Canadians offered 18-month parental leave: Can you afford it?

In the Liberal Government’s newly released 2017 budget, parental leave has been extended from 12 to 18 months. This actually has both benefits and pitfalls for parents.

With this new policy, parents won’t receive any more money from employment insurance, but they have the option of stretching their existing payout over a longer period of time. So, while EI benefits would pay 55 per cent of your salary over 12 months of parental leave, Canadians now have the choice of taking 33 per cent over 18 months instead. And there’s a cap. The maximum payout is $543 per week over 12 months. Stretching your leave to 18 months means you would receive a maximum of $362 a week.

One of the benefits of this is that it can help parents with the issue of finding affordable daycare. Obviously the longer a parent stays home with their new baby, the less time the child will spend in daycare. Also – my wife and I went through this search just a few years ago – daycare is much more expensive and hard to find for children under 18 months of age.

Of course, one of the drawbacks to 18 months of paternity leave is that few people can live off merely 33 per cent of their salary. Taking two-thirds off your paycheque would often be a bigger financial hit than the cost of daycare. So, it remains to be seen how many families will be able to afford taking advantage of this new policy.

Some employers do offer top-up benefits to add to what new parents receive from EI, but will they extend these over an extra six months? Companies are going to have to decide what effect these new extended periods of leave will have on such policies.

The impact on businesses is another potential pitfall with parents taking a year and a half off work. Companies must protect new parents’ jobs while they’re on leave, but 18 months is a long time to be off work. Recent studies have shown that the average tenure in any one job for most Canadians is just under two years. That means that a person could find themselves returning from parental leave to find a whole new team in place. That team would also likely be working on completely different projects with new targets and new technologies than they had when they left.

The business world moves that fast now, and companies making decisions based on hitting this quarter’s numbers or shifting departments for a six-month plan. Returning to your job after 18 months off will often be much more like starting a whole new job – requiring a fresh onboarding and training. This means that workers could see their careers set back due to the lack of skills development and could find themselves pushed to the back of the line for opportunities for advancement.

Of course, if you can afford it, and your career can endure the time away, the biggest benefit of all to an extended parental leave is that time you get to spend with your new baby. Those are moments you’ll never get back.

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