Fertility crisis: impact on employment

Becoming a parent, however, can be a complex and difficult journey for many. Statistics published this month by the World Health Organisation reveal the scale of this problem, with one in six people now affected by infertility across the globe. Alongside these trends, female participation in the labour market is growing, meaning that women are more likely to be in work when they have a child or when struggling with infertility.

What impact might these global phenomena have on employers and their HR Policies? Why are some employers adopting fertility policies, and is this a trend which is likely to take off more widely? This article considers these questions by drawing on the experiences of our lawyers across countries facing some of the lowest fertility rates.

Low fertility rates are driving demographic change across many countries. If fertility levels drop very low, this can present significant challenges for society, as discussed by Professor Wolfgang Lutz in our report published today. Any drop in the number of children may, however, have an impact on employers caused by an ageing population and a shortage of younger workers.

In the long run, worker shortages may be addressed by automation. In the meantime, some countries/employers can attract other countries’ workers to fill the gaps (although this depends on immigration laws and generates political controversy in some places).  Many more countries are likely to raise retirement ages to extend the working age of the population, as the French government is currently attempting to do in the face of significant opposition. With people living longer, they will need to work longer too because governments cannot sustain lengthy retirements against the backdrop of reduced fertility. This means that employers will need to think harder about how to attract, recruit and retain older workers.  As the workforce ages, HR policies may need to adapt to reflect this. This might involve, for example, offering new types of leave entitlements or flexible contracts designed to cater for the needs of older workers. We explore the practical impact of an ageing workforce in our article how can employers make their workplaces appeal to older workers?

Alongside the need to face the reality of an ageing population, many countries report a desire to increase fertility. The introduction of policies with the single expressed aim of increasing birth rates is rare, but halting a decline in fertility is often one of the motivations behind the introduction of various family-oriented policies.

Some governments have chosen to introduce tax exemptions, tax credits or direct “baby bonus” payments to individuals who have a baby. In Japan, for example, the government pays around USD 4,000 for a birth. It’s not clear that cash transfers or bonuses work in the long run. In Poland, the so-called 500+ programme pays PLN 500 (around USD 116) per month for each child up to the age of 18, which was intended to boost fertility rates but has not achieved this goal. An Australian scheme was established in 2004, shortly after the fertility in the country reached a record low, but was scrapped ten years later after little impact. In 2016, the Italian Ministry of Health launched a “Fertility Day” campaign to promote fertility awareness and encourage Italians to have more children, but the marketing was so controversial that the initiative was never repeated.

On the other hand, research published in 2022 has shown that generous increases in family leave entitlements do increase fertility rates. This is a relatively recent conclusion; previous research has been less clear cut. Family leave entitlements are generally on the increase everywhere, but provision remains uneven. Many countries with very low birth rates and ageing populations are increasing statutory leave entitlements. For example, Hong Kong recently increased maternity leave from 10 weeks to 14 weeks, Greece increased special maternity protection leave from six to nine months, Australia is increasing paid parental leave incrementally to 26 weeks (up from 20), and Japan has been slowly improving paid childcare leave from one to two years.

Boosting fertility rates tends not to be cited as an explicit objective behind these measures but is likely to be perceived by governments as one of the side benefits. Given that recent research is now starting to show that family leave entitlements are genuinely influential, we can expect to see more government attention on them in the years ahead. Any change to family leave rights clearly has an impact on employers, who need to accommodate the changes and consider if they want to offer more generous provision.

Governments wanting to address a fertility rate crash might also look to other employment rights, such as any rights that address job security (which has been shown to be a factor in fertility) or the ability to work flexibly or part-time. Government initiatives are unlikely to succeed, however, if they do not take account of the whole picture, including the availability of childcare. For example, the Japanese government has been making serious efforts to address its fertility crisis.  Nevertheless, our lawyers observe that in practice parents cannot access home help because private citizens are not allowed to employ foreign workers and the local workforce is expensive and reluctant to take on childcare roles (even babysitting). Having children and combining this with a career remains very challenging in Japan.

Many countries caught up in the fertility crisis have legislated to provide a right to time off work for fertility treatment, including Greece, Japan, Malta, Portugal, Italy, Ukraine and France (where employees undergoing fertility treatment have a statutory right to unlimited paid time off for the necessary medical procedures). In some countries (such as the UK and Ireland) legislation along these lines has been under consideration. In Spain, the courts have ruled that employers cannot dismiss employees for repeated absences due to fertility treatments.

Rising maternal ages and increasing awareness of infertility means that employees are increasingly concerned about fertility and more likely to seek medical assistance to conceive.  Some forward-thinking employers are starting to address these concerns and develop fertility policies in response.  Fertility policies may support individuals struggling with infertility issues as part of their overall family-friendly offer.  They can even go as far as helping employees with the costs of egg freezing, if they would like to start a family in future but are not ready to do so immediately. As this article in WIRED discusses, supporting egg freezing was once regarded as pressuring women to put off pregnancy until a later date but is arguably viewed differently now, at least in the US.

Fertility polices are slowly beginning to emerge in countries outside the US too. For example, in Australia, it is increasingly common for enterprise agreements and workplace policies to expressly stipulate that existing personal (sick) leave and carer’s leave entitlements can be used to attend fertility treatment appointments. Some employers are offering fertility leave as a separate entitlement to sick leave: in the past year, major bank Westpac and the NSW Government both introduced five additional days of paid fertility leave as a stand-alone entitlement. In the UK, the Co-op (a consumer co-operative) recently launched a fertility leave policy providing paid leave for employees undergoing fertility treatment for up to ten appointments per cycle for up to three cycles of treatment.  In Ireland, the Bank of Ireland introduced a new policy in February this year offering 10 days’ fertility leave, which follows a similar move by Vodafone Ireland. In Spain, some companies are beginning to include fertility treatment policies in their collective bargaining agreements or equality plans although it is not yet common practice. It is a similar picture in Italy, with a small number of multinational employers offering paid leave for fertility treatment. Policies providing financial assistance for fertility treatment (rather than just time off) are even less common outside the US, but not unheard of. For example, in Australia, Harrison.ai provides up to $10,000 in financial assistance to workers for egg and sperm collection and IVF treatment.

Our lawyers in Singapore and Hong Kong met to discuss this issue at our Apac Managing an International Workforce conference last month and you can watch a recording. They agreed that fertility policies were likely to emerge as a trend in their jurisdictions, and that employers should be more alive to fertility concerns. In both Hong Kong and Singapore, government provision for fertility treatment is restricted to married couples in traditional heterosexual relationships. Private treatment is available (and can potentially be accessed by single people) but is extremely expensive.  In Hong Kong, it is typically carved out of employer health insurance plans altogether. This provides opportunities for global employers to design or negotiate more inclusive benefits packages to attract the best employees in what remains a competitive market.

State provision for assisted conception is patchy across the globe. In some countries (e.g. Poland and Ireland) there is very limited or non-existent state support for assisted reproduction, which could make fertility benefits especially attractive there. Even in countries where there is reasonably good state provision for fertility treatment (e.g. Finland and Spain) fertility benefits can still be valued because, for example, paying for treatment can enable employees to access it much more quickly.

Any global fertility benefit package needs to reflect nuances in local law, healthcare systems and culture. For example, in Belgium, fertility treatment is up to the employee’s health insurance fund, for which the employer is not responsible, and over which it has no influence. In Finland, infertility is not categorised as an illness, meaning it cannot be treated as one, so employers could offer fertility treatments but then find that they cannot accommodate paid sick leave for employees were they to suffer any painful side effects. In Germany, employees are generally very privacy-conscious and fertility issues are regarded as particularly personal, meaning that employers could offer benefits but find that employees are reluctant to apply for them until their privacy concerns are addressed. In many countries, assisted conception is a very sensitive topic and local employers are not keen to implement policies in this area. In some countries (such as Mexico and Chile) birth rates remain relatively high and fertility is not considered a priority for employers at all.

Surrogacy is perhaps the most difficult issue of all, and laws on this topic vary by country and even within countries. In Greece, a mother welcoming a child through surrogacy is treated the same as a natural parent as regards the postnatal element of maternity leave (the only difference being that they are not entitled to the 8 weeks’ leave before the probable date of childbirth, granted to natural mothers). In Ireland, by contrast, she would not be recognised as the mother. This means that she would not be entitled to maternity leave but her partner, if he is the father, would be entitled to paternity leave (the law is being changed and many Irish employers have included surrogacy leave in their policies in recognition of the issue). In many countries, however, (including Spain, Italy, Germany, Poland and Finland) surrogacy is a criminal offence and employers should be very careful about their policy stance and aware of local law and sentiment on the topic. For example, in Italy there is significant opposition to the practice of surrogacy on religious and moral grounds and there are discussions about making it a criminal offence to engage in surrogacy outside of Italy as well as within the country.  In Japan, surrogacy is not illegal but women having surrogate babies cannot access medical treatment, meaning that in practice it is not possible and so policies extending to surrogacy may have little practical impact.

It remains to be seen what happens with fertility policies and whether they spread more widely across the globe. Fertility benefits can be very attractive but are not yet commonplace. In areas where maternal age is rising but there is poor or uneven state provision for fertility treatment, they can be regarded as a valuable benefit. Employers do, however, need to be attuned to local law, healthcare systems and culture. This is an area for employers to watch.

It seems inevitable that governments will increase their efforts to boost births as the impact of falling fertility rates begins to take hold. We may see a range of employment rights being increased and employers can expect family leave entitlements to continue to be strengthened. Fertility may not be cited as the key driver for employment law reforms but is likely to be a background reason.

Employers can also expect the age profile of their workforce to evolve. The impact may be felt slowly, but it will bring new challenges and opportunities for HR policies designed to recruit and retain older workers.

In short, falling fertility rates do matter to employers and could have significant implications for the labour market, employment law and HR policies.