Does Australia have one of the least generous paid parental leave schemes in the OECD?

Does Australia have one of the least generous paid parental leave schemes in the OECD?

RMIT ABC Fact Check investigates Parents At Work founder Emma Walsh's claim that Australia has one of the least generous paid parental leave schemes amongst all OECD nations.

The claim

Advocacy group Parents At Work says Australia's approach to paid parental leave "requires an urgent rethink from both government policymakers and employers".

The organisation's founder Emma Walsh told ABC Radio National's Life Matters: "Australia has, unfortunately, one of the least generous paid parental leave schemes amongst all OECD nations."

Is she correct? RMIT ABC Fact Check investigates.

The verdict

Ms Walsh's claim is a fair call.

The average length of paid parental leave among OECD countries is around 55 weeks, while Australia's system offers 18 weeks, according to OECD data.

Unlike the majority of the 36 members of the OECD, Australia provides a flat rate rather than a replacement wage.

This makes the Australian system generous to low-income earners and part-time workers but not to those who earn more than the full-time minimum wage.

Paid parental leave in Australia is granted to one parent, the "primary" caregiver, whereas in other OECD countries it can be shared. In other countries it can also be taken in addition to maternity leave and paternity leave.

And Australia's provision for "secondary" caregivers of a total two weeks' paid leave — a right that according to experts is rarely used — is well below the OECD average of 8.1 weeks.

An international network of academics and policymakers puts Australia's scheme in the least generous of three categories of paid parental leave, because it offers less than four months leave. The network did not classify this as "well-paid" leave.

Australia ranks near the bottom on available measures of generosity of paid parental leave in the OECD. Australia ranks near the bottom on available measures of generosity of paid parental leave in the OECD.

The context of the claim

In her radio interview, Ms Walsh was asked about barriers in Australia to men getting extended leave from work.

She responded with her claim about generosity relative to other OECD countries and went on to say: "We have an average of 18 weeks, minimum wage, and that's really set up for the primary caregiver and obviously in many cases that is women. It then is up to a woman to then transfer that leave to her partner. So the system really isn't set up, first of all, to support men easily to take leave in their own right."

Given this context, Fact Check has assessed Ms Walsh's claim on the basis of Australia's support for both primary and secondary carers, and both new mothers and new fathers.

Australia's support for new parents

Parents in Australia have been entitled to government-mandated leave after childbirth or adoption since January 1, 2011.

Under the Paid Parental Leave Act 2010, eligible new parents can take up to 18 weeks' leave, funded by the Federal Government and paid at the rate of the national minimum wage.

Marian Baird, of the University of Sydney and Gillian Whitehouse, of the University of Queensland both told Fact Check that in Australia the legislated parental leave is by default granted to the mother after birth. It can be transferred to the father or partner under special circumstances.

"It's not strictly 'leave', nor is it limited to mothers," Professor Whitehouse said.

Since 2013, fathers or partners have been entitled to "Dad and Partner Pay", or DPP, a separate, non-transferable payment.

This is two weeks of taxpayer funded leave, paid again at the national minimum wage rate.

Australia also provides 52 weeks employment-protected leave for new parents, but this is unpaid.

Experts also told Fact Check that employees could be receiving additional leave based on their employment contracts.

But since Ms Walsh used the expression "paid parental leave schemes", Fact Check has confined its assessment to government-paid entitlements available to workers.

Australia legislated for paid parental leave from the Federal Government in 2010. Australia legislated for paid parental leave from the Federal Government in 2010.

What international data is available?

The Organisation for Economic Co-operation and Development, or OECD, is an intergovernmental body of the world's most developed nations.

Membership is decided according to criteria including having an open market economy, a stable and transparent financial system and a "regional or global role in the world economy".

Its research unit compiles data on parental leave for its 36 member countries, collected from secondary sources and national correspondents.

The latest was published in the OECD Family Database in 2016.

Experts told Fact Check this dataset was still relevant and reliable for comparison.

A spokesman for the OECD told Fact Check that Lithuania had become the 36th OECD member in 2017, but the 2016 database included information for OECD candidate countries including Lithuania.

Fact Check has included Lithuania in its assessment, as it was a member at the time Ms Walsh made her claim.

Other data sources suggested by the experts are the Workplace Gender Equality Agency, an Australian Federal Government agency, which published a paper on the topic in 2017 and an international academic group, the International Network on Leave Policies and Research.

The group has 60 members including researchers, academics or policy makers, all experts on leave issues, from 43 countries around the world.

They produce a yearly international leave policy review with country updates and cross-national comparative tables that uses information and sources provided by the members from each country.

Dr Baird and Dr Whitehouse are members and co-wrote Australia's profile for the network.

The OECD data

The OECD Family Database report identifies four general types of leave: maternity; paternity; parental; and home care.

"Almost all OECD countries have public income support payments that are tied to taking maternity leave," it says.

Leonora Risse, from RMIT University, told Fact Check that the key in understanding international comparisons of paid parental leave is terminology and eligibility.

"You've got paid maternity leave and then you've got paid parental leave," she said.

The OECD report notes that in some countries, including Australia and New Zealand, "there is no separate entitlement for (paid) maternity leave with stipulations instead integrated into the parental leave scheme".

Other countries have an arrangement under which each parent has a period of maternity/paternity leave and a separate shared period of parental leave.

This leave "frequently, but not in all countries, follows the period of maternity leave," the report says.

Home care leave typically allows "at least one parent to remain at home to provide care until the child is two or three years of age," the OECD says.

"Home care leaves are less common than the other three types of leave and are offered only in a minority of OECD countries."

Dr Risse told Fact Check: "The role of the OECD is to produce data that is comparable across countries wherever possible ... but some assumptions and averaging has to come into that."

Measuring 'least generous'

The OECD records the number of weeks offered by each country's scheme.

Australia's 18-week scheme is well below the average length of paid parental leave for mothers in the OECD's 36 member countries of 55 weeks.

The OECD then identifies three rates that governments use to compensate parents for their lost earnings: as a proportion of a worker's income (for example Hungary at 70 per cent or the Czech Republic at 70 per cent but with a daily cap); as a full replacement of income (Austria and Poland); or as a flat rate (as Australia uses).

It compares schemes by taking the payment to workers on the national average wage, and by calculating the number of weeks of paid leave they would receive "if it were paid at 100 per cent of previous earnings".

Dr Risse told Fact Check: "It's a clever and appropriate way of combining both [length of leave and rate of pay]."

In Chile, for example, mothers are entitled to 30 weeks total paid leave with 100 per cent replacement of the net income averaged over the previous three months, with no ceiling on the payments.

That means that the OECD's "full-rate equivalent" at the average wage for Chile is 30 weeks leave.

On the other hand, Australia pays parental leave for 18 weeks as a flat rate at the full-time national minimum wage.

So for Australia, the "full-rate equivalent" at the average wage is calculated by the OECD as 7.6 weeks.

OECD calculation for Australia

Dr Risse provided the following calculation for Australia's "full-rate equivalent" in weeks and "average payment rate", that other experts reviewed:

  • As at April 2016, the minimum weekly wage (set by the Fair Work Commission) was $672.70.
  • Australia's "full-time adult average weekly total earnings" sourced from the ABS Average Weekly Earnings (original data for November 2015) was $1560.50.
  • The ratio of minimum wage to average earnings is $672.70/$1560.50 = 0.431
  • 18 weeks of minimum pay at a ratio of 0.431 is equivalent to 7.76 weeks of full-rate average pay


Australia with 7.6 weeks "full-rate equivalent" of total paid leave available to working mothers on the average wage exceeds only the USA (0) and is a little lower than New Zealand (7.7), Switzerland (7.9) and Ireland (8.9).

Fathers' rights to parental leave

Peter Whiteford, of the Australian National University, told Fact Check that by providing two weeks of paternity leave, Australia is probably "slightly better on leave for fathers" in the OECD ranking.

Australia's paid paternity leave is higher than the OECD average of one week.

However, when it comes to "total paid leave reserved for fathers", Australia's two-week entitlement is well below the OECD average of 8.1 weeks. Australia ranks ahead of countries including Chile (1), Italy (0.4) or Ireland (0).

And for fathers or secondary carers, Australia offers 0.8 weeks "full-rate equivalent" exceeding 12 of 36 OECD countries with lower or no entitlement.

This low ranking reflects the more generous schemes in other countries that can be used by either parent or shared.

The International Network on Leave Policies and Research notes that Australia does not provide incentives for fathers to take the paid leave they are entitled to, unlike some other OECD countries.

Eight OECD countries offer a "bonus" for fathers in the forms of economic benefits or additional family leave time.

For example, Sweden has a "gender equality bonus" that gives economic incentives for families to encourage them to divide parental leave more equally, while Germany and Japan extend the maximum weeks if both parents use some of their entitlement.

Spending per child born

Professor Whiteford suggested examining eligibility and comparing "people who are actually covered" by each country would be another way to assess "generosity".

"The 'spending per child born in a year' is a proxy for this," he told Fact Check pointing to the relevant chart in the OECD Family Database report, which uses data from 2013 from 33 OECD countries.

Australia is the seventh-lowest country on this measure.

"Although, because it is adjusted to US dollars in purchasing power terms, this will explain why we are more generous than countries like Greece and Turkey which are much lower income than Australia," Professor Whiteford said.

Other cross-nation comparisons

The International Network on Leave Policies and Research divides the countries it monitors into three groups based on the total leave available to parents and payment provisions.

In the first group there are OECD countries like Austria, the Czech Republic, Denmark, Japan, Iceland and Sweden which according to the network provide nine months or over of "well-paid post natal-leave (at two thirds replacement rate)". 

However, many of these countries have in place payment ceilings, above which no payment is made.

The second group includes countries like New Zealand, which provide four to seven months of "well-paid post-natal leave".

The paper noted that this is often delivered as maternity leave with a shorter paternity leave.

The final group, in which Australia is included, comprises countries that provide less than four months of "well-paid post-natal leave".

This is also often delivered as maternity leave and other than Australia, the group includes OECD countries like Ireland, the United Kingdom, France and the United States.

Further, the report does not consider that Australia's 18 weeks of paid leave is "well-paid".

The Federal Government's Workplace Gender Equality Agency conducted an international comparison in a 2017 report.

It noted that: "Parental leave entitlements continue to vary greatly across OECD countries, in terms of the length, the flexibility, and the level of payments."

It said the majority of OECD countries have extended leave entitlements around the birth and adoption of a child to support both parents/carers, "recognising that fathers/partners taking leave is good for children and for women's labour market outcomes".

The report concluded that Australia's statutory paid parental leave scheme was flexible in terms of usage, yet by international standards "not very generous".

What the experts say

The OECD spokesman told Fact Check that countries have different objectives with their paid leave systems, so terms such as "lengthiest" rather than "generous" are used in cross-nations comparisons.

"Some countries (such as some of the Baltic and Eastern Europe countries) put strong emphasis on allowing at least one parent to stay at home for a long time. Other countries put more emphasis on gender equality and women's employment and careers, as well as on sustaining family income during the leave period," he said.

"Both are 'generous' in their own way."

Dr Risse told Fact Check that Australia's flat rate puts women in a dilemma between leaving the workforce and having a baby.

"Australia's paid parental leave policy has been constructed more as a welfare subsidy for new parents, rather than as an economic compensation for forgone income," she said.

"And it's high-income earning women who face that decision more."

Professor Whiteford agreed that Australia is probably more generous to low-income families and part-time workers because it provides a flat rate at the full minimum wage.

"Those countries with higher replacement rates will tend to be more generous to mothers who had higher-paying jobs before childbirth," he said.

Professor Baird also noted that Australia's flat rate is more advantageous to people not working full-time.

"It is paid in full ... Thus it is possible to receive more on PPL than their regular [part-time] wage," she said.

"Many women don't earn average weekly amounts, so for some, a flat rate is better than a percentage system."


Principal researcher: Christina Arampatzi

Additional research: Ivana Domic

For full story, please visit the RMIT ABC FactCheck website.


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