Sunday, August 24, 2008

Finding the Equilibrium

Generally, people look out for themselves before anyone else. The exceptions are probably their own child, their parents and perhaps their own 'flesh-and-bloods' siblings. So when a rule comes into play that will advantage some and disadvantage others, then that rule will not likely work out the way it should. One of these is the additional month of leave for mothers that the PM announced in the National Day Rally speech delivered last Sunday. I don't know, but this time, the PM has probably talked 'too much' to the ah-soh and not balanced it with consulting employers, especially those that run a 'tight ship', which will likely become even more lean and mean in the months ahead, given the less than rosy economic outlook.

The economy is sputtering worldwide - in the US, in Japan and possibly in Europe. With China dependent on the US for its exports (it is, after all, its largest customer that can absorb its humongous volumes of exports), it will mean lower production in the months ahead. The sub-prime problem continues to bring down Banks and Finance houses that two years ago was inconceivable, to the benefit of Sovereign Wealth Funds (SWF) managed by some Middle Eastern countries and that tiny red dot of an island called Singapore.

In this environment, can employers be expected to engage in such largesse of extending 4 months of maternity leave to its employees? Even if the cost of that fourth month is borne by the government so that the employer can bring in some standby staff at no additional cost to itself, it will still be on the losing end. Not everyone is born equal, and not everyone knows the company's business like its employees. The stand-in staff will have to learn the business and the operations of the person she is temporarily replacing first before she can become effective (and equivalent to the person whom she is replacing). By the time that proficiency kicks in, it is time to cede back the position to the person who has been away for those 4 months. There are intangibles that money just can't buy in the short term and money is therefore a necessary but not sufficient solution.

I would expect that with this extended maternity leave kicking in, it will get even more difficult for the women employees in any organisation, particularly the Small and Medium-sized Enterprises. The young and energetic, who are the target lot that the government is encouraging to bear more children, would still not want to bear children. After at least 12 years of going through the Singapore school system (and more if they are graduates), who would want to give up recouping the time, money and effort expended? Having children young goes against all rational thinking. The priority must first be to make enough money, then think about marrying and then having babies. That's the incontrovertible truth about life in Singapore, although it is not uncommon today to have the baby first and then marriage. The young probably do not earn enough yet to make the tax burden onerous at all, so its a non issues as far as taxes go. The increasingly consumption-based tax regime has also made the tax burden more bearable, not to mention the generous tax breaks that everyone seem to enjoy nowadays.

So the women who will really will gain the most are the older set, probably in the late twenties and early thirties. But therein lies the irony. At that age, many would already have established themselves in the company and thus becoming less readily replaceable. With their skills and experience, they are not easily replaced - at least not in the short time of four months. And that's where employers will bear the most anguish. So what is the logical course of action, as far as employers go?

1. Never employ women who are more interested in the family than the workplace.
2. Never train nor promote women to a level where they are hard to replace.
3. And, obviously, never employ a pregnant women. The risks have just gone up a notch. (I imagine that there will be an additional question on recruitment forms asking job seekers (apply to females only, obviously) to declare that they are not pregnant, besides the obligatory 'I am not a bankrupt'....etc.)

The only way these various financial incentives can work is when a women, on balance, can earn more money giving birth to a child compared to what they can earn in a full time job. This is not likely to happen, or if it does, then nobody will be working (and I am not referring to the surrogacy industry).

So what can be done. If women really want a longer maternity leave, they should be given a longer one. 4 months is disruptive. Why not go on a one year maternity? That way, the stand-in staff can put to good use what she has taken perhaps a month or more to master for a longer period. The business suffers less disruption, the mother can really take care of the child without prematurely exiting the industry and the stand-in staff can be more useful. Who is going to pay for the absence? Let's make a 4-4-4 deal - the employer bears the 4 month bill at reduced pay (40% of regular salary), the employee takes 4 month no-pay leave and the government ante's up the balance 4 months. (What's that? tax payers will be screaming bloody murder?).

Frankly, if you want to do something that will make a difference, it is no point taking 'baby steps' by just upping by a month more. You need to be bold, like what some other countries are doing - giving one year maternity leave. But of course this can be a threat to the mother, who would rightly worry whether she has a job to return to at the end of one year. But in Singapore, this problem can probably be legislated away.

The other suggestion is to establish a national registry for 'transient' women workers who are willing to work part-time on stand-in basis. This registry will list their skills and experience, and their availability for employment. Employers can then tap on this registry to find the right stand-in person who can take over the job of a 'maternatied' woman. This will go a long way towards alleviating the problem of getting the right stand-in person who can be productive from day one.

To generate more babies, it is important not only to help the women, but also the employers. A one sided solution, even with the largesse of the government, will not go very far. This is what Economists call equilibrium. Without it, the 'market' will make its own adjustments, which may bring more grief than help to the womenfolk.

Image source: Author: Kevin Rosseel

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