Research reveals childcare cost impact on UK labour market

Kate Dodd of Pinsent Masons was commenting after new research by Working Families, the UK’s national charity for working parents and carers, highlighted the impact that the cost of childcare in the UK is having on ‘lower income’ households – a threshold that may nevertheless capture parents earning well above the national average.

The study, which Pinsent Masons partnered with Working Families on, found that working parents on lower incomes – where the annual household income is £50,000 or less – are more likely than not (51%) to reduce their working hours in the UK to care for children, with the likelihood increasing where the parents are women (58%) or Black (60%). It also found that one in five working parents on lower incomes have had to quit a job to manage childcare needs and that four in 10 working parents on lower incomes have gone into debt to pay for childcare.

Dodd said the findings should spur “a significant rethink” of the UK’s approach to childcare and flexible, agile working. She said that, whilst revised legislation will help to bring about lasting change, there are things employers can do to alleviate the strain on working parents – and that there are benefits to doing so.

Dodd said: “It can be seen from the Working Families research that women and Black parents in low income households are disproportionately affected by the cost of childcare. Notwithstanding the moral imperative to address this, it is vital for employers to understand how this might impact their bottom line – we know that businesses able to harness diversity of thought are more likely to innovate, meet the challenges facing them, and are better placed to attract and retain talent. Employers should therefore be considering what they can do to make it easier for lower income working parents to address childcare needs.”

“We would encourage employers to consider the extent to which they can provide employees with flexibility in how they perform their roles – from day one. Childcare needs may make it difficult for some working parents to operate by standard daytime working hours, but it may be possible in some roles for at least some hours to be made up in the evenings or at weekends. What should matter most to employers in such cases is the quality and volume of the work undertaken – not when it is done,” she said.

“There are also financial incentives that employers may wish to consider offering staff, from salary sacrifice schemes for childcare vouchers, to enhanced parental leave entitlements that go beyond the statutory minimum. Enhanced entitlements can encourage fathers and mothers to take time off when it’s needed, make it easier for women to progress their careers, and avoid working parents feel that they need to leave the workforce,” she said.

According to the Working Families research, working mothers on lower incomes take four months’ less maternity leave than the UK average, while working parents on lower incomes are twice as likely to have an informal flexible working request rejected than the average parent.

However, the charity also found that working parents on lower incomes who had successfully requested flexible working were a third less likely to have to quit their job to manage childcare, 25% less likely to fall into debt, and half as likely to have had their mental health negatively impacted due to the difficulty accessing childcare than those who had had their request rejected.

Jane van Zyl, chief executive of Working Families, said: “No parent should have to reduce their hours, leave the workforce altogether, or go into debt to pay for childcare. No parent should have to miss valuable time with their new baby because statutory levels of pay aren’t enough to survive on. And no parent should be prevented from accessing flexible working just because they don’t work at a desk in a knowledge-based industry.”

“It is clear that flexible working is no longer a nice-to-have; it is a must-have, particularly for those at the sharp end of the cost-of-living crisis. Not only can it enable parents and carers who would otherwise be locked out of the labour market to work; it also helps families better manage childcare, freeing up valuable income,” she said.

“Alongside measures to increase the supply of high-quality, part-time and flexible jobs in the labour market, Working Families is also calling for affordable and accessible childcare; more inclusive, better-paid leave for new mothers and fathers; and greater job security and advance notice of schedules for shift workers. This will support parents on lower incomes to thrive at work and at home,” van Zyl added.