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High childcare costs could force part-time working parents to give up their jobs as the outlay “outstrips” income, according to research from insurance firm Aviva.
Workers whose wages have already been devalued by rising inflation, pay freezes and product price hikes could be as much as £98 a month worse off once childcare costs are taken into account.
Results in Aviva’s Family Finances report suggest that employers could start to lose valued staff as they struggle to afford childcare and work part-time or full-time.
Analysis of data from the insurance firm’s ‘Family Index’, which draws on information from more than 6,000 people in a family group, found that typical full-time childcare can cost £385 a month per child. Parents with children under two years old have to pay the highest charges of £729 a month, while part-time care for older children costs £78 a month.
However, just over half of families (54 per cent) claimed they didn’t use childcare, while 31 per cent said their family and friends look after their children for free. But the parents who do have to pay can struggle to manage their finances, the report warned.
But even parents who have access to free childcare have been affected by a rise in school-related expenses, such as clothes, equipment, transport, sports activities and outings. These expenses have increased by nearly 7 per cent in the past year, according to a separate Aviva study of 1,200 parents.
Once average employment-related spending (£120 a month for full time workers and £90 for part-time workers) is added on top, a mum working part time with two children could be £98 worse off. And even if she worked full time she would only be better off by an average of £120.
Researchers said it was “unsurprising” that 32,000 more women have chosen to stay at home to look after their families since the third quarter of 2010.
Louise Colley, head of protection for Aviva, said: "This report shows very clearly the challenge many families with young children face as they balance their income with the cost of childcare. As care costs rise, it's quite possible we will see more and more couples relying on one salary while the other person looks after the children - simply because they may actually be worse off if both people work. However, while this may make financial sense, it can also leave families vulnerable should anything happen to that income earner.”