BENGALURU: Early-stage startups and small businesses in India have been shying away from hiring women after the government increased paid maternity leave in 2017, a survey shows. An amendment to the Maternity Benefits Act, passed in March 2017, raised paid maternity leave for women from 12 weeks to 26 weeks, benefitting 1.8 million women workers in the organised sector.
The law applies to all establishments employing 10 or more people, and the entitlement applies only up to the first two children. LocalCircles, a citizens’ forum which surveyed 9,000 early-stage startups and small businesses, said hiring women who will avail of maternity benefits, which includes six months’ paid leave, has turned into a significant economic burden for startups that typically run on shoestring budgets.
In the survey, 46% of the respondents said they hired mostly male employees in the last 18 months.
“We (startups) work on shoestring budgets and paying someone six months of salary without them actually contributing at work is hard,” said Sreejith Moolayil, co-founder and COO at True Elements. While larger, well-funded players such as Flipkart and Ola could pay employees on a six-month maternity leave, smaller firms often don’t have a bench strength, forcing them to hire a replacement. “It’s literally a double cost to us,” Moolayil said.
While the government late last year said it will refund employers for seven weeks of pay given to an employee on maternity leave, startups and SMEs said it isn’t enough to cover the cost. As per the survey, 65% of the respondents said that even 19 weeks of pay would be too much for them to absorb.
A letter sent by LocalCircles to Santosh Kumar Gangwar, minister of labour and employment, on March 8, proposed that the government should exempt startups and SMEs from the Maternity Benefits Act, 2017, if they have less than 20 employees or an annual revenue of less than Rs 10 crore. The proposal was backed by 61% of the respondents who took part in LocalCircle’s survey.
“The focus on hiring a competent employee is still there, but the focus on improving diversity has taken a back seat. Our survey in startup hiring shows that if there’s a prospective male and a female hire with equal competency, startups today prefer to hire the male,” said Anshuman Das, founder of CareerNet.
“Earlier, they’d usually end up hiring the female, because these startups were looking to improve diversity.”
According to the latest Monster Salary Index report, women still earn 19% less than their male counterparts in India. This gap has decreased by 1% from last year. Further, the report adds that women-led businesses received only 65% of the funding secured by male-led ones.
However, not all small startups agree that maternity benefits need to be scrapped. Rohan Shravan, founder of AI startup Inkers Technology said that among his team of nine employees, three are women, and unlike many firms of its size, they even offer extended paternity leave benefit to employees.
“We need to equally support our employees regardless of their gender. When required, we’ve seen that women actually spend more time in office than men when there is need.
Startups are frugal and fast and if we know someone isn’t going to be there for those many weeks, we figure something out. So I don’t think we need an exemption from the law,” Sharvan said