Why investing in early childhood workers will be a win for women - and the economy

On the weekend, I spoke with a woman I know professionally. She’s incredibly bright, and a leading light in her field. She planned for a year off when her first child was born but now finds herself languishing at No. 48 on a 70-person waitlist for the eight spots in the “under-2s” room at her local childcare centre next year. The centre has the space to double capacity, but they simply can’t find enough workers to manage the higher intake.

The implications are stark. This new mother may not return to work at all next year, or will work much less than she would like. The same probably applies to the other 62 families expected to miss out.

This is not an isolated experience. The Australian Children’s Education and Care Quality Authority estimates we will need an extra 39,000 early childhood workers by 2023. High workloads and low pay are pushing people out of the sector. Already, 11 per cent of services have requested waivers from staffing requirements because they simply can’t find the workers to meet the current staffing ratios.

The bottom line is that a huge number of families experience the stress of not being able to access the childcare they need. Meanwhile, the country is missing out on the contribution of tens of thousands of skilled workers, mainly women, who have no choice but to pull back from paid work because they can’t find childcare.

It is economic insanity that we spend billions of dollars on new roads to shave a few minutes off commute times, but we haven’t made the necessary investments to ensure an entire group of willing workers can make it to work at all.

As Grattan Institute research has consistently shown, supporting women’s workforce participation is key to growing the economy. If the government is serious about tackling skills shortages and productivity at its Jobs and Skills Summit next month, the issue of care workers’ pay needs to be front and centre.

These staffing shortages didn’t just spring up overnight. While current tighter market conditions don’t help, the sector’s challenges in attracting and retaining staff have long been brewing.

In 2021, the Mitchell Institute found that just over half the educators who gained early childhood certificates since 2012 were still working in relevant jobs. In contrast, almost all of those who completed vocational certificates in building were still in relevant roles. Surveys consistently show that pay is a major factor for early childhood workers who are considering leaving their roles.

Early childhood workers are paid less than workers in many roles that don’t involve the same challenges and complexities. Indeed, a qualified early childhood carer can earn less per hour than someone working at Bunnings, McDonald’s or in road-traffic control.

Other female-dominated care workforces, such as aged care, are similarly poorly paid. Indeed, if we use census data to compare full-time weekly earnings for workers with diplomas or a certificate III, a clear pattern emerges: workers in the female-dominated care sector earn on average one-quarter to one-third less than their similarly qualified counterparts in male-dominated industries such as manufacturing, transport and construction.

The unvarnished truth is that these roles pay less because of the gender make-up of the workforce. We pay less for care work because we expect women to do it selflessly and, therefore, for modest pay. For too long, we have relied on the goodwill of our carers to subsidise government budgets.

But now the market has caught up with us. We will not be able to deliver the services we need or boost workforce participation unless we improve the pay and quality of these crucial enabling roles.

Aged care workers are asking the Fair Work Commission for a 25 per cent pay rise, and the new government has rightly committed to funding the cost. Grattan Institute research suggests that the full 25 per cent increase would cost the government about $3.4 billion a year. Early childhood workers will also need a significant increase to ensure a fair rate of pay and one that can attract enough workers to the sector.

Yes, these are big numbers, particularly when budgets are under pressure. But if we don’t address the carer shortage, many thousands of willing and capable workers, mostly women, will find themselves locked out of paid work. And remember, we’re only talking about paying what the work has always been worth – not just to Australian families, but to the economy overall.

Danielle Wood

Chief Executive Officer
Danielle Wood is the CEO of Grattan Institute, where she heads a team of leading policy thinkers, researching and advocating policy to improve the lives of Australians. She also leads Grattan’s Budgets and Government Program.

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Danielle Wood – CEO