A PLAN to double salaries for new mums returning to the workforce has won high praise, but the cost of matching the scheme could be prohibitive for many businesses.

A major employer’s decision to provide extra financial support for working mothers has set an example for other businesses to follow, according to the Australian Council of Trade Unions (ACTU).

Insurance Australia Group (IAG) last month announced it would sweeten its current parental leave policy by paying new mothers double their salary for the first six weeks after they return to the workforce.

The bonus is on top of 14 weeks’ parental leave on normal pay. The overall package easily exceeds the 18 weeks of parental leave available under government-imposed guidelines.

Mike Wilkins, managing director and CEO, says IAG had made the new offer as part of its commitment to creating a family-friendly workplace.

“Companies that embrace diversity and flexibility attract and retain high-performing individuals who ultimately perform better," says Wilkins.

“As an organisation we are supporting our people at a time when, generally, they most need extra financial support and more flexible work options."

Ged Kearney, president of the Australian Council of Trade Unions (ACTU), praised the IAG initiative.

“This is the sort of system we would like to see more employers embrace in the same spirit, not just in the finance sector but throughout the economy,” she says.

“Not many employers are actively seeking to help their workers by negotiating flexibility in workplace agreements.”

Small Business Improvement Services’ owner Helen Cowley says this strategy may work for bigger companies, but smaller businesses that employ 30 employees or less do not make sufficient revenue to adapt such a scheme.

“I don’t mean to condone IAG’s new payment scheme to mothers, but instead of paying women more to return to work, why not open a day-care facility within the premises and maybe subsidise child care costs?” she asks.

“In that way, women can work at ease and not worry about their children or the high costs of day-care. Even small businesses can adapt this strategy because it’s not hard to convert one big room to child care.”

Kearney encourages all businesses to look for solutions within their operations that provide better work-home balances.

She believes many situations in the workplace disadvantage women who want to take time off to start a family.

“A greater willingness by employers to negotiate returns from parental leave would reduce the high incidence of insecure work among women,” she says.

Research by The Australia Institute found that primary carers can expect to earn about 4 per cent less per hour on average than they would if they did not have a child.

Taking time off work for parental duties also can temporarily derail a female worker’s claims for a pay rise, and as a result they also lose out on significantly growing their superannuation nest egg.

As a result, the majority of working women have lower superannuation balances than men when it comes time to retire.

Wilkins says IAG undertakes remuneration reviews with women who take parental leave.

“This is to ensure their pay remains fair and consistent with colleagues,” he says.

Wilkins says IAG aims to have a third of all senior management positions filled by females within three years.

“We want IAG to be the employer of choice for mothers by cultivating a family-friendly work environment," he says.

“I believe our program will give potential employees more reasons to consider our organisation as an employer and retain current employees with the organisation.”

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