Small firms hire fewer women employees to save maternity leave costs

Nearly half of early-stage startups and SMEs in India claimed they have hired fewer or no women in the last 12 months due to the financial strain. The government’s Maternity Benefits Act 2017 which grants six-month paid leaves was pointed to as a prime reason for this reduction, according to a survey by community platform LocalCircles.


The survey which received more than 8,500 responses from startups, SMEs and entrepreneurs, showed that 49% companies hired fewer or no women in the last 12 months compared to the previous year.


It was found the financial strains of maternity leave were simply too much for many smaller organizations to take on. Nearly 33% respondents said they didn’t hire women at all, while 16% stated they had added fewer women employees than in the previous year.


The findings, however indicated that 44% of respondents wanted the current policy to stay.


As per the survey, the collective demand of start-ups and SMEs operating in India is that companies with an annual turnover of less than Rs 10 crore should be exempted from the six-month paid maternity leave policy, instead offer women three months’ paid leave.


“If this is done, the startup and SME industry will be better motivated to give equal opportunities to women and would look to hire them without any prejudice or bias,” the LocalCircles survey found.


When asked what should be the maternity leave allowance in India from their perspective, 37%  respondents said it should be a three-month paid leave while 6% stated should be a one-month paid leave. Meanwhile, 6% also claimed that there should not be any maternity leave allowance.


Nearly half or 44% respondents found that the current law of six month paid leave should be kept unchanged.



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