Should employers foot the bill for costly childcare?

When quitting might be cheaper than paying for childcare, businesses that help their employees financially can stand to gain.

In 2019, one in four parents considered or were intending on leaving their job in the next 12 months due to challenges associated with combining work and caring responsibilities.

Sixty-two per cent of working parents experienced difficulties in managing their mental and physical health because of these challenges.

As government subsidies fail to move the needle, employers are being asked to consider how they can help.

Prohibitively expensive

Childcare services in Australia are among the most expensive in the world. According to the Australian Competition and Consumer Commission (ACCC), Australian childcare is less affordable than in almost all comparable countries.

Between 2018 and 2022, childcare centres increased their fees by an average of 20 per cent, outpacing inflation.

“Australia’s childcare fees have long been called out as a major barrier to increased workforce participation and for being among the highest in the OECD,” said The Australian Financial Review.

When childcare is so costly, sometimes it’s cheaper for a parent to quit work altogether.

Though the federal government increased childcare subsidies only a few months ago, the issues are not going away. According to the World Health Organisation, “governments must play their part; however, the best outcomes will be achieved when this responsibility is shared with employers”.

The role of employers

Forty-three per cent of Australians caring for children reported spending more time on childcare activities because of COVID-19 restrictions.

In all areas of workplace policy, organisations are being forced to decipher temporary necessities from exposed, deeper truths around work/life balance.

The two most common aspects of life during the pandemic that Australians wanted to see continue were working from home and increased time spent with family and friends.

Many businesses have taken it upon themselves to allow greater flexibility for their employees. For instance, a recent ABC News article explored the use of “bring-your-baby-to-work” policies, which are particularly common among smaller businesses.

UNICEF Australia has been incentivising Australian businesses to make these and similar accommodations under its National Work and Family Standards. Businesses can apply for certification as Family Inclusive Workplaces if they meet certain family-friendly criteria.

The benefits for employers

Data shows that the benefits of a better organisational childcare policy will not be limited to the employees.

According to UNICEF Australia and Parents at Work’s Bridging the Work and Family Divide report, family-friendly workplace initiatives “increase employee engagement, which is known to be an effective and concise predictor of employee effectiveness”.

Indeed, it has been estimated that employee disengagement costs the Australian economy $211 billion each year.

Not only can these policies boost employee engagement, but they can become a selling point when trying to attract new hires.

“In an incredibly competitive world for high-quality talent, these policies and practices are incredibly important from a commercial point of view,” said Andrew Yates, chief executive at KPMG.

These policies can also enhance “retention and reduce employee turnover, with associated reduced costs to the organisation”, said the UNICEF report.

Among Family Inclusive Workplaces, 68 per cent of employers are committed to reviewing their flexible work policy and enhancing their organisational practices to support flexible working, while 55 per cent are committed to embedding a formalised carers policy.

According to UNICEF Australia, “employees of all ages are looking to work for companies that have a positive impact on society, the environment, and the economy”.

This is increasingly important to Millennials and Gen Z employees, who will soon dominate the Australian workforce.

The UNICEF report pointed to the following commitment areas, which ought to guide employer policy in meeting the standards of a Family Inclusive Workplace:

1. Employee mental health and wellbeing
2. Making flexible work arrangements a cultural norm
3. Introducing gender-neutral, flexible paid parental leave and return-to-work practices
4. Access to affordable childcare
5. Supporting managers to promote team wellbeing and work/life integration and being accountable for team wellbeing outcomes.

For more on parental leave, click here.