Parental leave is good for business

GOOD businesses understand cost management, but also see the real value in good staff relations, which build up and play out over years.

The returns on investing in staff are not necessarily immediate, but they are substantial.

Whereas many employers take a short-term view of parental leave costs, one of Australia’s biggest companies is looking to the long-term savings and returns. Insurance Australia Group will go further than the Gillard government’s legislated requirement of 18 weeks’ leave at the minimum wage and pay the equivalent of 20 weeks on full pay. IAG deserves praise, if only for having the sense to act out of enlightened self-interest.

IAG, which underwrites about $8 billion of insurance premiums a year through brands such as RACV, NRMA, CGU and SGIO, is frank about the need to retain skilled female staff in the prime of their careers. Women make up about half of its 9000-strong Australian workforce. Employers face increasingly fierce competition for skilled workers. IAG believes having one of the most generous private-sector maternity leave programs creates a competitive advantage in attracting and retaining such workers.

A decade ago, when The Age called for Australia to follow New Zealand’s recent creation of a parental leave scheme, the Australian Catholic University stood out as the shining exception to the national rule. Two-thirds of female employees had no access to paid maternity leave. The university may have felt a particular duty to be a family-friendly employer, but IAG rightly sees this as good business practice, too. ”We need to be above the minimum because we want to make sure we attract and retain the best-quality talent we can,” says chief executive Mike Wilkins. ”Yes, it’s generous, but we’re a business and it is about making sure we get quality people coming back to us.”

Double pay for the first six weeks back at work will help overcome significant costs such as childcare encountered by women returning to work, according to Mr Wilkins. The scheme is generous, but not unjustifiably so. Indeed, as IAG saves on recruiting and training costs, the scheme is expected to be ”cost neutral”.

Other employers – especially small businesses – may have less capacity to manage the costs and complexities of parental leave; that is why a national scheme needs a publicly funded component. IAG, though, has set an enlightened example and deserves to reap the business benefits of looking just a little further ahead than its private-sector peers. If more businesses took a long-term view of investing in people, all Australians would be better off.

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