Chapter 1: The case for addressing workplace discrimination related to pregnancy, parental leave and on return to work after parental leave

Addressing workplace discrimination related to pregnancy, parental leave and return to work (‘pregnancy/return to work discrimination’) is not only a priority in its own right, there is a clear business case for addressing it. Discrimination in these areas creates costs for everyone – the individual affected, their family, the workplace, and the wider economy.

Costs for individual organisations include:

• loss of talent, knowledge and skills
• lower productivity among employees
• higher staff turnover resulting in increased costs to the employer as a result of the loss on investment made in employees, as well as the additional costs for recruiting and training replacements
• a decline in the organisation’s reputation.

The National Prevalence Survey discussed in the next chapter finds that discrimination has significant costs to the national economy, including through its impact on women’s workforce participation:

• 32% of mothers who were discriminated against at some point resigned,^[8] or went to look for another job^[9].
• 22% of mothers who reported experiencing discrimination at work during their pregnancy did not return to the workforce as an employee, compared to 14% who reported that they did not experience discrimination and did not return to work.
• 23% of mothers who reported experiencing discrimination at work during their pregnancy did not return to the ‘main employer’ they had before the birth/adoption of their child, compared to 13% of mothers that reported they did not experience discrimination and did not return to their previous ‘main employer’.

The failure to address and prevent such discrimination is clearly a significant contributor to the lower participation rates of women in the workforce. The experiences, responsibilities and choices that women make in relation to pregnancy, parental leave and on return to work therefore have a direct impact on women’s ability or decision to enter and/or remain in the labour market.

1.1 The gender gap in the Australian workforce

The clear and pervasive gender gap in the Australian workforce is widely acknowledged. Despite the fact that women are graduating from university at higher rates than men, with 57% of higher education students in 2011 being women,^[10] women are under-represented in the labour market.

In 2011-12, males aged 20-74 years had a higher labour force participation rate (79%) than females in the same age group (65%), a gender gap of 14%.^[11] This issue is more acute in Australia than in other OECD countries, with Australia ranked eighth lowest in 2005 for the workforce participation rates of child-bearing aged women (25 to 44 years).^[12]

The Grattan Institute found that prior to women having children, young women are equally as likely as young men to be employed in paid work. Most women give birth to/adopt children during their 20s or 30s, and thereafter are much less likely to be engaged in paid work, or likely to work for shorter hours over the rest of their working lives.^[13]

Another critical contributor to the lower participation rates of women in the workforce is that women still largely shoulder the majority of caring responsibilities for children, family members or friends with disability, chronic illness or frailty due to older age. ^[18]

As women move from full-time to part-time employment to accommodate the needs of their families, their careers are interrupted, for which they pay an excessive price. Women who put their careers on hold for even a couple of years are left with risks of being on lower salaries than men; side-lined from leadership positions; and with little in the way of retirement savings.^[19]

In making the case for addressing discrimination, the National Review does not suggest that women and men’s workforce participation rates should be the same. Rather, in making the case, the National Review aims to ensure that discrimination does not become the reason why women opt out of the paid workforce.

1.2 The business case at the national level

The gender gap in workforce participation has been widely recognised as having detrimental effects on individual workplaces and the wider economy.

[Gender disparity in the workforce] is costing the nation billions of dollars in the form of an unrealised productivity potential.^[20]

A significant body of research has identified the benefits of lifting women’s labour force participation rates – both for individuals (ie greater individual wellbeing in terms of financial security, self-esteem and social engagement), as well as for Australian workplaces, and overall national productivity levels.

Research shows that the rise in the female employment rate since 1974 has boosted economic activity by 22%.^[21] In fact, the Grattan Institute has estimated that if women’s workforce participation in Australia increased by 6%, the national GDP would be approximately $25 billion higher.^[22]

The Grattan Institute has argued that an increase in women’s labour force participation would not lower men’s workforce participation (as when an individual enters the labour force, their household’s demand tends to increase, resulting in higher market demand overall and the creation of more jobs) nor would it depress wages (ie more labour brings higher returns to capital, encouraging investment and in turn increasing capital stock, the demand for labour, and restoring wages to their original level).^[23]Government budgets would also benefit substantially as the number of income tax payers increases.^[24]

Further, increasing women’s workforce participation has been identified as a key mechanism to securing retirement incomes for women, which could consequently reduce their reliance on the age pension. It has been estimated that a reduction of women’s reliance on the age pension by 10% could conservatively save $2 billion per annum now and $8 billion per annum in 2050.^[25]

Globally, the International Monetary Fund (IMF) and World Bank have recognised that closing the gender gap in workforce participation is a prerequisite for ending extreme poverty and boosting shared prosperity. Drawing on a large body of evidence, the World Bank suggests that raising female employment to male levels could have a direct impact on a country’s GDP, for example, increasing it by 34% in Egypt and 9% in Japan.^[26]

Equally, the IMF has recognised that the level of women’s participation in the paid workforce has serious macroeconomic consequences. It notes that the employment of women on an equal basis with men would allow companies to make better use of the available talent pool, with potential growth implications.^[27]

These findings are further supported by the Booz Company’s findings that: there is a clear correlation between the front-end processes and policies regarding women’s economic opportunities (ie anti-discrimination laws, equal pay processes and access to parental leave and early childhood education and care services etc) and the increased participation of women in the labour force; and that there is a further strong correlative relationship between women’s economic participation and general economic growth.^[28]

1.3 The business case at an organisational level

As well as having a significant impact on national productivity, an increase in women’s participation in the workforce can have a direct and substantial impact on organisational culture and operations. It generates tangible benefits in terms of better efficiency, performance and innovation; increased access to the female talent pool; and improvements to organisational reputation. These benefits are frequently realised by increasing the retention of women.

Given the connection between the reduction in participation of women in the workforce and pregnancy and challenges faced upon return to work after parental leave, there are clear business advantages to ensuring gender equality through the creation of infrastructure and practices that focus on supporting women during childbearing years.

(a) Better business efficiency and performance

Current research demonstrates that gender balance has a direct positive impact on the efficiency and performance of individual organisations of all sizes and across all sectors. A diverse workforce develops a wider set of skills, expertise, and knowledge that in turn contributes to greater innovation and performance.

A field study experiment of undergraduate students in international business at the Amsterdam College of Applied Sciences found that teams with an equal mix of men and women outperformed male-dominated teams in profits and sales. Performance peaked when a team had about 55% women.^[29]

A study by researchers from MIT, Carnegie Mellon University, and Union College documented the existence of collective intelligence in groups whose members cooperated well, and found that collective intelligence surpassed the cognitive abilities of the individual members of the group. Groups in which one person dominated were less collectively intelligent. A major factor in creating a group with the right internal dynamics for collective intelligence to emerge was the number of women. The most effective and cooperative groups exhibited high levels of ‘social sensitivity.’ Because women tend to have higher levels of social sensitivity, the analysis revealed that the number of women in the group significantly predicted the effective problem-solving abilities of the group overall.^[30]

There are also reported benefits of gender diversity at both board and executive management level. One of the underlying reasons for this is that, inherent in gender diversity, is diversity of thought and leadership. These, in turn, are well established as essential elements to successful management.

Research has shown that increased gender diversity on boards is associated with better financial performance.^[31] Through an examination of 180 publicly traded companies in France, Germany, the United Kingdom and the United States, McKinsey has reported that companies with diverse executive boards enjoy significantly higher earnings and returns on equity than those in the bottom quartiles.^[32]

McKinsey has also shown a positive correlation between a critical mass of at least three women in a management team and stronger organisational and financial performance. ^[33]

Similarly, Forbes examined the stock performance of the 26 publicly traded companies headed by women on its ‘2010 Power Women 100’ list and found that, on average, companies in the group outperformed their industries by 15% and the overall market by 28%.^[34]

Since 2004, a series of Catalyst studies has shown that companies that have greater gender balance in their management and on their corporate boards attain better financial results, on average, than other companies. Catalyst’s 2011 study found that companies with the most women board directors outperformed those with the least in return on sales (ROS) by 16% and return on invested capital (ROIC) by 26%. Companies with sustained high representation of women – defined as three or more women board directors for at least four of five years – significantly outperformed those with no women board directors.^[35]

Meanwhile, companies with a higher proportion of women on boards are also more likely to have women in senior management and a smaller gender pay gap.^[36]

Catalyst found a clear and positive correlation between the percentage of women board directors in the past and the percentage of women corporate officers in the future. Additionally, women board directors appeared to have a greater effect on increasing the percentage of line positions held by women than they did on staff positions. Line experience is necessary for advancement into CEO and top leadership positions, and Catalyst’s annual Censuses show that historically women are under-represented in these roles.^[37]

(b) Benefits of retention

Successful policies for supporting employees during pregnancy, parental leave and on return to work are essential to retaining employees, particularly female employees. Failure to support women during this period may result in their departure from the workplace or the workforce in general.

The Business Council of Australia notes, for parents with primary caring responsibilities, mainly mothers, the main issues inhibiting workforce participation include job design and workplace flexibility, specifically the lack of flexible employment options, including parental and carers’ leave provisions.^[39]

Targeted strategies such as providing breastfeeding facilities have also demonstrated benefits such as high retention levels (94%) and high loyalty levels, as well as reduced absenteeism.^[40]

Increased retention, and correspondingly reduced turnover, is a priority for any organisation, and will result in reduced expenditure and increased savings, in relation to:

• job advertising costs
• lost time spent on interviews, clerical and administrative tasks
• use of temporary staff or lost output while waiting to fill the position
• costs associated with training the new employee
• termination pay
• loss of specialist knowledge
• loss of customers
• low staff morale and reduced productivity.’^[41]

The Australian Human Resources Institute has estimated the cost of staff turnover to Australian business to be at $20 billion nationally.^[42]

Both women and men are more likely to remain with an organisation where there is a proactive diversity ‘climate’ as they perceive a concrete payoff to themselves by staying in an organisation they view as fair.^[43]

A human resources consulting firm analysed extensive employee opinion survey responses and found a positive and significant relationship between employees’ overall job satisfaction and engagement with how fairly their company treated diverse employees and consumers.^[44]

(c) Accessing the talent pool

Promoting gender balance can also increase the capacity of an organisation to attract a greater proportion of the female talent pool.

Kronos Australia reported that their survey revealed a predisposition among Australian employers towards an ‘ideal’ profile for workers – favouring single, young, unattached, male candidates – which meant businesses missed out on a range of talent that did not fit this profile.^[45]

The Business Council of Australia has reported that, given that talent is randomly distributed across both genders, at least half of a talented workforce is likely to be women. This means that taking 90% of company leadership from just 50% of the talent pool simply does not make sense.^[46]

Having the best talent is obviously critical to success in competitive markets and with women increasingly becoming more highly educated than men, an organisation which is as attractive to women as it is to men will have a competitive advantage in attracting the best talent available. ^[47]

Kronos Australia notes that in the context where many industries are facing skill shortages, the competition for attracting and retaining talent means flexible work is no longer a ‘nice-to-have’ option, but rather it is becoming a critical component of attractive working condition packages required for attracting and retaining talent.^[48]

Importantly, however, flexibility is an offering which appeals not only to female employees, but it is also becoming a significant marker in attracting male talent, especially younger men. According to research by the Diversity Council of Australia, a significant number of men desire greater access to flexible work arrangements than they currently experience and this is especially the case for young fathers.

The research shows that 79% of young fathers would prefer to choose their start and finish times, but only 41% actually currently do.^[49] Around 18% of men, including 37% of young fathers, had ‘seriously considered’ leaving an organisation due to a lack of flexibility.^[50] Men, especially young fathers, value flexible working highly as a job characteristic,^[51] meaning that access to flexible work is likely to be one of the determinants among all high quality candidates.

(d) Benefits to reputation

Finally – and pragmatically – strategies which promote workplace gender equality by reducing sex discrimination can minimise a company’s risk of financial and reputational loss. Discrimination can be costly, potentially involving court appearances, legal representation, settlement costs, and potential compensation and penalties payable.

By contrast, and as discussed above, an organisation with a positive reputation for promoting gender equality can benefit from being a more attractive employer. As evidenced by the strong interest among companies registering for the Workplace Gender Equality Agency Employer of Choice Awards, companies recognise the competitive value derived from having a positive reputation for gender equality.^[52]

1.4 Conclusion

It is undeniable that the interests of Australia’s businesses, workplaces and the national economy lie in preventing pregnancy/return to work discrimination. The business case makes clear that the interests of Australian employers and workers are aligned in developing supportive workplaces; increasing the participation and retention of women in the workforce; and, in doing so, improving productivity and satisfaction for all.

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^[7] Grattan Institute, Game-changers: Economic reform priorities for Australia (2012), p 39.
^[8] 19% mothers who were discriminated against at some point resigned, see Chapter 2.
^[9] 13% went to look for another job, see Chapter 2.
^[10] There continues to be some gender segregation in areas of study, with 13% of men, compared with 2% of women enrolled in ‘Engineering and related technologies field’ and 5% of men, compared with 14% of women enrolled in the Education field. Australian Bureau of Statistics, 4102.0 - Australian Social Trends, Sep 2012: Education Differences Between Men and Women (2012). At http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features20Sep+2012 (viewed 14 July 2014). See also Graduate Careers Australia, An analysis of the gender wage gap in the Australian graduate labour market (2014), which reported areas of gender segregation in higher education.
^[11] Australian Bureau of Statistics, 4125.0 - Gender Indicators, Australia, Jan 2013 . At http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4125.0main+features1110Janper cent202013 (viewed 14 June 2014).
^[12] J Abhayaratna and R Lattimore, Workforce Participation Rates – How Does Australia Compare? (Staff Working Paper for the Productivity Commission) (2006), p x.
^[13] Grattan Institute, Game-changers: Economic reform priorities for Australia (2012), p 39.
^[14] Australian Institute of Company Directors, at http://www.companydirectors.com.au/Director-Resource-Centre/Governance-and-Director-Issues/Board-Diversity/Statistics (viewed 14 June 2014).
^[15] Workplace Gender Equality Agency, Australian Census of Women in Leadership Summary of key findings (2012). At http://www.wgea.gov.au/lead/australian-census-women-leadership (viewed 20 November 2013).
^[16] Australian Bureau of Statistics Average Weekly Full-Time Earnings data (cat. No. 6302.0).
^[17] R Clare, Developments in the level and distribution of retirement savings (2011), p 10.
^[18] In Australia, it is more common for women than men to provide care between the ages of 18-74 years. In 2011, one in three women (31.8%) compared to one in four men (23.6%) were caring for children, with only 18% of mothers with children under the age of 5 years in full-time employment. (Australian Bureau of Statistics, 2011 Census of Population and Housing, Basic Community Profiles Catalogue no. 2001.0, (2012)). Existing studies show that the gender gap in labour force participation rates is most evident when children are under the age of six years, with the labour force participation rates of female parents being 39% points lower than male parents who had a youngest child under six years (Australian Bureau of Statistics, ‘Labour Force’, Gender Indicators, Australia, Jul 2012, (2012) Catalogue, no. 4125.0) When employed, female parents are more likely to work part-time than male parents: 66% of employed females with children aged under six years worked part-time compared to 7% of employed males with children of this age (Australian Bureau of Statistics, ‘Employment conditions’, Gender Indicators, Australia, Jul 2012, (2012) Catalogue, no. 4125.0). Women are also more likely than men to have care responsibilities involving greater time and intensity. Women who are unpaid carers have considerably lower rates of employment and are more likely to work in part-time and casual jobs. Less than 23% of female primary carers were in full-time employment at any point across the age groups (Australian Bureau of Statistics, Surveys of Disability, Ageing and Carers (SDAC);Australian Bureau of Statistics, Census of Population and Housing (from 2006 onwards) in Australian Human Rights Commission, Investing in care: Recognising and valuing those who care (2013). At https://www.humanrights.gov.au/investing-care-recognising-and-valuing-those-who-care (viewed 14 June 2014)).
^[19] Ernst & Young, Untapped opportunity: The role of women in unlocking Australia’s productivity potential (2013), p 2.
^[20] Ernst & Young, Untapped opportunity: The role of women in unlocking Australia’s productivity potential (2013), p 2.
^[21] Goldman Sachs, Australia's Hidden Resource: The Economic Case For Increasing Female Participation (2009), p 2.
^[22] Grattan Institute, Game-changers: Economic reform priorities for Australia (2012), p 39.
^[23] Grattan Institute, Game-changers: Economic reform priorities for Australia (2012), p 40.
^[24] Grattan Institute, Game-changers: Economic reform priorities for Australia (2012), p 39.
^[25] Ernst & Young, Untapped opportunity: The role of women in unlocking Australia’s productivity potential (2013), p 5.
^[26] World Bank, Gender at Work: A Companion to the World Development Report on Jobs (2013), p 1. At http://www.worldbank.org/en/topic/gender/publication/gender-at-work-companion-report-to-world-development-report-2013-jobs (viewed 5 May 2014).
^[27] International Monetary Fund, Women, Work, and the Economy: Macroeconomic Gains from Gender Equity (Staff Discussion Note 13/10) (2013), p 5.
^[28] Booz and Company, Empowering the Third Billion: Women and the World of Work in 2012 (2012), pp 13-15.
^[29] Catalyst Information Center, Why Diversity Matters (July 2013). At http://www.catalyst.org/knowledge/why-diversity-matters, referencing S Hoogendoorn, H Oosterbeek, & M van Praag, ‘The Impact of Gender Diversity on the Performance of Business Teams: Evidence from a Field Experiment’, Social Sciences Research Network, Working Paper Series (April 28, 2011).
^[30] Catalyst Information Center, Why Diversity Matters (2013), p 10. At http://www.catalyst.org/knowledge/why-diversity-matters, referencing A Williams Woolley, CF. Chabris, A Pentland, N Hashmi, & TW. Malone, ‘Evidence for a Collective Intelligence Factor in the Performance of Human Groups’, Science (September 30, 2010), and ‘Collective Intelligence: Number of Women in Group Linked to Effectiveness in Solving Difficult Problems’, Science Daily (October 2, 2010). For similar reports see also: Credit Suisse, Gender diversity and corporate performance (2012); Deloitte & Victorian Equal Opportunity and Human Rights Commission, Waiter, is that inclusion in my soup? A new recipe to improve business performance (2013); Catalyst, The Bottom Line: Connecting Corporate Performance and Gender Diversity (2004); G Desvaux, S Devillard-Hoellinger, & MC Meaney A business case for women (2008), McKinsey Quarterly.
^[31] Australian Stock Exchange, Corporate Governance Principles and Recommendations (3rd ed, 2014); Reibey Institute, ASX 500 – Women Leaders Research Note (2011). At http://www.reibeyinstitute.org.au/wp-content/uploads/2011/10/ASX500_Women-Leaders-2011.pdf (viewed 14 June 2014); Catalyst, The Bottom Line: Corporate Performance and Women’s Representation on Boards (2011).
^[32] McKinsey, Is there a Payoff from top team diversity? (2012), p 12. At http://www.mckinsey.com/insights/organization/is_there_a_payoff_from_top-team_diversity (viewed 14 June 2014).
^[33] McKinsey, Women Matter: Gender Diversity, A Corporate Performance Driver (2007), p 12; and McKinsey, Women Matter 2: Female Leadership, a competitive edge for the future (2008).
^[34] Catalyst Information Center, Why Diversity Matters (2013) p 5. At http://www.catalyst.org/knowledge/why-diversity-matters, referencing Michael K. Ozanian, ‘Girls Rule,’ Forbes (October 25, 2010).
^[35] Catalyst Information Center, Why Diversity Matters (2013) p 2. At http://www.catalyst.org/knowledge/why-diversity-matters (viewed 14 June 2014).
^[36] Catalyst Information Center, Why Diversity Matters (2013) p 3. At http://www.catalyst.org/knowledge/why-diversity-matters, referencing S Terjesen & V Singh, ‘Female Presence on Corporate Boards: A Multi-Country Study of Environmental Context,’ Journal of Business Ethics, vol. 83, no. 1 (2008).
^[37] Catalyst Information Center, July 2013, Why Diversity Matters (2013), p 2. At http://www.catalyst.org/knowledge/why-diversity-matters, referencing, L Joy, Advancing Women Leaders: The Connection Between Women Board Directors and Women Corporate Officers (2008) and R Soares, S Bonaparte, S Campbell, V Margolin, and J Spencer, 2012 Catalyst Census: Fortune 500 Women Executive Officers and Top Earners (2012).
^[38] Male Champions of Change, Our experiences in elevating the representation of women in leadership: A letter from business leaders (2011), p 6. At https://www.humanrights.gov.au/male-champions-change (viewed 14 June 2014).
^[39] Business Council of Australia, Action Plan for Enduring Prosperity (2013), p 84.
^[40] J Ortiz, K McGilligan, and P Kelly, ‘Duration of breast milk expression among working mothers enrolled in an employer-sponsored lactation program’. Pediatric Nursing, (2004), 30(2):111-119, cited in HRSA, The Business case for breastfeeding, Steps for creating a breastfeeding Friendly Worksite.
^[41] Workplace Gender Equality Agency, The Business Case for Gender Equality (2013), p 3.
^[42] Australian Human Resources Institute, Human Resources Pulse: ‘Love ’Em Don’t Lose ‘Em’ – Identifying Retention Strategies That Work, (2008) p 1. At http://live.ahri.com.au/scripts/cgiip.exe/WService=AHRI-LIVE/ccms.r?pageid=10953 (viewed 14 July 2014). The cost of turnover was calculated on a workforce of 10.1 million and using a conservative figure of 75% of an average salary of $55 660.80 (Australian Bureau of Statistics).
^[43] Workplace Gender Equality Agency, The Business Case for Gender Equality (2013), p 3, referencing DM Kaplan, JW Wiley, & CP Maertz, ‘The role of calculative attachment in the relationship between diversity climate and retention’, Human Resource Management, 50(2), 271-287 (2011).
^[44] Catalyst Information Center, Why Diversity Matters (2013), p 7. At http://www.catalyst.org/knowledge/why-diversity-matters, referencing HR Solutions International, Inc. ‘Attention to Diversity Pays Off: A Conversation with Murat Philippe’ (2007).
^[45] Kronos Australia, White Paper: Australia’s Hidden Workforce (2013), p 1. At www.kronos.com.au/research/australia-hidden-workforce.pdf (viewed 14 June 2014).
^[46] Business Council of Australia, Increasing the Number of Women in Senior Executive Positions: Improving Recruitment, Selection and Retention Practices (2013), p 3. At http://www.bca.com.au/publications/increasing-the-number-of-women-in-senior-executive-positions (viewed 14 June 2014).
^[47] Workplace Gender Equality Agency, The Business Case for Gender Equality (2013), p 2.
^[48] Kronos Australia, White Paper: Australia’s Hidden Workforce (2013), p 6. At www.kronos.com.au/research/australia-hidden-workforce.pdf (viewed 14 June 2014).
^[49] Diversity Council Australia, Men Get Flexible! Mainstreaming Flexible Work in Australian Business (2012). At: http://dca.org.au/News/News/Employers-take-note%3A-men-want-flexible-working-too!/293#sthash.ZFgIpJ1A.dpuf (viewed 14 June 2014).
^[50] Workplace Gender Equality Agency, The Business Case for Gender Equality (2013), p 3, referencing G Russell, & J O’Leary, Men Get Flexible: Mainstreaming Flexible Work in Australian Business (2012).
^[51] Workplace Gender Equality Agency, The Business Case for Gender Equality (2013), p 7, referencing A Hayes, L Qu, R Weston, & J Baxter, (2011); G Russell, & J O’Leary, Men Get Flexible: Mainstreaming Flexible Work in Australian Business (2012). See also M Bittman, S Hoffmann & D Thompson , Social Policy Research Centre, University of New South Wales, Men’s uptake of family-friendly employment provisions, Policy Research Paper No 22 (2004).
^[52] Workplace Gender Equality Agency, Employer of Choice for Gender Equality. At https://www.wgea.gov.au/lead/employer-choice-gender-equality (viewed 4 July 2014).