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Why Childcare is the Key to Unlocking Women's Economic Potential

As the mum of an eligible three-year-old (plus two others under four!) I was really disappointed with the news that the Scottish Government was postponing the planned legal requirement for all Scottish local authorities to increase free childcare provision to 1040 hours from this August. Not only had I financially planned for the extra childcare for my oldest (I’m estimating the additional cost to top up privately will be nearly £300 a month!) but as a Women’s Enterprise Scotland Ambassador, I was also concerned about the wider impact across the country on female led businesses in particular and I hope that it's one of the many challenges facing women business owners that the new digital Women’s Business Centre will help give profile to.

As with all public health crises, the economic and health impacts of COVID-19 will be gendered. Women are more likely to take on the ‘second shift’ of care at home, particularly if someone in their family is sick or has to be isolated (either young or elderly) and are more likely to be affected by school and nursery closures. For example, it is women who are most likely to be home-schooling children and checking on people within intergenerational family and friend networks. Women are more likely to be working in sectors hit by social distancing such as service sectors, including hospitality and non-food retail.

This disruption is going to last for many months, and some women’s lifetime earnings may not recover. Women’s Enterprise Scotland research in 2019 showed that 53% of women-owned businesses surveyed were paying themselves a salary of £15,000 or less and 60% were not paying into a pension.

All SMEs are facing disruption never seen before and this is having – and will continue to have - serious effects on their markets, supply chains and staffing. Women are more likely to work and be business owners in the sectors most affected by this crisis including health, care, catering, cleaning, hospitality, retail. Therefore, economically speaking, the Coronavirus outbreak could have a disproportionately negative impact on women both at home and at work.

The contribution of women’s enterprises in Scotland is not insignificant. Women owned businesses in Scotland account for 13.26% (231,390 jobs) of the private sector total of employment. Women led businesses in Scotland account for 13.5% (235,490 jobs) of the private sector total of employment. Women face specific challenges in business and access to needs-based expert support is critical at this time. For instance, women-led businesses are only 44% of the size of male-led businesses on average, and women-owned enterprises represent less than 25% of business in the UK’s five most productive sectors with women owned businesses still dominant in sectors such as healthcare, personal services, administration, retail etc. Women entrepreneurs are also underrepresented in the most productive, high value sectors in Scotland and in the UK.

As small businesses with limited resources, women-owned businesses are especially vulnerable to the disruption caused by the pandemic. Women start their businesses with 53% less capital than men and also tend to draw more upon private capital (including personal savings) and family finances. As women-owned businesses typically generate lower profits, this crisis is expected to increase financial dependence upon partners or, in the case of lone self-employed women or parents, cause substantial difficulties in providing for themselves or their families.

Taking all this collectively and then adding in the delay to giving parents 1,140 hours a year of free early years education for three and four-year-olds in Scotland creates ‘a perfect storm of financial and working pressure’ for families and especially women.

Research by scientists from the universities of Oxford, Cambridge and Zurich during March and April already showed that working women in the UK, Germany and the US did more childcare and home-schooling across all wage brackets, compared to men with similar earnings. The difference was most noticeable in couples where the man worked outside the household during the pandemic.

Despite lockdowns easing around the world, many campaigners believe there will be a long-term impact on women’s work and home lives as a result of Coronavirus. A recent United Nations study even warned that the pandemic could dilute decades of advancement on gender equality.

Women are “more frequently the ones to give up their jobs” due to having lower salaries or earning expectations. In the EU, women earn an average 16% less an hour than men, while the figure rises to 18% in the US, and is substantially higher in South Asia, Africa and the Middle East, according to data from the World Economic Forum. Women are also more likely to work part-time, typically due to existing childcare or other family responsibilities which has also fed into many couples’ decisions for mothers, rather than fathers, to step back during COVID-19.

Other industry observers stress that even among full-time high-earning women who have so far maintained their careers while caring for children in the pandemic, many are increasingly concluding that the juggling act is unsustainable.

I chose to have children and I know that it’s my responsibility to look after them, but countries such as the Nordics demonstrate that government support has a significant economic impact. In 2012 the female employment rate in Sweden was 76.8% compared to 68.6% in Scotland. Another great example is Australia, where nurseries remained open during lockdown and the government paid all fees, allowing families across the country to continue working from home, thereby reducing the additional economic impact of workplace restrictions.

A recent report from The Hunter Foundation claims that “the best social policy is a good job”, something I definitely agree with. Surely the best way to work our way out of this economic crisis is to provide more support, not less, to get women into the workplace and productive. The more women work, the more they earn, generating taxes and increasing disposable income to be spent in the local economy – that’s win-win in my book!

Watch my recent interview on Politics Scotland here, where I talk about the impact on working women of delaying childcare provision. The full feature starts 11 minutes and 30 seconds in.

Nathalie Agnew is a Women's Enterprise Scotland Ambassador and the founder of Muckle Media