A 10-year-plan to unleash the full capacity and contribution of women to the Australian economy 2023 - 2033

Recommendation 2

The Australian Government must invest in policies and programs that recognise the economic importance and value of care work in Australia and help families to better share caring responsibilities.

Immediate actions

2.1. Legislate to establish and invest in universal, high-quality and affordable early childhood education and care. This needs to meet the needs of modern families, be culturally appropriate and be delivered by highly skilled, securely employed and well-paid employees.

2.2. Abolish the Child Care Subsidy Activity Test, as an immediate first step towards universal access to early education for Australian children.

2.3. Support applications in the Fair Work jurisdiction that seek to raise the wages and improve the job quality of early childhood educators. As a step to remedying historical undervaluation of educators’ work, ensure that the outcomes of these cases are fully funded.

2.4. Strengthen rights and protections for working parents and carers and ensure workers can access parental leave entitlements and high-quality, flexible work arrangements. Importantly, we need to ensure they are not discriminated against when seeking to use those entitlements.

2.5. Fully implement the National Care and Support Economy Strategy and develop policies that improve care workers’ wages, security and safety of their work, and recognises their work as a critical part of our society.

This includes ensuring fair remuneration, access to professional development opportunities and mechanisms for career progression. The government also needs to design a strategy to address gender imbalance across the full spectrum of the care sector.

2.6. Legislate the payment of superannuation on all forms of paid parental leave.

Long-term actions

2.7. Extend the Paid Parental Leave (PPL) scheme by phasing the entitlement up to 52 weeks and boosting the quantum of payments to reach a replacement wage and ensure the scheme incentivises men’s use of PPL. (The Business Council of Australia strongly supports in principle strengthening the PPL scheme and have developed their own preferred model).[37]

2.8. Elevate the status of care work and attract a diverse and skilled workforce by valuing and adequately compensating care workers, including by supporting relevant Fair Work Commission cases and committing to fund their outcomes.

Supporting information

The care and support economy is a significant contributor to employment, economic growth and societal wellbeing in Australia. The value of unpaid labour that takes place within households, which is overwhelmingly performed by women, is not captured in our Gross Domestic Product calculation. This means the socio-economic value of this unpaid care to the Australian economy is not always visible or appreciated. [53]

Submissions to the Employment White Paper, from care and support sector services, worker representatives and community organisations, emphasised that low social status, low pay and persisting assumptions that this type of work is unskilled contribute to the undervaluation of these workers. [54]

HESTA’s 2021 State of the Sector report showed that one in five survey respondents intended to leave the ECEC sector due to low pay and a lack of career development opportunities, [55] and one in three felt that the sector was undervalued by society. [56] Of the respondents surveyed, 95 per cent were women. [57] While pay for care and support jobs varied by role, 95 per cent of workers were earning at rates below the Australian average. [58]

The National Strategy for the Care and Support Economy will set a road map of actions towards a sustainable and productive care and support economy that delivers quality care with secure, safe jobs with decent wages.

The care economy in Australia comprises a range of sectors that provide care to people of various ages and abilities, such as aged, disability, veterans, and early childhood education and care. [59] These workforces are female-dominated, low paid relative to other industries, and have high rates of casual and part-time work.

Childcare challenges

The Australian Childcare Alliance states that at least 10,000 additional teachers and educators are needed to address urgent supply shortages. [60] However, this only addresses the immediate-term pressures and does not reflect the much larger expansion that would be needed to achieve universal provision.

The Australia Institute suggests that for Australia to have an early childhood education and care (ECEC) system comparable in size to OECD counterparts (some of which have universal provision), the VET system would need to produce 48,000 new ECEC graduates per year by 2030. From 2015-2018, there was an average of 35,000 graduates per year.[61]

Other facts worth considering include:

  • The average tenure for paid ECEC contact staff is just four years. [62]
  • Centres are currently unable to meet staff ratio and qualification requirements due to costs and shortages. As at July 2021, 11.7 per cent of long day care services were operating with temporary waivers for one or more staffing requirements under the National Quality Framework. [63]
  • The Australian Competition and Consumer Commission’s (ACCC’s) interim report [64] shows that households in the lowest income bracket pay the largest proportion of their income on child care out-of-pocket fees.
  • Australia’s ECEC is among the most expensive in the OECD, and Australia has the third lowest rate of maternal full-time employment across OECD countries. [65]
  • The Mitchell Institute found that women with children under age five, who live in an area without childcare facilities, have lower levels of workforce participation. [66]

Impact Economics and Policy, a consultancy, estimates that the current activity test for the Child Care Subsidy limits access to subsidised childcare and is contributing to at least 126,000 children from the poorest households missing out on critical early childhood education and care. As a result, these children are more likely to start school behind their peers, with many never catching up. [67]

Accounting for positive and negative impacts on women’s workforce participation, the report estimates that removing the activity test would increase participation by between 9,840 and 81,680 women. Taking a mid-range estimate would see participation rise by 39,620 and boost GDP by $4.5 billion per year. Impact Economics and Policy argues that this would offset the direct costs to Government from abolishing the test – estimated at $1.3 billion in 2023-24 .[68]

Removing the activity test for access to the Child Care Subsidy may also deliver the following benefits:

  • Greater access for children from low-income families to early education and care
  • Improved participation for low-income parents that are currently dissuaded from work due to the uncertainty created by the activity test and risk of incurring debts with Centrelink
  • Reduced red tape for Government and providers, improving the efficiency of the system. [69]

ABS data from 2020-21 [70] showed 24.7 per cent of respondents cited ‘caring for children’ as the main reason they were not available for work. Women of all ages are spending nine more hours per week, on average, on unpaid care and work than men. [71]

Paid parental leave

Gendered expectations and actions around care within families occur as soon as a baby is born. In Australia, most employers offer paid parental leave, such as primary carer’s leave, secondary carer’s leave or parental leave, which replaces an employee’s regular salary following the birth or adoption of a child. [72] This paid parental leave is generally offered for a specified period of time and within a specific timeframe. Employer-funded paid parental leave is not a legislative requirement for employers in Australia, but it’s often regulated through industrial agreements or organisational policies.

There is a strong business case for paid parental leave, as a cost-effective means of retaining valued employees and as one initiative that may assist employees to return to work after parental leave. [73]

The availability of paid parental leave links to an increase in job satisfaction as well as an increase in employee productivity and loyalty. Other ways that paid parental leave benefits organisations include:

  • Increasing the number of employees returning to work after parental leave
  • Reducing recruitment and training costs
  • Improving staff morale and productivity level
  • Providing a cost-effective means of retaining skilled staff
  • Improving organisational efficiency through the benefits of long service, for example, institutional memory, industry knowledge, and retained networks and contacts.[74]

According to the OECD’s key characteristics of parental leave systems data, the global average of total paid leave entitlements available to mothers is 54.1 weeks. Australia is currently offering 20 weeks as of August 2023, [75] with plans to increase this to 26 weeks by 2026.

The wealth and superannuation gap

In July 2020, the Treasury Retirement Income Review found that the main driver of the superannuation gap at retirement was the gap between men and women’s working-life earnings, reflecting women’s accumulated economic disadvantages. [76] The gap between men and women’s working-life earnings occurred because women worked in lower paid roles and industries, and therefore have an increased likelihood of taking on part-time or casual employment. They are also taking career breaks to care for others, face discrimination and harassment in the workforce, and are more likely to experience family and domestic violence. [77]

When a number of these factors occur throughout a working life, as they often do for women with children, the lower earnings accumulate and exacerbate the superannuation gap at retirement. [78]

The Retirement Income Review [79] found that if superannuation was paid on Government Parental Leave Pay, the median female earner would receive an additional 0.17 per cent in annual retirement income.

An inequitable labour market and household dynamics have resulted in a superannuation gap of approximately 23 per cent at retirement age. At 60–64 years-old, the average man has approximately $181,000 in superannuation, while the average woman has $139,000. [80]

Current settings see compulsory superannuation contributions rising from 9.5 per cent of wages to 12 per cent by 2025, in addition to encouragement to increase voluntary contributions. However, as pointed out by the Grattan Institute and the Government’s Retirement Income Review, higher super contributions are ultimately funded by lower wages, thereby making women poorer before they reach retirement.

Women are also more likely to rely on the age pension in retirement, given lower superannuation balances and longer life expectancies.

The Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 strengthens access to unpaid parental leave and helps families share work and caring responsibilities. The changes commencing on 1 July 2023 included:

  • Increasing flexibility for working parents by allowing them to take up to 100 days of their 12-month unpaid parental leave entitlement flexibly (up from 30 days).
  • Allowing pregnant employees to access their flexible leave entitlement up to six weeks before the expected date of birth of their child.
  • Removing restrictions that prevent employees who are married or in a de facto relationship from taking more than eight weeks of unpaid parental leave at the same time.
  • Ensuring both parents can take up to 12 months of unpaid parental leave, regardless of the amount of leave the other parent takes. Further, both parents can request an extension of up to 12 months, without impacting the amount of leave available to the other parent.

Women of all ages are spending nine more hours per week, on average, on unpaid care and work than men. [71]