The government’s commitment to spend $3.6 billion funding a two-stage 15% pay rise for Australia’s 220,000 childcare workers is a huge economic story — bigger than boondoggles like Future Made In Australia, despite the latter’s much bigger price tag.
Labor has already committed more than $10 billion to fund a multi-stage pay rise for aged care workers amounting to between 17-28%. The childcare pay rise is the next step in what is a massive investment in Australia’s vast health and caring sector, which has driven much of the employment growth of recent years.
But while the aged care pay rise was driven by both equity concerns about the poor remuneration in a feminised industry and the need to strengthen the aged care workforce to deliver better quality care for seniors, the childcare pay rise has another important economic dimension: lifting female workforce participation. In its interim report on the sector last year, the Productivity Commission (PC) argued that the childcare sector faced what many call a “workforce crisis”:
Vacancies for [early childhood education and care] positions are at record highs and vacancy rates are above those of the wider workforce … Many inquiry participants have pointed to the relatively low pay and unattractive working conditions offered by the sector as a major factor that impedes the attraction and retention of staff. For educators, lower skilled, lower stress jobs offer similar — or sometimes higher — wages … median wages for [early childhood teachers] working in ECEC settings are about 20% lower than those of primary school teachers … there is evidence to suggest up to two-thirds of graduates of early childhood education degrees choose employment in primary schools.
The PC not only recommended that the pay and conditions of childcare workers be improved but that the government fund 100% of the childcare costs of low-income families to overcome cost barriers.
What are the benefits of a high-quality, accessible childcare and early childhood education system? Twofold: it benefits children themselves — while complex and mixed, the PC found “recent evidence from Australia and overseas that shows that most ECEC programs (in centre-based daycare or preschool) have positive effects on children’s early academic, cognitive, or non-cognitive skills. Such benefits are more likely for preschool attendance and for older children. These benefits can last well into adulthood … Children experiencing disadvantage tend to experience greater improvements in educational outcomes as a result of attending quality ECEC.”
And second, the obvious benefits for female workforce participation: the PC found that a maximum of 118,000 extra workers would be added to the workforce if all barriers to childcare were removed — that’s not just parents (mainly mothers) but grandparents as well.
For a country suffering workforce shortages across a wide range of industries despite a tepid economy, a few extra tens of thousands of workers, especially as they already live here, is nothing to sniff at. Continuing to lift female participation — now at around 63% compared to 61% before the pandemic, presumably helped by mortgage stress driving more households back to two-income status — is the easiest way to take some demographic pressure off the labour market.
The government linking funding for pay increases to holding price increases within the sector will also provide a temporary response to the problem of cost barriers identified by the PC, but a long-run solution awaits the government’s response to the final PC report.
Labor’s approach of lifting wages in the health and caring sector — which has helped overall wages growth — is in contrast to the previous government’s approach. The Coalition presided over a disaster in aged care during the pandemic and refused to commit to funding a pay rise for aged care workers recommended by employers, unions and the aged care royal commission. It increased childcare subsidies substantially but did nothing about initiatives to address childcare workforce problems. The Perrottet government in NSW took a different approach when it joined with the Andrews government in Victoria to move toward universal pre-kindergarten, aiming much of its 2022 budget funding at increasing the childcare workforce.
No doubt there’ll be a chorus of inflation hawks and neoliberals to complain that the pay rise will fuel inflation, as happened when aged care workers — some of the country’s lowest-paid — received a substantial pay rise. But if economic hardliners thought it was fine to leave our seniors to endure a badly understaffed and poor quality aged care sector, it’s much harder to argue that ensuring we have a big enough childcare workforce is some sort of luxury given the need to maximise workforce participation.
It also means that health and caring, already by far the biggest employer of Australians, will continue to drive job creation at a time when the market sector of the economy is flatlining thanks to the Reserve Bank. In jobs, the future, for the time being, is female.
Is the government doing enough to increase female workforce particpation? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
