'Political punching-bag' paid parental leave a crucial retention tool

As the paid parental leave policy debate heats up in the final stage of the Federal election campaign, Hewitt Associates has found 71% of Australian corporate organisations are already offering some form of paid parental leave.

According to the Hewitt Paid Parental Leave Pulse Survey, conducted in July-August 2010, the majority of corporations recognise the long-term value of offering paid parental leave to primary carers; to support and retain loyal employees, as well as attracting them back to work after leave. However, some are not yet sure how to address this issue.

"As the major political parties battle-it-out on paid parental leave policy, a third of companies are waiting for the election outcome before they commit to implementing company policy," said Tim Powell, managing director for Hewitt Associates Australia and New Zealand.

"Our research has found that on the whole, corporate Australia leads the way in recognising the role paid parental leave plays in maintaining an experienced and loyal workforce. However, with different timeframes being thrown around by the Coalition, Labor and the Greens, some organisations are unsure of what is best practice and how to implement it," Howell added.

The survey found that 36% of companies with paid parental leave are fairly generous with their commitment, offering the primary carer 12 or more weeks of paid leave at full pay.

"The argument around paid parental leave is often that the cost is too high for business to bear, but the reality is it is an investment that saves organisations money in the long-term.

"The cost to replace an experienced staff member can be up to 75% of their annual salary, when you take into account the cost of recruiting a new employee and the time it takes for them to become a productive contributor to the business*," Powell said.

Primary carers are not the only ones to receive benefits from employers. According to Hewitt's survey, more than half of Australian corporates also offer paid parental leave to secondary carers - with one in three providing at least one week's pay.

"This survey has found that irrespective of federal policies and politics, the majority of Australian corporates are already offering paid parental leave; seeing it as a competitive advantage to attract and retain talent in an increasingly tight labour market.

Depending on the outcome of the coming election, Powell expects these companies to review paid parental leave policies and payments, to maintain this as a differentiator beyond what will be required under Federal legislation.

"As policy evolves and Australia's ageing population shrinks the available talent pool, paid parental leave offered by corporates may move beyond a competitive differentiator, to become an integral part of remuneration packages in the future," he said.

Top-line findings

• 71% of corporate organisations offer paid parental leave to the primary carer; 36% are given 12 or more weeks
• 59% of corporates offer a secondary carer paid parental leave; 37% receive at least a week of paid parental leave
• 57% of corporates are undecided what changes they will make to paid parental leave.
• 89% of corporates that offer paid parental leave make no attempt to recover paid funds if the carer does not return to work within the agreed timeframe

* (2008) HRPulse Research Report, Australian Human Resources Institute (AHRI)

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