Extract from The Guardian
Natsem study finds Coalition's paid parental leave scheme less effective help than cheaper childcare
Addressing the soaring cost of childcare would be a more effective
way of boosting female workforce participation than the paid parental
leave scheme, according to a study which found low-income mothers face
major barriers to re-entering the workplace.
The National Centre for Social and Economic Modelling, or Natsem, which is attached to the University of Canberra, found that a mother from a low-income family faces losing 69% of her income if she returns to work after having a child.
Women on a $16.37 hourly wage will keep just $5.10 of this once returning to work part-time, and just $4.55 if she returns to a full-time job.
This loss of income is proportionally far more than that faced by a high-income family, where a woman earning $100,000 a year would lose 47.7% of her salary if she returned to work part-time.
The reduction in income is derived from several factors, such as loss of government benefits, an increase in tax and childcare costs.
According to the Natsem report, childcare costs are a growing challenge for families; the average cost has risen by 150% over the past decade.
This increase, driven by strong demand and a lack of supply in some large cities, has seen government subsidies for childcare rise to $5 billion a year, up from $900 million in 1999. Natsem says this increase in government support may have contributed to rising childcare prices.
However, further support may be required if Australia is to increase female participation in the workplace, with the current financial scenario making it more attractive for low-income women to care for their children full-time rather than return to the workplace.
Ben Phillips, research fellow at Natsem, told Guardian Australia that help with childcare would do more to get women back into the workforce than the proposed paid parental leave scheme.
Under the government’s PPL scheme, a woman would be entitled to receive her full wage for six months, including superannuation. The maximum payment for new mothers will be $50,000. This threshold was dropped from $75,000 after concerted criticism from Labor, and some within the Coalition, that the scheme is unnecessary and unaffordable.
The government claims the PPL will help increase the number of women in the workplace. The Natsem report questions this premise.
Phillips said: “Arguably, you’d get more bang for your buck spending money on childcare than the PPL.
“Paid parental leave is a nice thing to have but it won’t impact whether you return to the workforce. It won’t make much difference to workforce productivity and it won’t do much for low-income families.
“It’s a $5.5 billion program where the more you earn the more you get, so it’s regressive and has no obvious benefit for workforce participation. Whereas childcare has a big impact in workforce participation, as well as positive outcomes for early learning among children.”
The Natsem study shows that Australia is a mid-ranking rich nation when it comes to an international OECD comparison of childcare use and female workplace participation.
But Phillips said Australia is far behind other countries, most notably the Scandinavian nations, in its childcare investment.
“There is good evidence that you get better education outcomes from investing in good quality childcare,” he said. “This, in turn, benefits the workforce and increases government tax revenue in the long term.
“If there is nothing further to offset rising childcare prices we are unlikely to see female workforce participation increase, at a time when we need to deal with the challenges of an ageing population.”
Australian men could do their bit too, he said.
“In Australia we still haven’t accepted that women shouldn’t be the only ones to shoulder the responsibility of childcare,” he said. “Having children makes no difference to the number of hours that blokes work in Australia, whereas women reduce their hours. Maybe that balance could be shifted in the future, but at the moment it’s still seen as a woman’s responsibility.”
The National Centre for Social and Economic Modelling, or Natsem, which is attached to the University of Canberra, found that a mother from a low-income family faces losing 69% of her income if she returns to work after having a child.
Women on a $16.37 hourly wage will keep just $5.10 of this once returning to work part-time, and just $4.55 if she returns to a full-time job.
This loss of income is proportionally far more than that faced by a high-income family, where a woman earning $100,000 a year would lose 47.7% of her salary if she returned to work part-time.
The reduction in income is derived from several factors, such as loss of government benefits, an increase in tax and childcare costs.
According to the Natsem report, childcare costs are a growing challenge for families; the average cost has risen by 150% over the past decade.
This increase, driven by strong demand and a lack of supply in some large cities, has seen government subsidies for childcare rise to $5 billion a year, up from $900 million in 1999. Natsem says this increase in government support may have contributed to rising childcare prices.
However, further support may be required if Australia is to increase female participation in the workplace, with the current financial scenario making it more attractive for low-income women to care for their children full-time rather than return to the workplace.
Ben Phillips, research fellow at Natsem, told Guardian Australia that help with childcare would do more to get women back into the workforce than the proposed paid parental leave scheme.
Under the government’s PPL scheme, a woman would be entitled to receive her full wage for six months, including superannuation. The maximum payment for new mothers will be $50,000. This threshold was dropped from $75,000 after concerted criticism from Labor, and some within the Coalition, that the scheme is unnecessary and unaffordable.
The government claims the PPL will help increase the number of women in the workplace. The Natsem report questions this premise.
Phillips said: “Arguably, you’d get more bang for your buck spending money on childcare than the PPL.
“Paid parental leave is a nice thing to have but it won’t impact whether you return to the workforce. It won’t make much difference to workforce productivity and it won’t do much for low-income families.
“It’s a $5.5 billion program where the more you earn the more you get, so it’s regressive and has no obvious benefit for workforce participation. Whereas childcare has a big impact in workforce participation, as well as positive outcomes for early learning among children.”
The Natsem study shows that Australia is a mid-ranking rich nation when it comes to an international OECD comparison of childcare use and female workplace participation.
But Phillips said Australia is far behind other countries, most notably the Scandinavian nations, in its childcare investment.
“There is good evidence that you get better education outcomes from investing in good quality childcare,” he said. “This, in turn, benefits the workforce and increases government tax revenue in the long term.
“If there is nothing further to offset rising childcare prices we are unlikely to see female workforce participation increase, at a time when we need to deal with the challenges of an ageing population.”
Australian men could do their bit too, he said.
“In Australia we still haven’t accepted that women shouldn’t be the only ones to shoulder the responsibility of childcare,” he said. “Having children makes no difference to the number of hours that blokes work in Australia, whereas women reduce their hours. Maybe that balance could be shifted in the future, but at the moment it’s still seen as a woman’s responsibility.”
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