Threat of increased childcare costs boosts the case for flexible work arrangements

The Fair Work Commission (FWC) has recommended a pay rise for low-paid childcare workers, warning that the increase may lead to significant cost implications if government funding isn’t made available.

During the “landmark” review into the undervaluation of wages in women-dominated industries, the FWC recommended a significant pay rise for low-paid workers covered by the Children’s Services Award.

Handed down on 16 April, the commission granted that workers who fall under five priority awards deserve a pay rise to remedy “gender-based undervaluation.”

Childcare workers fell into this bracket, with the commission recommending close to a 28 per cent pay rise spread over a five-year span – submitting, however, that the minimum wage rates (if implemented) will have significant implications for both employers and working parents if Commonwealth funding is not allocated.

“Our provisional view as to a new classification structure and minimum wage rates for care service employees (CSEs) will, if implemented, obviously have significant cost implications for employers in the early childhood education and care sector (ECEC),” said the commission.

“It is not in dispute that the sector is heavily reliant on Commonwealth government funding and that the capacity for employers in the sector to bear the cost of the new wages structure will depend to a large degree upon an adjustment to that funding.”

“… The Commonwealth has made no commitment to or decision about increased funding … The likely outcome of a lack of a funding commitment on the part of the Commonwealth … Is that providers will be forced to increase their fees, which will have consequences for the capacity of at least some parents with young children to participate in the workforce.”

As previously reported by HR Leader, a Remote report found that in 2024, sixty-nine per cent of working parents were forced to reduce spending to cope with childcare costs.

Job van der Voort, co-founder and chief executive of Remote, pointed out that the struggles that working parents were having with childcare costs could be alleviated with flexible hybrid working arrangements.

“Providing flexibility in where and how work gets done is not just a perk but a necessity for today’s workforce, especially to empower working parents to better navigate their professional and personal lives, fostering a culture of inclusivity, productivity, and wellbeing,” said van der Voort.

Amid return-to-office sentiments in political and employment spaces Katrina Huergo, co-founder and chief financial officer at Raisely, touched on how flexible working arrangements can be the perfect crutch for working parents – especially women – during a tumultuous economic period.

“It’s also vital to acknowledge that when it comes to family responsibilities – whether raising children or caring for an ill parent – the burden often falls on women,” said Huergo.

“Working from home allows the flexibility to keep a full-time role while being a caretaker. In-office mandates disproportionately impact women and their ability to see financial gain and professional growth, eroding decades of hard-fought progress.”

Without the critical government funding needed to support the overdue pay rises for childcare workers, working parents could be forced to bear the brunt of increased childcare costs. If this were to come to fruition, it’s imperative that employers look towards accommodating affected employees with flexible work opportunities.