Friday, 31 October 2014

THE £117 PER HOUR CHILDCARE SUBSIDY

George Osborne was out and about, last week, talking up the government's plans to get more women into work, mostly by providing childcare incentives. He wants to get another 500,000 "stay-at-home" mothers into the workplace by the beginning of 2016, reportedly in order to match the female employment rate in Germany.

His timing was unfortunate, coinciding, as it did, with the publication of a report by the Institute for Fiscal Studies, which estimates that free childcare places for three year-olds in England are costing more than £65,000 a year for each additional mother who enters paid work.

That figure is so staggering that it is worth looking at the methodology from which it is derived. Free childcare places for three year-olds were rolled out nationally between 1999 and 2007. At the start of the period 37% already had a free place funded by their local authority. Under the national scheme that proportion increased to 88%, suggesting that half of all three year-olds benefited.

That suggestion, however, is not quite what it seems. For, in addition to the 37% of three year-olds in free, local authority-funded places, a further 40% were in childcare for which their parents were paying. Only 11% of three year-olds moved newly into childcare as a result of the national free places scheme. Most of the money went as a substantial cash benefit to parents who had previously funded their childcare on their own.

Of that 11%, roughly a quarter of the mothers entered the workforce - an additional 12,000 women in total. IFS estimate the annual cost of all the additional free places under the national scheme at £0.8 billion per year, which, divided by 12,000, provides that headline figure. Since the childcare is for 15 hours per week, 38 weeks a year, the hourly subsidy comes out at £117.

So much for the sums. At that rate, if Osborne really wants another half a million mothers in the workplace, he will need to find a spare £30 billion a year. He doesn't have that sort of money - or anything like it. If he did, it's unlikely he would choose to spend it on subsidising women in low paid work.

Maybe he should, however. Last week the World Economic Forum published their latest gender equality rankings, which saw Britain continue its steady fall from ninth in 2006 to 26th today. In terms of economic participation, women are greatly under-represented in the "legislators, senior officials and managers" category and continue to score poorly in terms of equal pay for equal work. But the biggest difference relates to earning capacity, with women on 62% of the average earnings of their male colleagues. Many more women than men are found among the ranks of the lowest paid.

Low pay in Britain may be disproportionately a women's issue, but to turn this into a debate about women in the workplace is to miss the real question. That is, why is the government so keen to get people into paid work in the first place? By pushing more and more people onto the labour market it is forcing down wages and discouraging investment in productive technology. The result is that productivity has been falling, which means that the economy is becoming less efficient. Work, in effect, is being wasted because it is so cheap.

It is not as if that work is not needed in other spheres. The phrase "stay-at-home mothers" disparages parents of both genders who work by looking after their own children. It also devalues the work of caring more generally, whether children, the elderly, the sick or infirm - much of which is unpaid. But that work is important, and if government would only value it properly, offering financial incentives to enable people to give it all the time that it deserves, wages would rise in the labour market and productive investment would resume.

The purpose of caring is to seek an improvement in the social, emotional and physical wellbeing of the person being cared for. A visit to bath an elderly person does not become more productive because it is done more quickly; indeed a short, hurried visit may cause stress that cancels out any functional benefit. Similarly, time spent by parents with their young children is never wasted, and its benefit is likely to increase greatly when the pressure of other time commitments and obligations does not intrude.

To make sense of this the government needs to understand that caring does not function like the money economy. Time spent on it is not a cost to society, but a vital benefit, and the more of it a society can do, the richer it becomes. This means more money wealth being channelled toward carers to allow them to care - rather than forcing them into low paid jobs so that other low paid people can care "efficiently" on their behalf.

This article first appeared on Huffington Post

No comments:

Post a Comment