Two thirds of family income “taxed away” on childcare

Over two thirds of families’ income is effectively taxed away when mums enter the workforce due to childcare costs, says an OECD report.

Over two thirds of families’ income is effectively taxed away when mums enter the workforce due to childcare costs, says an OECD report.

The report Doing Better for Families compares family policies and child poverty in OECD countries. While the UK does well in terms of the earnings of working mums, much of their salary is lost on childcare costs, it says. Some 68% of their salary goes on childcare, compared to a OECD average of 52%.

It calls for more Government subsidy of childcare costs. "Providing services such as affordable and good quality local day-care centres, with flexible opening hours, is key to helping families with children on low-incomes into work," it states. The report says that increasing the number of children who are eligible for free childcare is a positive step to addressing child poverty, but adds that this does not help those families earning just above the eligibility criteria.

The report says that families with children are more likely to be poor today than in previous decades, when the poorest in society were more likely to be pensioners.

It documents how families across the OECD have changed dramatically in just a generation. With fertility rates dropping from 2.2 children per woman to 1.7 over the past three decades, families are getting smaller, it reports. Fewer people are getting married and among those that are, divorce rates are rising.

Women are better educated than ever before, and overtaking men in the process: more than one- third of women under 35 have now completed a university education (compared to just over 20% twenty years ago).

There are more dual-earner than one-earner couple families in almost every country. Female employment in the OECD has risen in the past 15 years by more than 10 percentage points, from just over half of women working in the mid-1990s to nearer 60% in 2009.

It states that further increases in women’s employment would help address the challenges of population ageing, but may be difficult to achieve unless men help out more with housework and caring responsibilities (on average women do 2.5 hours more work in the home than men). Even in Iceland, where fathers take the most leave, still only one-third of parental leave days are taken.

The OECD recommends that governments should: – Ensure that work pays for both parents, including through assistance with childcare costs.
– Help families combine work and care commitments, through an integrated set of leave, care and workplace support for parents of young children.
– Design parental leave systems that encourage more fathers to take and share leave and promote their engagement with homecare responsibilities.
– Start investing in family policies during the early years and sustain investment throughout childhood.
– Ensure high-quality childcare services are linked to improved cognitive development, especially for children from poor households.

“More family-friendly workplaces, equal career prospects for men and women, and a better sharing of care responsibilities not only make economic sense, they are a moral and political imperative,” said OECD Secretary-General Angel Gurría. 

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