The cost of childcare is now so high that some working parents are struggling to break even – or paying more for it than they take home. Latest figures show the average full-time nursery bill for a child under two now tops an eye-watering £11,000 a year, or £14,750 in London.
“For too many families, it simply does not pay to work,” concludes the Family and Childcare Trust’s 2015 report on childcare costs.
More than twice as many women, at 29%, than men (14%) have found that returning to work after having a child isn’t financially worthwhile, according to research given exclusively to The Observer by the National Childbirth Trust (NCT).
Yet for each year a mother is absent from the workplace, her future wages will fall by 4%, according to the Fawcett Society. “Mothers of young children who return to work for very little financial gain may do so to maintain their long-term ability to improve their earnings,” says David Finch, of thinktank the Resolution Foundation. “That way, when their children are school-age and their childcare costs come down, they’ve kept their careers and maintained their earnings potential.”
Research by the thinktank suggests two-thirds of unemployed mothers aren’t working because childcare is too expensive, while 67% of mums in work say the cost of childcare prevents them working more.
Paying to work
Gemma Parry, 37, knows this dilemma only too well. She quit her job as a museum assistant after having Ritchie, three, and Joe, one. “It probably would have cost me close to £100 a day to return to work full-time, after childcare and commuting costs. I’d have liked to go back part-time, but even that was a bad move financially. Now I’m a stay-at-home mum, which I enjoy, but I also worry about my career. The choice to work was taken away from me, and I think that’s wrong.”
Single mother Clare Greenhalgh, 36, from Manchester also quit her full-time job because she could not afford full-time childcare after having her son, Rory, seven. Now, she works three days a week as an admin assistant, earning just under £7,000 a year. “My boss asked me to work full-time and offered to promote me and almost double my salary. I wanted to say yes, but I’d be £550 a month worse off due to childcare costs, and unable to make ends meet.”
She thinks she might be better off if she quit, but unemployment isn’t an option, she says. “I want my child to know you go to work, and I want to maintain my skillset and use my brain. I wish I could work full-time. I know I’ll never get promoted or a pay rise if I continue to work part-time and the work can be mundane. I feel trapped.”
The cost of not working
“There are parents who can afford to take the financial hit to be back at their jobs, but the cost of childcare means others – especially mothers – are locked out of the job market,” says Alison Garnham of the Child Poverty Action Group. This is despite evidence that women in their 20s and 30s now earn slightly (up to 1.1%) more, on average, than men in full-time work, according to figures from the Office for National Statistics.
Yet one in five mothers refuses a job offer, and one in eight leaves a job, due to childcare costs, a survey of 1,000 Mumsnet users found.
“Unless a mother earns significantly more than her male partner, it is likely to be the woman who stops working or goes part-time,” says Cary Cooper, a professor of organisational psychology and health at the Manchester Business School. “Women still feel guilty for going out to work, instead of spending time with kids. Men rarely do.”
Even when both partners earn roughly the same, a woman’s wage is more likely to be weighed against the total cost of childcare, instead of the couple sharing the burden of this expense equally, says Cooper.
Long-term career damage
By the time a mother returns to work full-time, her male partner is typically earning 21% more than her, instead of the average 7% pay gap among childless couples, according to an OECD report. When she retires, her typical pension pot is just £107,000 – just over half of a man’s average £201,000 pot, according to pension provider LV=.
“Many women trying to decide whether to go back to their jobs after maternity leave will struggle to pay for childcare and make ends meet. Most will enjoy parenting, yet staying at home can cause long-term damage to careers,” says Elizabeth Duff, NCT spokesperson. “Mothers are damned if they do and damned if they don’t.”
If flexible working is a solution …
- Every employee now has the right to request flexible working once every 12 months. It needs to be highlighted that it is a right to request, not an absolute right to be given it, which is an important distinction.
- Requests must be dated and made in writing. Ensure to include the change you would like, when you want it to start, and the impact you think it would have on your employer. Employers have three months to make a decision.
- Employers must have a ‘sound business reason’ for refusing a request, and deal with the request in a ‘reasonable manner’ by, for example, assessing the advantages and disadvantages, meeting with you to discuss it and offering an appeal process.
- An employer is entitled to reject a flexible working request for business reasons. These include the burden of additional costs, an inability to either meet customer demand, to reorganise work, or recruit new staff.
- Find more information at www.gov.uk/flexible-working.
-reprinted from The Guardian