The pēpī penalty: How women take a $116m hit every year from lack of access to childcare

Friday, 30 September 2022

The notion of “free” childcare is a myth.

Women lose out on estimated $116m in earnings every year due to issues accessing childcare, with Māori, Pasifika, and single mums impacted harder. In the third part of an investigation into childcare, National Correspondent Michelle Duff examines how the inadequate system is a trap for women’s progress

Like so many parents seeking more for their children, Renata Kotua moved out of Auckland for her career and what she hoped would be a better lifestyle.

What she didn’t expect was to spend the next five months bringing her baby to conferences, staying up till 2am finishing projects, and scheduling meetings for when her child slept.

“I feel like I’m barely keeping my head above water, I’m just scraping by all the time,” says Kotua, who is now packing her children’s rooms for the move back to Auckland.

Baby Martha Kotua plays with her toys on a boardroom table, while at work with her mum Renata Kotua. She’s taken her baby to conferences because she has had no other option. “Most people are fine, but I can tell some get annoyed.”

* 'I can't afford to work': 'Free' childcare is a myth, and costs for parents are high

* Women can do anything…. if they're paid properly

Single mum Renata Kotua uplifted her life from Auckland to Palmerston North for work with children Te Akau, 5, and Martha, 14 months. She is now moving back because she couldn't find childcare.

Kotua contacted 14 childcare providers when she moved to Palmerston North in April with her then ten-month-old, Martha. As a single mum, she needed to work to pay for the cost of living for her and her two children, and because she wanted to; she was offered a good job at a decent salary as a disability support coordinator at the Cerebral Palsy Society.

There was no space at the high-quality daycares. “Everywhere that looked nice and decent and clean and dry and the kids were happy were long waiting lists, and they were four months plus.” At others, she says she wouldn’t have felt safe leaving her baby. When she Googled one, she found a child had died there.

Finally, a centre offered her two school days and a half day, a total of 16 hours at $119 a week, or $7.40 an hour. That was a high price, and it wasn’t enough time to cover her work week of 32 hours. But she took it, because she had no choice.

She’s coped – just – by working in shorter, productive bursts, distracting her baby with toys, and working while she sleeps, day and night. “I can work remotely, and I have a home-based office, but having a little one with you at home just wrecks havoc.”

Kotua says she is “lucky” to have a boss who understands, and who has now agreed to let her work from Auckland where she can be closer to family, and has more childcare options.

But not everyone does. The juggle is real, and new research places monetary value on the severe restrictions placed on women’s lives by not being able to find and afford childcare.

A series of studies undertaken for the Ministry for Women shows New Zealand women who want to work are missing out on a conservative estimate of $116m a year because of barriers to accessing childcare. It found the system doesn’t work for at least half of all women, and it’s worse for those on low incomes and Māori, Pasifika and disabled women.

The estimated impact only includes women with kids under 3, and doesn’t include those who have precarious childcare, cut down their hours or work part-time, and without factoring in the long-term impact on careers.

“The true figure is likely much higher,” says study author Isabelle Sin, of Motu Research. “Access to childcare has material consequences for mother’s work.”

‘The motherhood penalty’

Minister for Women Jan Tinetti says the figure is “extremely horrific”. She has ordered a review of policies to see what needs to change. Access to childcare was also identified as the biggest barrier for women going back to paid work in the recent development of the Women’s Employment Action Plan.

Minister for Women Jan Tinetti said she will be reviewing policy to see what should change to support parents with young children, which she expected would take three months.

“Care is very much a gendered issue and it really does impact upon women’s participation in the labour market,” she says.

“Women get so desperate, and they have this barrier of getting back into work and they can’t access childcare, often because of its affordability, and the arrangements they make are quite precarious.”

Tinetti’s review will include looking at the chasm between paid parental leave ending, when a child is 26 weeks old, and the start of significant childcare subsidies of 20 Hours when the child is 3 – a gap of two-and-a-half years.

“In that gap do we provide childcare assistance lower than three, or extend paid parental leave? That’s the question we are asking at the moment, what will make the biggest difference for women?” Tinetti says.

“The motherhood penalty does exist, and we should be encouraging a situation where women have authentic choice and at the moment they don’t have that. We have a patriarchal society and women are again being disadvantaged.”

She expects the analysis to be complete within three months.

Researcher Isabelle Sin, of Motu Economic and Public Policy Research, says the economic impact of barriers to women accessing paid work is high.

Not enough support for parents of under 3s

Caring for children has typically been considered women’s work, something mothers do for the sheer joy of it, with no dollar value attached. But the importance of who looks after children, how hard it is, and what that means for paid work was thrown into relief by Covid-19, when parents realised doing both was nigh on impossible or, at the very least, would drive them into an early grave.

Building on the work of feminist economists like Dame Marilyn Waring, who has long argued for valuing unpaid work like childcare, it’s being increasingly understood that getting provision right is critical to the economy - and lack of access is perpetuating gender inequality.

For her research, Sin used the Growing Up in New Zealand longitudinal data of 6846 children to identify mothers who said they wanted to work when their children were 9 months and 2 years old, but couldn’t because of childcare access issues. They were compared again at 4.5 years old, when nearly all mothers were in paid work.

She found 8% of all mothers couldn’t access childcare, with Māori and Pasifika mothers finding it more than twice as hard and struggling for longer, with issues persisting past two years, along with poor and less educated mothers.

“There large numbers of women with kids under 3 who aren’t working when they want to be, and the reason they aren’t is childcare,” Sin says. “Cost is a big one, but a whole range of barriers were reported which suggests there’s no one solution for these problems.”

Mothers are missing out on an average of $2660 every month when their child is 9 months old, and $3500 each month when they’re aged 2.

Outside of paid parental leave and the 20 Hours subsidy, Work and Income childcare subsidies are available for low-income parents – but many mothers don’t know about these, or find the bureaucratic process too hard, Sin says.

Reasons outside cost include a lack of space, not being available in work hours, and transport difficulties. These women often end up leaving work or making do with precarious or unsuitable childcare arrangements, the study found. “This is unlikely to be resolved without Government intervention.”

Auckland University of Technology Associate Professor of Employment Relations Katherine Ravenswood.

‘Antiquated’ system

After having her first baby, now 26 months, Wellington mum Melissa despaired over how their family was going to be able to afford childcare and work.

When she and her husband finally found childcare in Wellington – where more than 66 per cent of places have a waitlist, the worst in the country – it was $85 a day, or $660 a fortnight. “I couldn’t afford it on the salary I was on, I went back to work when she was 5-months-old and then had to get a promotion before she turned 1 to pay,” Melissa says.

Her husband stayed home with their baby when her 26 weeks paid parental leave ran out, and she went into full-time childcare aged 1. They found a new daycare at $605 a fortnight, with no significant subsidy until she’s 3 – still another year away.

“This whole system is set up so there’s a primary caregiver, it’s expected one person will be at home and one at work and its expected they’ll work part-time or not at all for the first three years. Either you have to go back to work full time because it’s so expensive to have a kid, or you don’t go back because you can’t cover the cost,” Melissa says. “If their goal is to support all children, this isn’t achieving it.”

Women are more likely to be primary caregivers, and re-entering the workforce can have long-term impacts on their careers. When they do go back work there’s a “motherhood penalty” – of an average 4.4 per cent drop in hourly earnings. Including the gender pay gap over a lifetime, they are expected to earn $880,000 less than men.

When the Government brought in the ‘20 Hours Free’ ECE policy in 2007, the intention was to remove financial barriers to childcare and provide universal access for over 3s.

But the workforce patterns it was based on are long gone. The labour force participation rate for women has risen by 50% since 1986, and women are returning when their babies are younger. While the employment rate for women is above the average for Western countries, women are more likely to work in precarious and underpaid jobs, be impacted by unpaid work demands, and have been harder hit by Covid-19.

Auckland University of Technology Associate Professor of Employment Relations Dr Katherine Ravenswood says women are still expected pick up the burden of care in society, and not be rewarded for it.

“It’s this 1950s idea of women, these really discriminatory gendered ideas that all they do is reproduce and look after their children and husbands for free. That also explains why we don’t pay early childhood educators properly, because it’s care work of little children, it’s women and we don’t think it’s hard.

“These underlying currents are that still, at base level, we don’t value women.”

There is a “massive gap” between parental leave – which is paid at less than the minimum wage – and the start of the ECE subsidies when compared to other developed countries, she says.

“We have a bad mix in wanting to have as little regulation as possible around employment, and not valuing women and their potential and their care work and what they do as ECE teachers or as parents. It’s a really nasty ideological hellhole.”

Renata Kotua, who lives with cerebral palsy, is packing up to go back to Auckland for better access to childcare for her children.

Going it alone

For many single parents, going back to work is a pipe dream.

“A lot of my single mums want to get back to work for peace of mind, because it’s relentless looking after children, but it’s so expensive it’s impossible to,” says Beneficiaries Advocacy and Information Service manager Karen Pattie.

“Childcare is the biggest hurdle.”

If they can find work and childcare, sometimes the difference between that and the benefit is negligible. “At that point they’re working because they want to, rather than there being any financial gain to it.

“There might be a career gain, but you’re penalised for having children.”

A survey by Project Gender of around 3500 single parents found that 75% of low-income single mothers either want to be in paid work (if they are not already) or do more paid work (if they are). The majority said finding affordable childcare was a key barrier.

Parents who are already working may qualify for a Work and Income childcare subsidy , but Pattie says applying can be a complicated process. She’s worked with clients who have waited six months for it to be paid.

“It’s a logistical nightmare, the subsidies aren’t enough so parents have to top it up and childcares are businesses, they’re asking for their money.” (The Ministry of Social Development could not provide data on average processing times, but says most applications are processed within a week. It is currently conducting its own review of childcare assistance, including the subsidy, as recommended by the 2019 Welfare Expert Advisory Group.)

Kotua qualifies for a subsidy, and says this helps to reduce her childcare by $40 a week. But this has been more than cancelled out by the significant debt she has incurred with MSD to help her move cities.

Still, she’s trying to be pragmatic – at least she still has a job.

“I uplifted my family hoping for the best, and it hasn’t worked out,” Kotua says.

“I’m reeling a bit, but I’m looking forward.”

How far forward will other parents have to look? Many advocates, including Equal Employment Opportunities Commissioner Saunoamaali'i Karanina Sumeo and Project Gender, are now agitating for a clear timeline for change. “Even though all the employment action plans mention childcare being a barrier to women being in paid work it doesn’t seem very firm, there’s no concrete targets,” Sumeo says.

“This needs to be a focus for everyone. If we just say it’s an MSD problem or a women’s problem it’s not going to get the attention we need - we need a whole movement.”