Women manufacturing employment decline followed by maternity leave amendment: Study

The 2017 Maternity Benefit (Amendment) Act expanded paid maternity leave for women employees from 12 weeks to 26 weeks for their first two children. It changed provisions in a law that was more than 55 years old. The amendment aimed to strengthen maternity benefits at covered workplaces.

It also required every establishment with 50 or more employees to provide a creche within a prescribed distance. Employers had to allow women employees four visits each day to the creche. These requirements added workplace responsibilities alongside the longer paid leave.

The change mattered because the study found that firms hired fewer women after the amendment. Women’s employment at covered manufacturing firms fell 8.4%, while men’s employment rose 2.6%. The researchers therefore recommended financing maternity leave through social insurance instead of leaving the full cost with individual employers.

At manufacturing firms covered by the law, women’s employment declined 8.4% after the 2017 amendment. At the same firms, men’s employment increased 2.6%. This is a substantial change in workforce composition, especially because it occurred after a law intended to expand women’s workplace benefits.

The researchers examined Annual Survey of Industries data from 2012-13 to 2019-20. They compared employment patterns at firms covered by the maternity law. The results showed fewer women and more men being hired after the amendment. The shift was measured at the firm level, rather than only through national employment totals.

The study found no significant change in firms’ output or profits. That finding suggests the employment shift was not accompanied by a clear production or profitability gain. The researchers recommended social-insurance financing, government-financed paternity leave, and maternity protections for informal-sector workers.

After the amendment, the number of days women worked fell by 9.5%. At the same time, the number of days men worked rose by 2.1%. These figures show that the law’s effects involved not only who firms employed, but also how many days different workers worked.

The study used Annual Survey of Industries data covering 2012-13 to 2019-20. It found that firms hired fewer women and more men after the law changed. The reduction in women’s working days and increase in men’s working days fit this broader pattern of labour substitution at covered manufacturing firms.

The result matters because longer paid leave did not produce a clear improvement in women’s employment at these firms. Instead, the study observed a gendered shift in employment and working days. It found no significant change in firm output or profits, strengthening the researchers’ case for changing how leave is financed.

When individual employers must pay for extended maternity leave, the cost is attached to the firm that employs the woman. Employers may therefore view hiring women as carrying a larger potential leave obligation than hiring men. This can influence recruitment decisions even when women and men can perform the same work.

The study found that women’s employment fell 8.4% and men’s employment rose 2.6% at covered manufacturing firms. The number of days women worked dropped 9.5%, while men’s working days increased 2.1%. These patterns are consistent with firms substituting male workers for female workers after the amendment.

The article also describes similar barriers in construction, including concerns about maternity, safety, toilets, and shared quarters. Harshil Sharma said contractors avoid hiring women to sidestep such obligations. The researchers proposed social insurance to spread leave costs beyond individual employers and reduce this hiring incentive.

The amendment’s effects were larger in industries that already employed more women. In those industries, women’s employment fell 12%, compared with an 8.4% decline across covered manufacturing firms. Male employment rose 4.1%, compared with a 2.6% increase overall.

This contrast shows that the law’s employment effects varied by the existing gender mix of an industry. A workplace with more women workers had more exposure to the leave-related obligations placed on employers. After the amendment, the study found a stronger movement away from female employment and toward male employment in those industries.

The researchers found no significant change in firms’ output or profits, despite the employment changes. That result makes the gender difference important for policy design. Financing maternity leave through social insurance, rather than individual employers, could reduce the incentive to avoid hiring women in industries where they are already strongly represented.

The researchers recommended moving maternity leave financing from individual employers to social insurance. Under that approach, the cost would not fall entirely on the firm employing a woman. The proposal responds directly to the study’s finding that firms hired fewer women after the law required employers to fund longer paid leave.

They also proposed government-financed paternity leave. This would expand parental protections beyond maternity leave and place some responsibility for caregiving benefits outside women’s employment alone. The article presents this as another way to address the gendered effects associated with maternity obligations.

A third recommendation was to extend maternity protections to informal-sector workers. The study focused on covered manufacturing firms, while the article also discusses barriers facing women in construction. Together, the proposals aim to broaden protection, share financing more widely, and reduce the risk that workplace benefits become a reason for excluding women from jobs.

Maternity benefits support women during childbirth and leave, but their financing can shape employer decisions. If each employer pays the full cost, the firm may associate women’s employment with a possible leave expense. That can turn a protective policy into a hiring barrier, as the study’s employment results suggest.

The article describes this interaction at manufacturing firms and construction sites. After the amendment, women’s employment fell 8.4% and men’s rose 2.6%. In construction, Harshil Sharma said contractors avoid hiring women to sidestep obligations involving separate toilets, maternity, safety, and housing. These choices reflect workplace arrangements and gender expectations, not only workers’ skills.

The result can reinforce existing gender norms: men are treated as easier to hire, while women face assumptions about caregiving and workplace requirements. The researchers proposed social insurance, government-financed paternity leave, and informal-sector protections. These measures could spread costs and make caregiving responsibilities less tied to women alone.