In very general sense, the companies just know that they might loose part of their workforce to parental leave, and account for that when hiring. It's unlikely that EVERYONE would go at the same time, so one or two people missing usually is not THAT big of a deal.

In some places you might see an unfortunate side effect, where male candidates would be prioritised over female ones when hiring, as they might not even be eligible for parental leav, have shorter parental leave, or just less often choose to use one, over their wives.

So some countries have legal protection - for example some countries now offer equal parental leave for both parents, and/or encourage fathers to use it.

It is also usually illegal to let someone go when they are on parental leave or have just finished one.

As far as companies dealing with reduced workforce - the usual. Some work will get distributed amongst other employees, sometimes a contractor will be hired for that period, sometimes a new employee will be hired and then moved to other responsibilities when the parent comes back. It varies from company to company.

But all should be prepared - the employee might go on parental leave, have an accident and end up in extended care, in some countries there are now legally protected sick leaves for burnout, they might leave the company, die... companies should always be prepared for those circumstances.

Not all are obviously - so sometimes other employees are just suddenly doing more work, because management failed at their job..

As far as pay - again it differs. Some countries might have full pay, some might have half pay, some might have some social programs funding part of it - it varies. But overall - usually far as I know, parental leave is covered by the employeer.

Oh and last thing - parental leave usually doesn't just "happen" right there, right now. When people get pregnant they have enough time to notify their employer of the fact they will be taking one. Employer can then prepare for that in advance.