Wed Aug 16

Labour's promise of paid parental leave for partners is 'the right thing to do' – but NZ could still do better

Written by Kate C. Prickett, Director of the Roy McKenzie Centre for the Study of Families and Children, Te Herenga Waka — Victoria University of Wellington

By introducing four weeks of paid parental leave for partners ^[1] if re-elected, the Labour Party would move New Zealand out of an undesirable and tiny club of OECD nations ^[2]. Only the United States and Israel would then not offer something similar after the birth (or adoption) of a baby.

But that’s not to say New Zealand might become a world leader in paid parental leave. In fact, the promised four weeks would move New Zealand into the middle of the OECD rankings ^[3] on length of leave available.

Furthermore, the proposed reimbursement rate would pay the leave at below the current minimum wage. This puts New Zealand back towards the bottom third of the OECD when it comes to the average number of weeks a parental partner’s actual income is replaced under such a scheme.

Nonetheless, the prime minister was correct to note the policy ^[4] was the “right thing to do”, and that it will ease the financial burden on families that would otherwise take unpaid leave.

Partner’s leave will also provide crucial support during those early days with a newborn, when extra hands and sleep are in short supply – especially for those families for whom taking unpaid leave would be prohibitively expensive. Whether it is adequate is another question, however.

Duration and remuneration matter

The research evidence suggests a myriad social and economic benefits for families. Reserved leave quotas for fathers have been shown to increase the likelihood ^[5] of men taking any parental leave ^[6] after the birth of a child. (Most research in this area focuses just on new fathers, rather than a wider sample of non-birth parents.)

Importantly, paid paternity leave is also associated with better outcomes ^[7] for the child, such as their cognitive development, both in the short term and later in life.

Such policies have also been shown to improve mothers’ incomes ^[8] and career trajectories over time, because they can return to work sooner or take on hours they might not have been able to. Overall, families are financially better off in the long term.

However, many of these studies – while extremely rigorous and using statistical methods that can make the case for a causal impact – are using data from countries with much more generous partner and parental leave systems than New Zealand’s, even if Labour gets to introduce its new policy.

Positive effects of partner and paternal leave have been found in countries where the leave duration is longer. Wage reimbursement is also much closer to the parents’ actual work income – up to a certain amount, but typically capped at a rate that is higher than the median wage.

In Norway, for example, new parents are entitled ^[10] to nearly one year of paid parental leave, at full wage compensation (capped, but still at a very high amount). Those 49 weeks’ leave can be shared however parents like.

A similar scheme exists in Denmark and Sweden. To encourage non-birth partners to take up parental leave, some countries ^[11] operate a “bonus” leave scheme ^[12]: if partners take leave, mothers or the birth parent qualify to take even more.

Baby steps

There may not be the political or public appetite in New Zealand to move closer to the gold standard of the Scandinavian models. But less generous entitlements risk being still too expensive for families to take up. And this threatens the universality of the policy – available to everyone, regardless of income.

The proposed reimbursement rate would mean many New Zealand partners who take up the leave would receive an income below the minimum wage. While this is technically better than unpaid leave, it amounts to an effective pay cut many families will not be able to afford – especially during a cost of living crisis.

There may be unintended consequences, too. Families that could always afford to take unpaid parental leave will be disproportionately more likely to take advantage of the new allowance compared to lower- and middle-income families. And a number of families will be omitted in the first place, such as children with sole parents.

None of this is to suggest paid partner leave is not a necessary and important step towards better supporting families during a crucial period in their lives, one that has been shown to be critically important for child development and shaping longer term wellbeing.

If implemented, it would help ensure New Zealand doesn’t continue to fall behind other nations in its commitment to strong families. But the scope and generosity of the policy on offer falls well short of the evidence-backed benefits that appropriately funded partner leave can have for children and their families.