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Benefiting from extended parental leave
The Unemployment Insurance Act (EIA)1 1 of 1940 introduced unemployment insurance to Canada, but it was another 30 years before the Act provided provisions for maternity leave. Starting in 1971, mothers with 20 or more insurable weeks could claim up to 15 weeks of benefits. Almost two decades later, in 1990, 10 weeks of parental leave benefits were added. These could be used by either parent or split between them (HRDC 1996). Another significant change in December 2000 increased parental leave benefits from 10 to 35 weeks, effectively increasing the total maternity and parental paid leave time from six months to one year. As well, the threshold for eligibility was lowered from 700 to 600 hours of insurable employment. However, the rate of benefit remained unchanged at 55% of prior weekly insurable earnings up to a set maximum (see Parental benefit revision).
One aim of the 2000 amendment was to enable working parents to care for their infant for longer and still allow them secure re-entry into employment. After the extension of parental benefits, all provinces and territories revised their labour codes to give full job protection of 52 weeks or more to employees taking paid or unpaid maternity or parental leave. 2 Many other industrialized countries have moved to provide employment-protected parental leave as well. In 1996, the European Union (EU) passed a directive on parental leave mandating the right of all workers to at least three months leave (not necessarily paid) for childcare purposes (as distinct from maternity). As of 1998, 13 of the EU countries had statutory parental leave provisions, 2 did not (United Kingdom and Ireland), and one (Luxembourg) had limited provisions (Hall 1998).
The expansion of parental benefits has the potential to alter the labour market behaviour of both mothers and fathers. Do women now remain at home longer with their infants, and are there factors, such as income, that influence the length of leave time taken? Do women return to the same employer after longer periods of leave? This paper examines the labour market activity of mothers before and after the last paid parental leave amendment. Some of the events, such as returning to work, are based on both actual and intended behaviour (see Data source and definitions).
In both 2000 and 2001, over 300,000 mothers had infants at home (Table 1). In both years, roughly three-quarters of these mothers had been employed for at least one of the 52 weeks prior to the birth of the child—74% in 2000 and 77% in 2001.
Among mothers who worked prior to the birth of their child, 84% in 2000 and 82% in 2001 returned or planned to return to work within two years. 3 The extension of paid leave does not appear to have affected mothers' return-to-work rate. An equal proportion of these women reported their reference job as paid (93%) (see Data source and definitions).
More mothers with paid jobs received maternity or parental leave benefits in 2001 (84%) than in 2000 (79%). This may be a result of the heightened awareness of the highly publicized revised parental benefit program and the reduction in the entrance requirement from 700 to 600 insurable hours. In any case, the combination of increased access to parental benefits and increased labour force participation of expectant mothers elevated the overall proportion of all new mothers receiving maternity or parental benefits from 54% in 2000 to 61% in 2001. Still, 39% of mothers with newborns in 2001 did not receive birth-related benefits because they were not in the labour force (23%), were paid workers who were ineligible or did not apply for benefits (12%), or were self-employed (5%).
A slightly smaller proportion of women who received EI reported receiving a financial top-up from either their employer or another source in 2001 than in 2000 (20% versus 23%). Women were much more likely to receive a top-up if they worked for a large firm. In 2001, 31% of those employed in firms of 500 employees or more received a top-up, compared with 18% of those in smaller firms. Also, the vast majority in both years returned to the same workplace, with 2001 showing a slightly higher rate—89% versus 84%.
Only about 3% of husbands claimed or planned to claim paid parental benefits in 2000, whereas by 2001 the figure more than tripled to 10%. This is not only a statistically significant increase, but also a socially significant one. Although the length of time involved is not known, approximately 1 in 10 fathers take a formal leave from their job to be at home caring for a newborn. Administrative EI data also shows a fivefold increase in the number of men receiving parental benefits since the amendment (Pérusse 2003). This parental leave benefit claim rate for fathers moves Canada ahead of many other countries, but still leaves it considerably behind those that offer non-transferable leave to fathers—Norway, for example, where almost 80% of fathers take parental leave (see International take-up rates among fathers).
One year off work more common now
For mothers who returned or planned to return to work within two years of childbirth, the most common return time changed from 5 to 6 months in 2000 to between 9 and 12 months in 2001 (Chart A). Clearly a result of the longer paid-benefit period, the proportion of women returning to work after about a year off (9 to 12 months) jumped from 8% to 47% between the two years.
Roughly 1 in 10 women in both years took either no time, or only one or two months, off work after childbirth. The vast majority of these early returnees were self-employed or employees without maternity or parental leave benefits. At the other end of the spectrum, for both years, less than 2 in 10 women did not plan to return to work, or did plan to return and either did not know when or gave a date beyond two years.
Time off jumps from 6 months to 10 for benefit recipients only
Among self-employed women who returned to work within two years, the median time off work was only one month in both 2000 and 2001 (Chart B). 4 Previous research supports this finding, and suggests that entrepreneurs on leave can face a double financial loss, not only because of their own lost earnings but because of the possible expense of hiring a replacement worker (Marshall 1999). And, since the self-employed do not pay into the Employment Insurance program, they are not entitled to maternity or parental leave benefits. The median length of time off work also changed very little for employees not receiving maternity or parental benefits—five months in 2000, and four months in 2001. The self-employed and employees without benefits accounted for a minority of the total who were previously employed and had returned (23% in 2000 and 19% in 2001).
Most women who returned or planned to return to work were employees in receipt of maternity or parental leave benefits: 77% in 2000 and 81% in 2001. And it is this group that appreciably extended their stay at home following the program amendment. The median time at home for women with benefits increased from 6 months in 2000 to 10 months in 2001. Although there is some variation around the median, most recipients were concentrated in a narrow band around this figure. Two-thirds (67%) took or planned to take 9 to 12 months, one-quarter took 8 or less, and the remainder took 13 to 24.
Key factors in length of paid time off
Father's take-up rate of benefits
Although most employees with benefits took advantage of the revised parental leave program and were, or planned to be, off work for almost a year, one-quarter of the women took less than 9 months off (median of 5 months) (Table 2). The two groups share many similarities; they had roughly the same median age (30), the same marriage rate (95%), and the same education (7 out of 10 had a post-secondary diploma or university degree). However, fathers' participation in the program differed significantly. Almost one-quarter of the husbands of women who took less time off claimed or planned to claim benefits, while only a handful of husbands of the long leavetakers did so. Logically, if fathers claim some of the 35 paid parental leave weeks, mothers would have less than a year of paid leave for themselves, and thus a shorter stay at home. Further analysis 5 indicated that women with partners who claimed or planned to claim parental benefits were 4.6 times more likely to return to work within eight months than those with partners who did not claim benefits.
Significantly more mothers who returned within eight months reported annual earnings below $20,000 in their previous or current job (49%), compared with those who returned after almost a year (29%). 6 In other words, lower individual earnings were associated with a quicker return to work (Chart C). For example, mothers with maternity or parental leave benefits who returned to work within four months had median annual earnings of just under $16,000. This suggests that women with lower earnings (and possibly lower savings) may not be financially able to stay at home for an entire year on 55% of their earnings.
Since personal income influences total household income, early returnees were also more likely to be part of a household whose total income was under $40,000—46%, compared with 38% for those who returned between 9 and 12 months (Table 2). However, when household income is compared with all other variables at the same time, by way of regression analysis, the mother's earnings are clearly the overriding factor.
Receiving an employer top-up or other compensation in addition to paid maternity and parental benefits does not appear to affect the timing of returning to work. Just over a quarter of all employees who returned or planned to return to work within two years enjoyed this benefit. 7 Although the top-up was substantial for many—half received a supplement large enough to equal 90% or more of their previous earnings—the median duration was only 15 weeks. The median weekly EI benefit rate was somewhat lower for those who returned sooner than for those who returned later ($300 versus $323), but the difference was not statistically significant.
The majority of mothers who took or planned to take a year off had worked full time in their previous or current job (87%), as had those who took less time off (82%). And, almost equal proportions (one-third) reported the job as unionized. However, one job-related factor that did determine a relatively early return to work, despite receipt of maternity or parental leave benefits, was whether the mother's job was permanent. Almost all (98%) of mothers on leave for a year had a permanent job, compared with 87% of those who returned in eight months or less. The job-permanency rate for benefit recipients who returned in four months or less was only 75%. Roughly 90% of these non-permanent jobs were temporary, term, contract or casual, and so would in theory be less likely to offer job protection. Those with non-permanent work were almost 5 times more likely to return to work in less than nine months compared with those with a permanent job.
Some of the key factors influencing the time away from work for women with maternity and parental benefits may be interrelated. For example, non-permanent jobs generally offer lower wages than permanent ones, so an early return to work might reflect the possibility of job loss, economic necessity, or both. Further analyses in subsequent years, when the entire sample will include births after the 2001 parental leave extension amendment, and upcoming data from the Survey of Labour and Income Dynamics may help shed further light on these questions.
Bill C-32 added 25 weeks of paid parental leave to the pre-existing 10. Including the 15 weeks of maternity benefits, parents can now receive up to a year of benefits while caring for their newborn children. Those who received these benefits experienced a significant increase in the time taken off work after the birth or adoption. Over 80% of these women returned or planned to return to work within two years, and the median time off increased from 6 to 10 months between 2000 and 2001. Despite the extended time off taken by most women who received benefits, one-quarter of them returned to work within eight months. Significant factors linked with a shorter leave from work included a father's participation in the parental benefit program, a mother's job being non-permanent, and low employment earnings. Even with the increased time away from work, women were equally likely to return to the same employer in both years.
However, the program amendment had no effect on those without access to parental leave—roughly 46% of all mothers with newborns in 2000 and 39% of those in 2001. The increased claim rate in 2001 was likely due to the increased employment rate of women before childbirth, as well as the increase in the proportion of employees qualifying for birth-related benefits. The mothers in 2001 without maternity or parental benefits consisted of those who were self-employed (5%), paid workers who did not qualify or apply for benefits (12%), and those who had not previously been employed (23%).
Since the extension of parental leave benefits, fathers' participation rate in the program has increased from 3% to 10%. So, not only are most newborns receiving full-time care by their mothers for longer, but many more are experiencing a father at home for some of the time as well.
Katherine Marshall is with the Labour and Household Surveys Analysis Division. She can be reached at (613) 951-6890 or email@example.com.