Startups and SMEs say maternity bill will impact hiring of women

27 March, 2017, New Delhi: While the amendment in the maternity bill which increases maternity leave to 26 weeks from the present 12 weeks has been met with great enthusiasm by citizens and employees, the startup, SME and entrepreneurship ecosystem has a mixed view of it. Over 40% of those surveyed said they will consider the maternity bill clauses during the hiring process. Approximately 26% have explicitly said that they will prefer hiring male employees instead.

In a poll conducted by citizen engagement platform LocalCircles in which more than 4300 startups, SMEs and entrepreneurs participated, 35% said that this move will have a negative impact on their ecosystem as it would impact both the cost and the profitability of the business. 10% said that it would not impact their company since they do not have any female employees. 39% said that it will have a positive effect on the company as it will lead to a happier workforce and 17% were not sure about the outcome.

At a time when capital and loan availability has substantially slowed down and startups & SMEs are looking to scale down operations or cut costs to remain competitive in the market, this decision might result in biasness in their hiring process with males being preferred over females for many important roles.

In a related poll, when asked how will the hiring approach for your startup/SME business change now that the new maternity bill (26 weeks of mandatory maternity leave) is in place, 40% of the respondents said that they will still hire women but consider is cost is worth the candidate. 26% said they will now prefer hiring male candidates with 22% saying they did not expect any change in their organisations hiring policy. 12% respondents chose not to answer the questions.

In addition to providing 6 months of maternity leave, the bill also makes it mandatory for employers in establishments with 30 women or 50 employees, whichever is less, to provide crèche facilities either in office or in any place within a 500-metre radius. This also is an investment required to be made and per some of the Startups and SMEs while it is a good move in the long run, an expense for a creche and the cost of six months of maternity leave will have a negative impact on many businesses. The world’s leader in women employment, America has 72M women employees and per law, employers have to provide 3 months of unpaid maternity leave. In comparison to that, India’s Maternity Bill offers much more. The question is, will employers, especially Startups and SMEs continue to be able to hire and afford women employees.