The Australian government’s decision to end the JobKeeper subsidy for childcare workers has been branded a “double whammy” for women, affecting both industry workers and mothers.
The government announced it would end support for the sector on 20 July, citing a huge increase in demand for the services.
But according to senior economist at the Centre for Future Work, Alison Pennington, the move effectively sinks the “only life raft the government threw mothers”.
“Axing public support for childcare is a ‘double whammy’ for women because it will lead to jobs shed in childcare – a highly feminised, underpaid industry,” Pennington told Yahoo Finance.
“The increased demand for childcare due to public support during shutdowns will collapse with fee reintroduction as financially strained households pull kids out of programs. Centres will sack (female) workers to adjust to lower demand, ripping more jobs and demand out of our stumbling economy.
“It is a highly damaging, counterproductive decision from the government that will reduce women's participation in paid work, cut jobs in childcare, and deny early childhood education and socialisation to millions of children.”
She said women’s employment and incomes have been disproportionately affected by Covid-19, with women losing 11.5 per cent of work hours compared to men losing 7.5 per cent of hours. Female employment also fell by 5.3 per cent, compared to male employment falling 3.9 per cent.
And according to the Financy Women’s Index report, across the 19 sectors of the economy, women have lost more jobs than men in 14.
Should we increase the childcare subsidy permanently?
Australia has high childcare costs compared to most countries, the Grattan Institute’s program director Danielle Wood said.
“We know that they create a really strong disincentive for second income earners, who are mainly women, to move beyond part-time work and go anything beyond three days a week of work.”
In fact, a study from KPMG found women who work more than three days a week tend to see negligible earnings due to income tax, family payments and the childcare costs.
“Addressing those problems creates incentives for people to work more and help grow the economy. So I do think there are some good opportunities out there, it’s just a question of how the government prioritises some of those choices,” Wood said.
Making childcare permanently free would cost around $20 billion a year, an increase of around $12 billion on current funding arrangements, Grattan estimates.
But another option is to increase the subsidy to 95 per cent of fees, which would add an extra $5 billion onto fees.
But eventually, the pay-offs would be huge.
“It would enable many women who want to increase their paid work to do so, support the post-crisis recovery and boost GDP by about $11 billion a year in the medium term through higher workforce participation,” Wood said.
“For policymakers seeking high-return government initiatives to boost the economy, this is an opportunity too good to miss.”
Bell Direct market analyst Jessica Amir echoed Wood’s words.
She said permanently improving childcare affordability would lift the workforce participation rate and help the Reserve Bank of Australia reach its ideal employment rate, where unemployment is 4.5 per cent.
“This would see skilled workers return to part or full time work, lifting the employment and participating rate, and boosting productivity.”