Currently, parents take family leave unevenly. This is especially detrimental to the position of women in the job market and their income, which has both short- and long-term effects. The aim of the family leave reform is a more even distribution of child-rearing responsibilities between the parents of a family. This is done to improve equality between women and men, both in the family and in working life. Furthermore, improvement is sought in the welfare of children and families, and in the gap between women’s and men’s pay and pensions.
The new parental allowance and leave system seeks to promote a more equal model of parenthood and that both parents have an equal right to the use of the allowance and leave. Furthermore, current parental allowance legislation is outdated and has become very complex due to a number of partial legislative amendments. The reform seeks to clarify the regulations, include different types of families, and consider the varying needs of families.
The EU Work-Life Balance Directive, which Finland has committed to, also requires certain changes in the regulations concerning parental allowance and family leave.
What will change?
The parental allowance system would be reformed in its entirety: the total number of parental allowance days would increase, and more days would be allocated for each parent. Due to the changes in the parental allowance system, some changes would be made to the parental leave provisions of the Employment Contracts Act. Supporting changes would also be made in the Act on Early Childhood Education and Care and the Act on Client Fees in Early Childhood Education and Care.
Each parent would have a quota of 160 days of parental allowance. There are six allowance days in a week, meaning the model would result in 12.8 months of parental allowance per child. A maximum of 63 allowance days would be transferable to the other parent, for example. In addition, a 40-day pregnancy allowance would be added to cover the end of pregnancy, meaning there would be a total of over 14 months of allowance days. Single parents would be entitled to both quotas. They could transfer 126 allowance days. Twins, triplets, and other multiple births would be an exception to the model: in these families, the allowance quota would be extended by 84 allowance days for the second child and every subsequent child.
Flexibility in the use of parental allowance would increase considerably. The names of the parental allowances would change.
The system’s entire base structure would be modernised. This is also required by the Work-Life Balance Directive. Other countries are headed in the same direction.
Employed parents would be subject to the family leave provisions of the Employment Contracts Act as they are now. The main changes to the Employment Contracts Act would concern the naming of family leave types and the periods when parental leave could be taken. More periods of parental leave would be allowed.
In addition, the employer would be required to give written justification if they decline part-time parental leave. This change is required by the Work-Life Balance Directive.
A completely new feature would be carer’s leave, which is based on the Work-Life Balance Directive. Five days per year could be taken as leave to care for relatives. No allowance would be paid for carer’s leave.
The right of children to early childhood education and care would start from the beginning of the calendar month when the child becomes nine months old. In practice, this is equivalent to the current system.
What remains the same?
The child home care allowance system and the right to leave from work until the child turns three would remain the same. The right to child home care allowance would be made more flexible by making it available before the right to early childhood education and care starts. Other forms of childcare support (private childcare allowance, flexible care allowance and partial care allowance) would remain the same.
Parents would still need to notify employers of parental leave at least two months in advance.
No changes would be made to the content of types of leave other than maternity, paternity, and parental leave.
Pregnant persons could take leave from their job more flexibly. Pregnancy leave could start 30 working days before the expected date of delivery or, upon separate agreement with the employer, no later than 14 working days before the expected date of delivery. Entrepreneurs, students and others with no employment relationship could start their pregnancy allowance at the time of their choosing between 30 and 14 working days before the expected date of delivery.
Parental allowance could be used in free-form periods until the child turns two, removing the obligation to use all of it in one continuous period. For example, parental allowance could be used in shorter periods or for only part of the week, allowing the parents to take turns with the child.
Employed persons would be entitled to a maximum of four periods of parental leave per child.
Part-time workers could apply for partial (halved) parental allowance. Child home care allowance would be available between parental allowance periods after the child is six months old.
In addition, considerations would be made for situations with multiple births in the family within two years. In this case, the maximum would be four periods of parental leave per calendar year.
Research and international comparisons have shown that allocating parental leave to fathers is the most effective way to increase fathers taking family leave. Quotas for parental leave and allowance also motivate parents to make conscious decisions and plans about how childcare is divided between them. Furthermore, the distribution of parental leave and allowance to each parent is used to generally influence the current societal notions of parenthood and the division of duties between women and men. Likewise, the quotas are a signal to employers that parental leave is the right of fathers as well, and that fathers can take longer periods of family leave.
The reform would increase the total number of parental allowance days. Parental allowance days, 320 in total, would be evenly distributed between the parents (160 days/parent), and each parent would be allowed to transfer up to 63 allowance days to the other parent. Therefore, the number of days for the mother would not decrease compared to the current situation, as was promised in the government programme. The model would introduce a significant extension to the father’s quota. Increasing the quotas and number of allowance days further would lead to a substantial increase in expenditure, even though the model might not encourage fathers to take any more leave. Compared to the current model, a more restrictive model with no transferrable days would hurt families where one parent would not use any parental allowance or only use it for a short time.
The reform is planned to come into force on 1 August 2022. The proposed changes in legislation are due to be discussed in Parliament in autumn 2021, which means they could be approved in late 2021 at the earliest. As this is a wide-reaching reform, sufficient time must be reserved for its preparation. Among other things, the reform will require updates to Kela’s information systems and communications to future parents, as well as the training of various authorities.
As the entire parental allowance system would change, the new parental allowances would be introduced in stages. The new regulations would only apply to those families whose right to parental allowance starts after 1 August 2022. In practice, this would mean that pregnancy allowance, generally granted based on the expected time of delivery, would start on 1 August 2022 or later. If the maternity allowance period is due to start before the act comes into effect, the current parental allowance regulations will apply (including the other parent).
The reform would have a number of effects, some of which are measurable only in long-term. The reform would affect families and children, but also working life and society as a whole.
The main objective of the reform is to distribute family leave and childcare responsibilities more evenly between the parents. If successful, this will have many positive effects. Children will have a close relationship with both parents from early childhood, which will have far-reaching effects on a child’s life. A more even distribution of parenthood and childcare responsibilities between the parents may well have a positive impact on the relationship of the parents.
A more even distribution of family leave is expected to have a positive effect on the professional careers and job market position of women, improving their wage development and future pensions. A more even distribution of family leave will also have an effect on employers and work communities: fathers and mothers will have an equal opportunity to take family leave.
The reform increases the freedom of choice for families regarding the use of parental allowance. The reform also improves the equality between children in different types of families and their opportunities for parental care.
What are the effects on expenditure?
The reform seeks to distribute family leave more evenly, which would primarily lead to fathers increasingly using their right to take family leave. If successful, the total cost of family leave to society would increase due to the increased number of allowance days used by fathers.
It is extremely difficult to estimate how much fathers would increase their use of parental allowance. The cost estimates are based on the current level of paternity allowance and assumptions regarding the behaviour of parents after the reform. One should bear in mind that currently 80 per cent of fathers are not using their paternity allowance, or only use it partially. In total, the reform is estimated to increase public expenditure by EUR 80 million.