

The expected benefits are increased employment for women, free time for men and increased productivity for companies that diversify their employee profile.

The benefit of more women remaining in the labor force is of the same magnitude as the cost of employment displacement for men: a decline in the employment of men leads to an increase in the employment of women. This benefit is worth 71.9 billion gourdes. The benefits of free-time for men are the same magnitude as the cost of paternity leave: 2.0 billion.

It has been shown overseas that paid paternity leave leads to a reduction in the pay gap. The resulting increase in productivity for businesses from the increase in women’s employment would be worth 23 billion gourdes.

The total benefits for one year are 96.9 billion gourdes. This means that each gourde spent on the paternity leave policy will generate returns to society worth 1.3 gourdes.

While this would lead to benefits for the formal labor market, it would not affect the informal labor market. Domestic workers, the majority of whom are women and children, feel the effects of inequality. In addition to often being paid poorly, they are virtually excluded from labor protection.

Dr. Torchenaud studies the effects of a 43 percent increase in the domestic worker minimum wage set in May, 2016 by President Jocelerme Privert. The wage would therefore be 250 gourdes instead of 175 gourdes.

The objective is to improve incomes so that domestic workers can better meet their needs and have better access to basic services.

This would cost 3.7 billion gourdes a year. The cost largely falls to employers, but there are also extra costs for to the education system. When we pay people more, they access more basic services, and in this case that means schooling for the children of domestic workers.

This extra schooling also delivers one of the benefits of the scheme, namely higher incomes for the children of the domestic servants. Other benefits include a decrease in babies born under-weight because their mothers can afford better food. The biggest benefit though is the increase in wealth to the domestic workers.

But there is a downside. The intervention may lead to job losses.

Standard economic theory tells us that higher wages will lead to lower employment – meaning some domestic servants will lose their jobs entirely after an increase in the minimum wage. However, studies from South Africa actually show that even a substantial rise in the minimum wage of informal workers surprisingly did not reduce the number or hours of employment.

If there were no job losses at all, then every gourde spent on the policy would generate 1.15 gourdes of benefits. But even with a 5.6 percent job loss, the benefits are slightly higher than the costs.

Inequality for women and low wages for domestic workers are important challenges. There are no simple answers, but now we at least know two ways to tackle these problems that do slightly more good for each gourde spent.

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