The European Parliament and Council of the EU are currently discussing a Commission proposal published last year, looking at harmonising a minimum length and level of compensation for different leave categories, with the aim of improving the work-life balance of parents and carers in the EU. The proposal looks at introducing a minimum of two weeks paternity leave; four months non-transferable parental leave for each parent that can be availed until the child is 12 years old; and an annual five-day leave for workers caring for relatives with a serious medical condition. It is being proposed that all leaves should be compensated at an adequate allowance that would be at least what the worker would earn in the case of sick leave. The proposal also includes provisions that cover flexible work arrangements and protection from dismissal before, after and during the leave periods.
The initiative emanates from the European Pillar of Social Rights, a strategy endorsed by the main EU institutions in a joint-proclamation at the Social Summit in Gothenburg held towards the end of last year. The Pillar establishes a strategy with initiatives aiming to create equal opportunities and access to the labour market, fair working conditions, social protection and inclusion to all EU citizens.
The European Commission argues that this proposal will contribute to more equality between men and women with regard to labour market opportunities and treatment at work. Employers however, do not share the view that additional leave entitlements are the solution to address equality issues. On the contrary, the measures can be detrimental to society and the economy by creating serious obstacles for growth and job creation, particularly in micro, small and medium enterprises (MSMEs).
Employers in the EU support the objectives of promoting equality between men and women, increasing female labour market participation, and promoting a good work-life balance. To this effect, the European Union is already one of the best places to live, to work, and to do business.
Notably, in the realm of social policy the EU is already a global leader. The European social model is known for a high level of redistribution and for a high level of social spending. The EU also has more than 70-legislative acts in the social field, thus, it already provides a wide range of rights to employees.
Yes, the EU is facing demographic challenges, particularly due to an ageing population and a declining birth rate. Therefore, a set of actions are indeed required to address labour market requirements of the future; among others by continuing to improve female participation in the labour market, and investing in lifelong learning, active ageing and the promotion of STEM skills through national education systems.
The EU’s approach should be also focusing more on promoting more investment in childcare and elderly care facilities and encouraging more fiscal incentives for working parents. In turn, this will give parents and carers the confidence that their dependents are well cared for, while they focus on their careers and professional development.
Also, it is a fact that traditionally women are the ones taking on caring responsibilities of children. This EU directive risks providing a framework whereby more leave ends being taken up by female employees, but not men. Eventually, it will lead to adverse hiring prospects for women particularly in smaller operations and consequently contribute to the widening of the income pay gap. Gender equality of caring responsibility needs to be addressed on a cultural level, not through the provision of additional leave entitlements.
Employers are extremely concerned about the disproportionate impact that the proposed measures will have on micro, small and medium enterprises. Companies employing a small number of employees will face numerous burdens to process requests for additional leaves and make alternative arrangements for the operations to continue running efficiently. Furthermore, colleagues will be faced with additional duties and face a higher risk of work-related stress while they take-over the responsibilities of the employees on additional leaves as proposed by this directive. Where it is not possible to transfer responsibilities to other colleagues, companies will be required to incur a cost of employing temporary workers and invest in training, which considering the limited assignment, it may not yield a return on investment in terms of productivity and performance.
One should also not underestimate the impact of additional leave entitlements availed by employees working in public services such as healthcare and education; crucial sectors for the economy and society.
The proposed directive suggests that paternity leave, parental leave and carers leave should be paid at least at the level of sick leave. It is still unclear at this stage whether companies will be required to compensate for the additional leave requirements directly to the employee or indirectly through higher social contributions. Alternatively, if the onus is taken by the member states directly, leave compensation will be an additional burden on public budgets.
Finally, employers strongly believe that in a modern labour market, work-life balance measures are most effective if dealt at company level and in consultation with employees and their representatives. A one-size-fits-all solution at EU level neither responds to labour market and economic challenges in individual member states, nor to the aspirations of working parents and carers that require permanent solutions for their responsibilities, not short-term benefits.