AMERICAN CHAMBER OF COMMERCE IN KOSOVO
ODA EKONOMIKE AMERIKANE NË KOSOVË
AMERICKA PRIVREDNA KOMORA NA KOSOVU
Prepared by:
Arian Zeka, AmCham Acting Executive Director
Visar Hapçiu, AmCham Policy and Project Officer
Fehmi Agani Str. 36/3
10 000 Prishtina, Kosovo
Position Paper on the Maternity Leave Provision of Law on Labour
Problems and Possible Solutions
Prepared for:
Ministry of Labour and Social Welfare
CC: Parliamentary Committee on Health, Labour, and Social Welfare
Parliamentary Committee on Economic Development, Infrastructure, Trade and Industry
Parliamentary Committee on Human Rights, Gender Equality, Missing Persons and Petitions
Prime Minister’s Office
Other relevant stakeholders
May, 2012
Prishtina
Supported by
I.
Introduction and Presentation of Issue
The new Law No.03/ L-212 on Labour (2011) entered into force in the Republic of
Kosovo in January 2011 after the approval by the assembly of the Republic of Kosovo. This law
covers the vast majority of the employees and employers that operate in Kosovo.1 Paragraph 1,
Article 49 of that law regulates the maternity leave of employed women in Kosovo, and states in
relevant part:
Article 49
Maternity Leave
1. An employed woman is entitled to tweleve (12) months of
maternity leave.
***
3. First six (6) months of maternity leave, the payment shall be
done by the employer with the compensation of seventy percent
(70%) of basic salary.
4. The following three (3) months, the maternity leave shall be
paid by the Government of Kosovo with the compensation of fifty
percent (50%) of average salary in Kosovo.
5. The employed woman shall have the right, upon this Law, to
extend her maternity leave also for other three (3) months without
payment.2
1
The scope of coverage of the Law on Labour is broad. Article 2 of that law determines the scope and states in full:
1. Provisions of this Law shall be applicable for employees and employers in the
private and public sector in Republic of Kosovo.
2. Provisions of this Law shall be applicable for employees and employers,
whose employment is
regulated through a special Law, if the special Law does not provide for a
solution for certain issues deriving from employment relationship.
3. Provisions of this Law shall be applicable for foreign citizenship employees
and persons without citizenship, who are employed to employers within territory
of Republic of Kosovo, unless otherwise provided by Law.
4. Provisions of this Law shall not be applicable to employment relationships
within international missions, diplomatic and consular missions of foreign
states, International Military Presence established in the Republic of Kosovo
under the Comprehensive Proposal for the Status Settlement and international
governmental organizations.
2
Article 49.1 of Law on Labour.
Furthermore, the same article states that the leave can be utilized up to 45 days before the
expected date of birth.3
In general, the Law on Labour, including the cited provision, has been deemed as being
in line with best practices and standards of the International Labour Organization (ILO), as well
as the Acquis Communautaire of the European Union, which should serve as a testimony of
Kosovo’s ambitions for European Integration. The American Chamber of Commerce in Kosovo
(hereinafter “AmCham”) applauds the dedication of Kosovo institutions toward European
integration and harmonization of Kosovo legislation with EU directives.
However, although the law has been drafted according to these guidelines, it has been
assessed that, in practice, certain provisions of this law are unenforceable in Kosovo and not in
line with the overall economic conditions of the country. The chief implementation issue rests
with paragraph 3 of Article 49, which states: “First six (6) months of maternity leave, the
payment shall be done by the employer with the compensation of seventy percent (70%) of basic
salary.”4 Research performed by AmCham shows that this provision, rather than protect women,
it indeed encourages discrimination against women at the hiring stage. Given the current stage
of economic development and the conditions that businesses face in Kosovo in terms of cash
flow and access to finance, it has been proven in practice that this provision increases the burden
on Kosovo businesses. To avoid such burden, businesses have begun avoiding hiring women in
the recruitment processes. This has been emphasized in many meetings and focus groups which
3
4
id.
Article 49.3 of Law on Labour.
AmCham held with business representatives in the past, as described in a document published in
October 2011.5
The following sections of this position paper present, compare and evaluate three
possible policy choices, listing advantages and disadvantages of the three options, namely: (i)
continuing with the current version of the Law on Labour that entitles women to twelve (12)
months of maternity leave; (ii) continuing with the same number of months of maternity leave,
but decreasing the amount which employers are obliged to compensate to their employees by
calculating the employer’s obligation based on Kosovo average salary as opposed to the
employee’s salary; and (iii) making amendments to the maternity leave provision in order to
decrease the maternity leave to nine (9) months. In the end, the recommendation section will
prove why changing the maternity leave will improve the position of women in Kosovo’s labor
market.
5
See Zeka & Hapçiu, “Kosovo Business Agenda 2011”, 2011.
II.
Policy Options to Advance Protection of Women in Workplace
There are several options on how to resolve the current predicament that would improve
the implementation of the law and avoid the negative consequences on women workers that have
stemmed from the Law on Labor. Each of these options are addressed respectively.
Policy Option 1: Continuing with the Current Version of Maternity Leave Provision
The first policy option would be to proceed with the current policy (status quo). A major
advantage of the current provisions regulating maternity leave is that the already employed
women in Kosovo enjoy favorable conditions in cases of pregnancy. This may also serve as an
incentive for women to increase their willingness of obtaining a job. In addition, this law might
also affect the birth rate indirectly, given the favorable conditions which are guaranteed to
employed women deriving from this law.
However, it is crucial to note that this law is not in harmony with the current economic
situation in Kosovo that businesses are currently experiencing. The fact that employers are
obligated to compensate seventy percent (70%) of the employee wage for a period of six (6)
months, for all female employees on maternity leave, poses a serious burden on businesses,
especially in terms of cash flow. As a result of this positive intent, in practice, the employment of
women by private businesses has suffered a negative consequence, namely the business
community has been discouraged to hire women out of fear of imposing on themselves a
potentially unbearable financial burden. Unfortunately, as “Kosovo Business Agenda 2011”
document reveals, some employers have began a practice of offering only 6-month contracts to
their female employees, while others claim to have reduced the number of female employees
altogether.
Given the already challenging environment which businesses face, as evidenced in
Kosovo Business Agenda 2011 document, posing such burdensome requirements on maternity
leave will further discourage businesses from hiring female employees, which will ultimately
lead to a worsened position of women in the labor market in Kosovo. Thus, maintaining the
current version of Article 49 of the law not only does it not protect women, rather, it encourages
inequality through gender discrimination. As a result, AmCham does not support the maintaining
of this version.
Policy Option 2: Decreasing the compensation made by employers
A possible policy option to resolve the current problem with Article 49 would be to
decrease the compensation done by employers during the first six months of the maternity leave.
Paragraph 4 of Article 49 currently states: “The following three (3) months, the maternity leave
shall be paid by the Government of Kosovo with the compensation of fifty percent (50%) of
average salary in Kosovo.”6 In this direction, a possible solution would be to amend the current
law so that employers are required to pay fifty percent (50%) of the average wage in Kosovo for
the foreseen period of six months, as opposed to the salary of the employee. This option has its
advantages and disadvantages.
A major advantage of this option is that businesses would be encouraged to employ more
women in their workforce, given that this option would vastly reduce the financial burden on the
business community, as compared to the current situation. This could potentially contribute to
the overall efforts of our government to increase the percentage of women employment in our
country and promote gender equality.
6
Article 49.4 of Law on Labour.
On the other hand, AmCham emphasizes that amending the current law to address this
recommendation would not solve the problem of women employment in Kosovo. Given that the
compensation in case of maternity is low, women would be less encouraged to become part of
the labor force. In addition, the compensation rate of only 50% of the average wage in Kosovo
for nine (9) months (six (6) from employers and three (3) from the Government) would not be
completely fair toward female employees.
Adopting this option would likely help in making positive strides towards the overall goal
of placing more women in the workforce, as this is a very business-friendly option. However,
while this option would encourage businesses to hire women, it would certainly discourage
female employees from having children because they would suffer substantial wage reduction
during the maternity leave. Thus, it is AmCham’s strong stance that this policy option should not
be pursued.
Policy Option 3: Amending the Maternity Leave Provisions of the Labor Law
The third policy option would be to decrease the maternity leave period from twelve (12)
to nine (9) months, out of which, three (3) months would be paid by businesses at a rate of 70 %
of the employee’s salary, the other three (3) months would be paid by the Government of
Kosovo at a rate of 50 % of the average wage in the country, while the remaining three (3)
months would be unpaid leave. Although this would benefit employed women less as compared
to the current provision in the law, in the long run, it would be beneficial because of the
incentives which employers will have in hiring women.
Firstly, this option would again be in line with EU directives and standards of the ILO,
thus not damaging Kosovo’s aspirations for Euro-Atlantic integration. ILO standards state that
women should be entitled to at least 14 weeks of maternity leave.7 In addition, the EU Directive
92/85/EEC on Maternity leave grants women the right of at least 14 weeks of maternity leave in
case of pregnancy. Thus, reducing the time for maternity leave from 12 months to 9 months
would not be in conflict with either of the above standards.
Secondly, the adoption of this policy would have no budget implications whatsoever for
the Government. The provisions of the current law require the Government to pay 50 percent of
the average wage in Kosovo for three months after the first 6 months of the maternity leave.
With our proposed policy option, the Government would continue to pay the same amount for
the same period, given that the change would only decrease the number of months for which
employers are obliged to compensate during the leave.
Thirdly, a major advantage of reducing the maternity leave from 12 months to 9 months
is that the private sector would be encouraged to employ more women in their companies, given
that the burden of businesses in case of pregnancy of their employees is lower. At the same time,
it provides substantial financial support to the female employees wishing to benefit from the
maternity leave provision.
The following table illustrates the burden which businesses face with regards to maternity
leave, given the provisions on maternity leave of the current labour law, assuming that a female
worker receiving a salary of 1,000 euro per month takes a maternity leave:
7
International Labour Organization, “Maternity at work - A review of national legislation”, 2010.
CASE 18
Salary Costs for 12 months:
1,000*12= 12,000 euro
CASE 29
Payment done to the worker in
maternity
leave:
70%*1,000*6= 4,200
Payment done to replacement
worker during the leave:
1,000*12=12,000
CASE 310
Payment done to the worker in
maternity
leave:
70%*1,000*3= 2,100
Payment done to replacement
worker during the leave and
three months of payment when
the worker returns:
(1,000*9)+(1,000*3)=12,000
Total Costs: € 12,000
Total Costs: 16,200
Total Costs: 14,100
As the table reveals, the current provisions of the maternity leave increase the costs of
private companies to employ women. This example depicted a case where only one female
employee took a maternity leave, which alone increased company’s costs by €4,200 in a given
year. If five female workers were to take a maternity leave, the costs increase would amount to
€21,000 in a given year. This alone discourages companies from hiring female employees and/or
encourages the offering of short-term contracts to female employees.
On the other hand, if maternity leave provision of the Law on Labour would change to
reflect policy option 3, the costs to businesses when their female employees take maternity leave
would decrease significantly, as illustrated by the table above. Resultantly, it is crucial to
decrease the number of months of maternity leave permitted by law and that require employers
to compensate 70 percent of regular employee wages, so that it additionally alleviates the
practice of avoiding hiring women that is currently present as a consequence of the current
version of the Law on Labour.
8
CASE 1 illustrates financial implications for a given company when its female employee receiving a salary of €
1,000 per month is not in maternity leave
9
CASE 2 illustrates financial implications for a given company when its female employee receiving a salary of €
1,000 per month is on maternity leave, given the current provisions of the labor law
10
CASE 3 illustrates financial implications for a given company when its female employee receiving a salary of €
1,000 per month is on maternity leave, given the proposed provisions of the labor law
III.
AmCham’s Position and Recommendations
American Chamber of Commerce in Kosovo proposes that the maternity leave should be
reduced from 12 months to 9 months. This position has been taken based on thorough research
and with the objective of removing the negative impact of the Law on Labor on women workers,
including but not limited to discrimination, which female employees face during the recruitment
processes. In that vein, AmCham proposes that the 9-month maternity leave be structured as
follows:
-
3 months of paid leave where the compensation shall be done by the employer at a rate of
70 percent of employee’s salary;
-
3 months of leave where the compensation shall be done by the Government at a rate of
50 percent of the average wage in Kosovo;
-
3 months of unpaid leave;
As stated earlier, this recommendation or this policy is in line with EU Directives and
with standards promoted by the International Labour Organization. In addition, this policy will
not have any budget implications for the Government of Kosovo, because the compensation from
the government will not be altered. Although this option would certainly be less financially
beneficial to the female employees that take advantage of the maternity leave, such financial
benefit would be completely offset by the fact that this option would reduce the cases of
discrimination and would encourage a gender neutral recruitment process.
Thus, we can
conclude that reducing the number of months of maternity leave during which businesses are
obligated to compensate their female employees, will be directly correlated to an increase in the
number of female workers hired by Kosovo companies.
IV.
Conclusion
AmCham reiterates its willingness and availability for a continued and strong cooperation
with state institutions with the aim of strengthening the private sector in Kosovo and improving
the overall doing-business environment in the country. This policy paper has been prepared as
part of AmCham’s overall objective, and is motivated by the sheer need of the current business
environment and the state of women workers. Thus, the resolution to this serious problem in line
with AmCham’s recommendations would very likely contribute to the overall improvement of
the business environment in Kosovo.
Bibliography
Assembly of the Republic of Kosovo. (2010). Law on Labour. Prishtina, Kosovo.
International Labour Organization. (2010). Maternity at work - A review of national legislation.
Geneva. Retrieved from
http://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/@publ/documents/publi
cation/wcms_124442.pdf
Zeka, A., & Hapçiu, V. (2011). Kosovo Business Agenda 2011. Prishtina: American Chamber of
Commerce in Kosovo. Retrieved from
http://www.amchamksv.org/images/userfiles/files/4409_kosovobusinessagenda2011finalf
orweb.pdf