We were all babies once. Early-stage humans grow up to be employees, entrepreneurs, taxpayers, citizens, workers, friends, family and part of our community. If we want the human race to continue, pregnancy is not optional or just nice to have, it’s essential.
Even so, pregnancy and new parenthood can be a needlessly stressful and financially insecure time for many working parents in Ireland says Rebecca*, a reader who got in touch with us about maternity leave finances.
Rebecca and Simon*, both professionals living in Dublin, are excitedly expecting their first child after waiting a few years for some financial security. They’ve been setting aside savings to help offset costs. The couple know they’ll have to cut their cloth to suit their measure, but the first year is a big financial worry.
Thankfully, new mums have a right to maternity leave benefit of €299 per week for 26 weeks from the State, with an option for another 16 weeks (unpaid), but Rebecca is not sure if her employer will pay anything on top of that during her time off.
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Rebecca is a well-paid private sector professional who makes upwards of €1,000 a week. If her employer does not provide a top-up payment during her leave then she’s down about €3,000 a month or €36,000 for the year. That’s a big chunk of change when your household has just gone from two to three.
There are other supports. Her partner is eligible for two weeks of paid paternity benefit, also at €299 a week, if he takes leave from work. There’s also a statutory entitlement to a full nine weeks of paid parent’s leave of €299 a week for parents of children under the age of two if you have enough PRSI payments. Employers are not required to top this up.
[ RTÉ's Sarah McInerney on telling her manager she was pregnantOpens in new window ]
If it’s only time the parents need, then they can avail of unpaid parental leave of 26 weeks for those who are under 12, or under 16 if they have a disability.
Rebecca says she was shocked when she ran the numbers despite planning ahead and having the security of a partner who earns well. When your financial circumstances change because you’ve had a baby, your big bills like mortgage or rent, heating, electricity, car-related costs and groceries remain the same, she says.
“Most couples don’t think about this as they’re so excited to have a baby. There’s some financial planning but you don’t expect your wages to drop so much.”
This begs the questions: in a high-cost environment can you, and your employer, afford for you to have a baby? As importantly, can society and the Government afford for you not to?
Reality check
Employers must legally permit time off for maternity leave but they have no obligation to pay anything financially to their employee during this leave. Unfortunately, this has created a hierarchy of parenthood and disadvantages some babies.
Large organisations and multinational employers (those with 250 or more workers) tend to top-up mums’ benefit as, although maternity leave can be a logistical, organisational and financial challenge, it’s easier for them to absorb the cost and organise a replacement. These companies also know that polices that support parents are good for long-term recruitment and retention.
Small enterprises may struggle to provide a financial top-up as they have fewer resources and less defined procedures, and they will have to find someone and pay them to fill in while that person is on leave.
Approximately 70 per cent of all women in receipt of maternity benefit in Ireland received a top-up payment from their employer in 2021, according to the CSO. Of companies that do provide a top-up, most pay it for the full 26-week statutory period.
While nearly all public sector employees receive a 100 per cent salary top-up, private sector availability is lower, with roughly 52 per cent of private companies offering this benefit.
Top-ups are most common in public administration and defence, but only about 19 per cent of employees in the information and communication sector and just over 20 per cent in the accommodation and food service sector get them, says the CSO.
The system benefits parents working in the public sector, multinationals or large organisations. They’re well paid, have some job security and enjoy a range of parental and health benefits.
Other workers on low wages, those with a manual job or working in the gig economy are most likely to be totally reliant on State entitlements, so for financial reasons they’ll probably need to return to work when the baby is just a few months old.
Dads feel the financial, professional and family pressures too. Among fathers, approximately 55 per cent take paternity leave, but only 25 per cent take the additional nine weeks of paid parent’s leave available to them, largely because they can’t take the financial hit.
Finances, not choices
Maternity and paternity leave is an important time for the baby and the parents, but also for wider society. Stability and safety in a child’s early years pay dividends later in terms of their positive contribution to their communities and economy.
No babies, no human race. Yet the Government and employers seem to forget how vital these little creatures are to them in the future.
A quick trawl of the Oireachtas website shows one public representative in particular, Emer Currie, has been very vocal about the need for pay-related parent’s benefits recently. Government policies are not joined-up enough when it comes to new parents whose babies are in their first year of life, she says.
“Parents are making financial decisions, not always free choices. Parents can find themselves in a catch-22 situation where they either want to stay at home but cannot afford to do so, or want to go back to work and cannot source childcare for babies under 12 months of age,” Currie says.
Ireland is generous with time off for having a baby, but not with payments to support that leave. The Republic offers the second longest period of maternity leave in the EU, after Bulgaria.
France and Germany provide for 16 and 14 weeks of maternity leave respectively but pay 100 per cent of salary. Spain offers 17 weeks of maternity and paternity benefit at 100 per cent of salary, as well as two weeks of the equivalent of parent’s benefit for each parent, for a total of 38 weeks, compared to 46 weeks in Ireland.
It’s the finances though that seem to be the rub for parents like Rebecca and Simon. A large majority of OECD countries have earnings-related payments; Ireland is an outlier. Payments are lowest in Ireland and the UK, where fewer than one-third of gross average earnings are replaced by maternity benefit. Countries such as Lithuania, Austria, France and Germany have benefits based on past income.
In Finland they have extended leave coupled with lower rates, so there is a trade-off.
We have above average leave time here, but the lack of financial supports reduces parents’ choices in the crucial first year of the baby’s life, says Currie.
The good news is that the Government is planning to do more. This autumn, it is issuing a public consultation document on pay-related parent’s benefits and inviting the public, employers and other stakeholders to have their say.
Make sure you do.
Margaret E Ward is chief executive of Clear Eye, a leadership consultancy. margaret@cleareye.ie
*Names have been changed to protect the identity of the parents
If you have work-related questions, including questions on maternity leave, The Irish Times Work Q&A column is here to help. You can use the form below to submit your question. Please limit your submissions to 400 words or less and please include a phone number. Your name and contact details will be confidential and only be used for verification purposes. Any details about your employer will also be anonymised.
