Equalising the playing field

Tax benefits for maternity benefit payouts could realistically incentivise companies to hire more women

Two developments this month have brought into stark focus the practical issues embedded in the vexed issue of increasing gender diversity in the workplace.

Earlier this month, a state labour department team visited Apple iPhone assembler Foxconn’s Sriperumbudur, Tamil Nadu plant after the Union government reportedly drew attention to discriminatory hiring practices there. The provocation was a Reuters investigation that alleged that, over 2023 and 2024, Foxconn declined to hire married women for its main iPhone plant. Expectedly, the company denied such practices; its HR executives told labour department officials that 8 per cent of the company’s employees are married women, though it did not give a break-up specifically for the iPhone facility (the company also makes Pixel smartphones for Google). It added that 25 per cent of women hired in the latest intake were married women.

Earlier this week, the Supreme Court declined to issue a directive making it mandatory for governments to offer its women employees menstrual leave. Though, irritatingly, the Bench deciding an issue concerning women’s health was headed by a man, the Chief Justice of India D Y Chandrachud, the court validly pointed to the counter-productive consequences of this policy, including dissuading companies from hiring women.

Both issues point to the practical problems associated with hiring women that corporate managements regularly face but are rarely openly discussed in the discourse on women in the workplace. Women’s rights advocates understandably promote the case for hiring more women in the workplace from the prism of gender rights, diversity and equality. But few address the issue from the point of view of the hiring entity, the company or institution. Doing so is critical because the problem unquestionably has a bearing on promoting gender diversity in the workplace.

As any CEO or HR manager will attest (even if they are women), the cost of hiring women, especially those of marriageable and reproductive age, can be steep. The smaller the company, the thinner the margins on which it works and therefore the lower its ability to bear the cost or consequences of maternity or monthly menstrual leave.

Paid maternity leave was enhanced in 2017 from 12 weeks to 26 weeks for a woman for the first two children for any establishment employing 50 or more employees. This is unexceptionable from the point of view of the woman employee. But flip the view to the management: The cost of training or hiring a replacement for the duration has doubled, substantially reducing the propensity for hiring a woman. Add in the compulsory requirement to provide crèche services (also for units with 50-plus employees) and the costs (and headaches) rise further. 

Again, almost every woman employee would love a bit of time off by way of menstrual leave. But from a company’s point of view, a missing employee in, say, the middle of a project or a heavy production schedule can be inconvenient. These concerns are likely to — and mostly do — dissuade companies from hiring women. It’s a two-way loss; companies unwittingly deprive themselves of the talent of a goodly chunk of the workforce, and women are deprived of job opportunities.

As a counterfactual argument, people often point to Sweden and the Nordic countries in general where three-fourths of the women are in the workforce, the result of access to affordable childcare and generous, paid parental leave (for both mother and father). But that benign environment is largely driven by the unique demographic concerns of developed, educated societies of the West; with shrinking populations, women need to be incentivised to have children. In India, where the problem of a shrinking, ageing population is some time away, the issue is to get more women in the workplace without compromising their freedom to have children.

The question, then, is how to realistically incentivise Indian companies to hire women. In 2018, the ministry of labour and employment proposed a Maternity Leave Incentive Scheme to reimburse seven weeks’ wages to employers who employ women workers with a wage ceiling of Rs 15,000 a month and provide them with maternity benefits of 26 weeks. Last heard, according to a reply to a Parliamentary question in 2019, the government was working out the financing details.

The scheme certainly reflected a game-changing practicality in outlook. Though well-meaning, however, it carries with it all the complications associated with government-led reimbursements, predicaments that those units accessing benefits through FAME or the production-linked incentive programmes are all too aware of. If the government is willing to underwrite the cause of women’s employment, perhaps a better idea could be to re-orient the scheme from a tax angle by, say, allowing a higher set off for maternity benefit payouts or for the cost of hiring a replacement for the duration. Expanding the ambit by removing the wage cap would also universalise the incentives and go some way towards equalising hiring costs and is likely to be popular with corporate managements. After all, who doesn’t love a tax break?