Women in the 20-39 age cohort are uniquely and severely disadvantaged in the labour market in Sri Lanka. This disadvantage is linked to the current policy of placing the full cost of maternity leave benefits (MLBs) on employers.

In this context, this makes hiring women costlier than hiring men and creates an incentive for a discriminatory recruitment practice where male job applicants are preferred over female job applicants. This Insight offers a solution to this adverse incentive structure by suggesting state-sponsored maternity leave benefits to improve labour market participation and outcomes for women.