Monday, 25 March 2013

Are nannies pricing themselves out of the market?

This is a question I have been pondering for some months.  It is certainly a complex issue, and one that particularly concerns me as throughout my years as an agent I have advocated for proper wages and working conditions for nannies employed by our agency.

Some of the complexities arise from the fact that the sector is too small to have an award wage so legally it is possible to employ a nanny for the legal minimum rate of $15.96 per hour.  The closest award would be perhaps the Children's Services Worker level 4 with at least 2 years experience which works out at just over $18 per hour.  Yet this position does not really equate to the nanny role.

Unlike a child care worker, a nanny is a lone worker with sole responsibility for the children of a family in the absence of the parents while the children's services worker would usually have at least one other worker in the room, and would certainly be part of a larger staff group.  This means both shared responsibility and adult social contact during working hours, which are much shorter than those worked by the average nanny.  A nanny would usually have a range of household duties related to the care of the children and may also be required to transport those in her care to various learning and social activities and at times will also need to care for the children when they are ill.  Unlike their counterparts working in children's services who receive in-service training during work hours, any such training for nannies is in their own time.

The other main factor that has a bearing on wages is that children's services are funded jointly by the government and by parents' fees while nannies are most usually paid from the after-tax income of parents.  While I have frequently put the case that employing a nanny for two children makes good economic sense because the cost is comparable to the child care fees that would be involved and is available even when the children are unwell and would be excluded from more formal care, it is certainly a costly alternative when there is only one child.  This is a premium that parents are often prepared to pay for the sake of individual, one on one care in the family home, a situation that most replicates the care a parent would give.

The hourly rates of the nannies vary between about $21 and $26 per hour, depending on skills and experience and the requirements of the position.  This is an attempt to take into account the particular circumstances of the nanny role compared to a children's services worker, but is also aimed at keeping the cost affordable for families.

Our nannies,in addition to their hourly rate are covered by WorkCover insurance. Many of them get paid annual and sick leave which equates to about an extra 25% on top of the hourly rate.  Often when nannies ask for a higher hourly rate they ignore this extra value.  They may receive say $28 an hour as a casual nanny but then they do not get the extra value or the advantage of on-going employment.  Thus it is important for nannies to focus less on the hourly rate and more on the total package when they are considering different positions. They also need to remember that families are not simply charged the hourly rate, but also the agency margin to cover the costs of running the agency as well as for the WorkCover insurance of the nannies and their superannuation.

It is not unusual to hear clients say that the after-tax income of one of the parents is almost exclusively devoted to paying the costs of having a nanny, but feel this is justified because of the quality of care their children receive and the importance for the parent of maintaining their position in the workforce.

It is noticeable that as care costs have risen, and companies have adopted more family friendly policies, that the number of full time nanny positions has dropped, but part time positions have increased.   Some nannies have adapted to this by working in two or three part-time positions, or by working part-time and studying part-time.

As I said above, the question of whether nannies are pricing themselves out of the market is complex and there are no easy answers.

Let us know what you think.