Debate Magazine

An Economist Speaks

Posted on the 10 February 2015 by Markwadsworth @Mark_Wadsworth

from the Telegraph
But Ms Reeves dismissed those concerns, telling BBC Radio 4 Today that “good” businesses that “value” employees will support Labour’s plans.

“This is exactly what people used to say about maternity leave, that it was a big burden on businesses. But the reality is, what good businesses know, is that it is really important to keep women in the workplace once they have children and not let them drift off because they can’t manage work and family life. That’s increasingly the case for dads.”
“Good employers like Asda, National Grid and Citibank are already giving more than the statutory paternity leave.”
“What good businesses know is that unless they give that flexibility to mums and dads, they are likely to lose their best employees as they will go to a business that does value them, or they will sadly drop out of the workforce altogether.”
So, why does it need more government legislation? If it's in the interest of businesses, they'll do it. Now, maybe Rachel Reeves knows better than those businesses, but as someone who's only worked at HBOS, one of the failed banks, I think that's unlikely.
And ASDA aren't like a software or manufacturing company that can be based anywhere in the world. Adding 2 weeks paternity leave makes people here more expensive. OK, maybe only slightly more expensive, but "only slightly" can tip the balance in favour of another supplier.
As for maternity leave, I know a company that closed down a software team in the UK for this reason. Hiring staff that come in and within a year go off on maternity leave for a year introduces huge costs, most notably, backfilling with expensive temporary staff. It increased their staff costs by 10% over a 2 year period, which was enough to shut down the team and expand the team in the USA.

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