This report differs from others because of its consideration of times of economic downturn. In a recession, increased Government spending on transfers may seem undesirable. However, longer PPL should slightly reduce redundancies, because new parents will voluntarily leave the workforce for longer. For employees, this increases job security. For Government, it means money will be spent on PPL rather than unemployment benefits. Moreover, PPL provides job-security, which would ensure Government’s expenditure is temporary. For employers, this reduction in redundancy would mean less is spent on redundancy packages. Also, during recessions, there are more ‘buyers’ in the job market. This would ease employers’ search for replacement staff.
Once we move out of recession, lengthening PPL makes even more sense. This is because revenue from taxes should be higher, making it feasible for Government to increase spending on transfers. Economic growth will also increase employers’ concern for retaining skilled staff. Lengthened PPL would mean that parents who would resign under shorter PPL may, instead, return to work after a satisfactory leave period.[1]
[1] This argument is expanded upon below, in the discussion of parents’ concerns.