According to a survey by LocalCircles, almost 50% of SMEs and start-ups in India reported less female hires over the last year. The 2017 Maternity Benefits Act, which increased maternity leave from 12 weeks to 26 weeks, was pointed to as a major reason for this reduction in women hires.
The survey, which gathered 8,500 responses from SMEs, startups and entrepreneurs, found the financial strains of maternity leave were simply too much for many smaller organizations to take on. 33% said they didn’t hire women at all, while 16% said they had hired fewer women than in the previous year. A third said they had hired the same number of women as in the previous year, while 18% even said they had made more women hires. When asked what the ideal leave should be from an SME and startup perspective, 37% said three-months paid leave, 6% said one-month paid leave and 6% said there should be no maternity leave allowance.
According to LocalCircles researchers, startups and SMEs ideally would like companies who make less than INR 10 Mn (USD 1.3 Mn) a year to be exempt from the current maternity leave rules. “The risk of inaction,” LocalCircles stated, “is that more and more of these companies will start looking like a men’s club which isn’t an outcome anyone wants.” Leaders must look at how to address the financial impact of parental leave on smaller businesses so as to avoid women missing out on opportunities or suffering from biased hiring.