Wednesday, 25 March 2015

Rwanda's new draft law on 100% salary during maternity leave

I looked at the Central Africa page today and found a story (from News of Rwanda) reporting Rwanda's new draft law on maternity pay.  It is just above a report from the DRC entitled "Congo Hospital Sees Rise in Rape of Girls As Young As 18 Months".  The city of Bukavu in the DRC (where the hospital is based) and the Rwandan city of Cyangugu are separated by a river, that's all.  There is much more to both countries than is captured by these headlines, but they do indicate how the border affects women's life opportunities at the moment.

This post is about the maternity law part of the news.  As it is reported, the law extends maternity pay in the sixth to twelfth week after birth from 20 percent of salary to 100 percent.  The employer will pay half, and half will come from social security contributions paid to the government by all employees.

I would vote for such a law, myself.  The effects of such a law are economy-wide, and it isn't my area of economics, but my quick reasoning would be along the lines of:

1) the loss of income is an uneven allocation across workers based on involuntarily assigned gender at birth, and governments often act to smooth out involuntary loss of income,
2) it helps with the care and education of the next generation of citizens and workers at an important time,
3) it encourages and eases the entry of half the population into the workforce, and
4) it isn't a large amount of additional money, despite a high birth rate in Rwanda.

Having said all that, I can't believe that all employers are happy with the new law.  The news report above describes how the CFO of a business with 450 employees does not consider the law to be a burden.  It may be one for an employer of just two or three people, even though the absolute amounts of money involved are quite small.  It would be helpful for the small business sector if the government follows how the law affects them in particular.  There may be scope for a reduction in the 50 percent share paid by small employers and an increase in the share paid by large companies.

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