The Big Question: Would more flexible parental leave end reward inequality?

2011-06-06

We ask the experts for their answers... have your say online

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Linda Holbeche, co-director of the Holbeche Partnership:

In its Modern Workplaces consultation, the government is championing a radical new system of parental leave in which the existing 18 weeks’ maternity leave and pay will be protected, as will the current two weeks of paternity leave and pay. The remainder of maternity leave “should be reclassified as parental leave” to make it available to either parent equally.

These proposals seem entirely fair and are consistent with current social trends since many women want, or need to, return to work as soon as possible after giving birth. Similarly, many men want to spend time on their parental duties. However, would these proposals lead to a greater gender balance at board level?

That seems unlikely. Despite 20 years of evidence-based equalities campaigning by organisations such as Opportunity Now, the number of women on the boards of FTSE 100 organisations remains low. Similarly, the Higgs Review of the Role and Effectiveness of Non-Executive Directors, and the subsequent Tyson Report on the Recruitment and Development of Non-Executive Directors recommended increasing the representation of women on boards as a means of improving governance, yet most commercial boards remain significantly gender-imbalanced. This may be due more to boards recruiting in their own image and women’s continuing exclusion from largely male networks of power, than to the traditional career patterns of women with children.

But the proposals represent an overdue move in the right direction. It sends a powerful signal parenthood is a serious commitment for both parents, and opens up the possibility both men and women might aspire to have it all in future.

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Karen Thomson, associate director of policy, research and strategic visibility at the Chartered Institute of Payroll Professionals (CIPP):

Although many of the government’s proposals are geared towards ending inequality in the workplace, theory versus practice is another matter. The measures assume fathers will want to take more responsibility in caring for their offspring and, with improved legislation to help them, it assumes fathers will actually take leave and request flexible working.

The principle of changing the UK culture of flexible working is welcome, but the proof of the pudding will be whether it materialises. To find out where there are pay gaps, employees need to know what their colleagues earn. Local authorities and the public sector have pay scales and this is, on the whole, a fair and transparent system. The private sector, however, tends not to operate such schemes and it becomes more difficult to understand whether an employer is discriminating on the grounds of gender or for some other reason.

One could argue that where a woman has taken time out for her children, she enters the workplace on less pay than a male counterpart, but then her experience may be less than that male counterpart. This may seem unfair in respect of pay arrangements if they are doing the same job, but there has to be some flexibility for the employer to reward staff based on achievement and experience.

We are disappointed that the working group the government has set up to look at these proposals does not include the CIPP – and therefore the payroll profession – because any amendments to the four pieces of legislation will require payroll input if they are to ensure employees are paid accurately and on time.

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Simon Moffatt, senior reward consultant at Prudential:

The government’s Modern Workplaces consultation on plans to introduce a new system of flexible parental leave from 2015, enabling both parents to share some of the statutory time out, will provide a more flexible foundation for both parents to share childcare duties while maintaining their careers and earning power.

It also potentially provides a route to end one of the great unaddressed reward inequalities that affects the UK’s population – the pensions gender gap. Prudential’s Class of 2011 survey, published last month, revealed that the average UK woman retiring this year will receive £6,500 a year less than the average man – a huge income gap and one that broadly reflects a lower level of pension savings by women compared with men.

Women have traditionally dropped out of workplace pension schemes during career breaks taken to raise children, and have consequently stopped paying national insurance contributions which help boost the state second pension element of retirement schemes.

This double hit means that many women are now retiring with considerably lower pension savings than men. A more flexible approach to parental leave, combined with women topping up their national insurance contributions where possible, could help to address this inequality and allow women and men to share the leave period, thus making it easier for both parents to maintain their careers, earning capacity and pension contributions.