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Can Canadians afford the new parental leave options?

Taking a baby break may be a no-brainer for those whose employers top up their benefits, but many will experience lower income if dads take time off

A baby travelling with it's father on a public busThe new Parental Sharing Benefit is available when parents of a baby born or adopted on or after March 17, 2019, agree to share their parental leave (Getty Images/Mayte Torres)

New paid parental leave options are available to Canadian parents, allowing an additional five to eight weeks of leave for fathers and other non-birth parents. 

But can Canadian families afford to take the new leave option?

The goal is to encourage more men to take leaves, thereby reducing discrimination against mothers in the workplace said Jean-Yves Duclos, Canada’s Minister of Families, Children and Social Development, when he launched the program at a news conference last month.

This program is similar to one that has been available in Quebec since 2006, where a benefit replaces 70 per cent of the non-birth parent’s income for up to five weeks. According to Statistics Canada, about 86 per cent of fathers took a leave in 2015 in that province, compared to about 12 per cent in the rest of the country.

NEW LEAVE OPTIONS

The new Parental Sharing Benefit is available when parents of a baby born or adopted on or after March 17, 2019, agree to share their parental leave. Both parents must choose the same leave option—either standard or extended.

For standard leaves, the new benefit:

  • increases the maximum amount of shared time available from 35 weeks to 40, with the second parent taking at least five weeks
  • replaces 55 per cent of the second parent’s income for up to five weeks

For extended leaves, the new benefit:

  • increases the maximum amount of shared time available from 61 weeks to 69, with the second parent taking at least eight weeks
  • replaces 33 per cent of the second parent’s income for up to eight weeks 

BARRIERS TO PARENTAL LEAVE

For families who don’t qualify for parental leave—about 38 per cent of Canadian mothers outside of Quebec, according to a 2016 study—options include applying for provincial social assistance programs, which are often tied to employment expectations, or self-funding a parental leave.

But even if they qualify for paid leaves, taking a break from work can be a challenge for many families. And that’s particularly true for men, says Joyce He, a PhD candidate in organizational behaviour and human resources management at Rotman School of Business.

“A lot of people men might think fatherhood means being a provider,” she says. “It varies depending on race and socioeconomic status, but men from more low-income families might associate providing with being a father.”

And even for men who wish to take a leave, barriers exist, He adds. It’s partly due to the wage gap. When income replacement is not topped up, she writes, “if the father is the higher earner in the family, his leave is potentially costlier for family finances.”

That means that only those with at least one parent who earns a high income or whose employers top up the benefit can afford to take advantage of generous parental leave options, He points out.

THE EMPLOYER’S ROLE 

Some companies see parental leave income replacement as a competitive factor that helps them attract and retain employees, says Richard Yerema, managing editor at Mediacorp Canada, which publishes a list of Canada’s Top Family-Friendly Employers.

All the employers that made the 2019 list top up benefit payments so that families on parental leave do not experience a significantly lower income, notes Yerema. Though a range exists, more generous leave plans add to the government payment enough to nearly replace the employee’s full income. For example: 

  • At Fidelity Canada, a parental leave program tops up the benefit to as much as 100 per cent of the employee’s salary for 25 weeks. 
  • At Vancouver City Savings Credit Union, it’s 85 per cent of the employee’s salary for 61 weeks. 
  • At Desjardins, a top up for mothers replaces as much as 95 per cent of their salary for 18 weeks; for fathers, it’s 95 per cent for 12 weeks.

Those generous policies are new in the last 20 years, Yerema notes. “There’s a greater understanding among employees that there are employers out there who can help you with this,” he adds.

GETTING READY TO EXPAND YOUR FAMILY? 

CPA Canada’s publication, Babie$: The Real Story of How Much They Cost, is a powerful tool that can help you create a baby budget, plan your parental leave, guide you through different childcare options and make you aware of the hidden costs associated with your growing family.

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