Government funding of parental leave may not fully address operational concerns, say businesses

ALTHOUGH the government is picking up the tab for increases in parental leave, this may not solve the problem of having to make covering arrangements for extended periods, said industry associations.

Small businesses in particular could find it hard to adjust, said Ang Yuit, president of the Association of Small and Medium Enterprises (Asme).

Their operational worries include business continuity concerns if a key staff member takes extended leave, and finding temporary staffing – particularly for roles or industries that require specialised skillsets, said Ang.

Prime Minister Lawrence Wong announced on Sunday (Aug 18) that new parents of Singaporean children will get 10 weeks of government-paid leave to share, on top of existing entitlements.

This will be implemented in two phases – six weeks for parents of babies born from Apr 1, 2025, followed by the full 10-week entitlement a year later.

From Apr 1, 2025, mandatory paid paternity leave will also double to four weeks. With these changes, parents will be entitled to a shared total of 30 weeks of paid parental leave, up from 18 weeks now.

Hard to cover

The extra leave entitlement is more likely to pose immediate challenges to SMEs, which typically operate with leaner teams and smaller budgets, said Mark Li, Asia-Pacific vice-president of business development at recruitment agency Randstad.

This is unlike large multinationals, many of which already offer generous maternity and paternity benefits beyond statutory entitlements, noted Laure de Panafieu, partner and Asia head of employment and incentives at law firm Linklaters.

With their small staff strength, many SMEs only have a few decision-makers in key positions, said Asme’s Ang.

If such people are away for longer periods of time, this could have negative downstream implications on projects if the transition is not handled well, he warned.

“It may get the company into a difficult situation,” said Ang. “For instance, you may actually end up losing money in the long run because your key guy cannot fulfil the project on time.”

But a new notice requirement should go some way in moderating these challenges, he added. To help employers, parents will have to give at least four weeks’ notice before taking any government-paid parental leave.

Beyond leadership roles, SMEs often have a single person performing corporate functions such as human resources (HR) or accounting, noted Juliet Tan, director of outsourced HR service provider Emplifi HR.

If that person takes extended leave, their SME employer may have to outsource these functions or hire a temporary replacement.

“If the job market stays soft, I think you can still find contract workers, from unemployed Singaporeans and the like,” she added. “But if the job market (becomes) stronger, you will find it harder to find contract workers down the line.”

And in industries or job roles which require specialised skillsets, “finding suitable temporary replacements isn’t always easy”, said Mark Lee, vice-chairman of the Singapore Business Federation (SBF).

He named sectors such as healthcare, security services and food services, as well as roles such as on-site supervisors for construction and manufacturing.

For service-oriented businesses such as traditional Chinese medicine clinic chain Oriental Remedies, it is challenging to find replacements who can match the exact schedules of the practitioners they are covering, said chief executive officer Beatrice Liu.

“All our patient-facing roles will be particularly challenging to fill during extended leaves due to the specialised skills required and the importance of maintaining consistent care quality,” she added.

In such a setting, where the relationship between patient and physician matters, patients could also be reluctant to see a replacement, which could affect business.

And businesses could also incur additional costs due to “overlapping periods” where both the returning employee and temporary staff are needed.

Said SBF’s Lee: “To help businesses manage these challenges, we hope the government can consider extending one to two months of pay coverage for returning employees, which would go a long way in offsetting the operational impact.”

How to cope

Still, given the lead time before the changes kick in, business leaders can plan and adjust their operations, noted Singapore Manufacturing Federation president Lennon Tan.

“To mitigate these challenges, companies may need to consider cross-training employees… and possibly exploring automation to reduce the dependency on specific roles,” he said.

On its part, Asme will produce a step-by-step playbook by year-end to help its members adjust to the changes.

The association will also seek government funding to run workshops and courses to bring SME bosses up to speed on HR best practices, and aims to introduce these next year.

Employers can look at increasing the diversity of their workforce, such as hiring older or younger people “who are willing to work and are free from their childcare responsibilities”, said Rahul Chawla, head of talent solutions for South-east Asia at Aon.

Another concern is the impact on employees who have to cover for their absent colleagues. Businesses can make this easier, said Robert Walters Singapore director Kirsty Poltock, by giving increased bonuses for the period spent covering their colleagues.

Good management of staffing needs will increase employee morale, noted Benjamin Boh, vice-president of the Restaurant Association of Singapore.

“But those who don’t (manage these well) are likely to have trouble in not only hiring, but retaining (a) younger workforce who might have an interest in F&B but also want to start or expand families,” said Boh.

Higher take-up rate expected

As for whether fathers actually take up their increased leave entitlement, observers expect so – though it could take time for mindsets on child-rearing responsibilities to change.

According to the latest data available from the National Population and Talent Division, the take-up rate for paternity leave was 50 per cent in 2022.

Having the new leave scheme be shared is thus a good step, as it signals that childcare responsibilities should be equitable between parents, said Robert Walters’ Poltock.

By default, the extra weeks will be distributed equally. Parents can freely reallocate this entitlement between themselves in the first four weeks after the child’s birth; after this, their employers’ consent is required.

By signalling that fathers need to pull their weight in parenthood, the increased paternity and shared leave entitlements may also encourage more women to stay in the workforce when becoming mothers, said Aon’s Chawla.

Having more women remain present in the workforce can create a “virtuous cycle”, as a more gender-balanced workforce would give men more room to take up paternity leave, he added.