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Australia vs USA: Whose maternity leave is better?

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Paid parental leave is crucial for so many families as they try and get on the front foot with their financial planning.

In April this year, San Francisco became the first city in the United States of America to approve fully paid maternity leave for six weeks. Previously, parents would only receive 55 per cent of their income over this period.

While legislation differs between states and cities in the USA, it prompts the question - how does Australia's maternity leave compare to the most powerful country on the planet, and the rest of the world?

Australia vs USA: What we do well

Under the Department of Human Services in Australia, Parental Leave Pay is the minimum weekly wage ($672.60), guaranteed over a total of 18 weeks (six of maternity leave, and 12 of paid parental or home care leave. There is also Dad and Partner pay, which can be paid for up to two weeks. Parental Leave pay is  subject to residence and income-based requirements, but applies  across the nation.

In the United States, things are a little different. A 2016 OECD study found that the USA was the only country without a nationally implemented paid leave entitlement for parents. Only some states (California, Connecticut, Massachusetts. New Jersey and Rhode Island) have passed laws for paid parental leave.

So, at a federal level, Australia is ahead of the USA when it comes to paid parental leave.

Australia and the rest of the world: Where we can improve

Although Australia’s parental leave entitlements are better than the USA’s at a federal level, we still have plenty of room for improvement when compared to other nations.

The OECD average length of paid parental leave is 54.1 weeks, with the period extended as long as 166 weeks in Estonia, meaning Australia is toward the bottom of the table. Surprisingly accompanied by the Netherlands on 16 weeks.

We are also behind many countries when it comes to the proportion of regular income that received while on paid parental leave. The OECD data shows that in Australia, minimum wage payments account for, on average, 42 per cent of what people earned prior to taking the leave.

It’s here that the Netherlands shines with parental leave set at 100% of normal earnings. They are accompanied by many other first world nations like Spain, Estonia and Israel and surprisingly by some in the developing world including Chile and Mexico.

Australia may come out on top of the US, but we still have a long way to go compared to most other countries.

Paid parental leave helps Australian families at a time when budgets can be stretched thin - not to mention the effort it takes to continue building financial security during this time.

If you need financial advice ahead of a potential parental leave period, talk to your local Yellow Brick Road representative about making your money work.