Childcare Exodus: More Than Half of Workers Leave Within a Year

‘52 percent of jobs in the childcare sector were held for less than a year, compared to 25 percent for jobs in the school sector,’ said a new report.

A child plays at an early childhood education centre in Auckland, New Zealand, on July 8, 2014. Fiona Goodall/Getty Images

One in two childcare workers leave their job within a year amid concerns over low pay and the profit-driven nature of childcare centres.

These are the findings of a new report by Victoria University’s Mitchell Institute, which identified problems with the existing market-based funding model, finding it had failed to retain the childcare workforce and address shortages of places in some communities.

According to the report (pdf), the sector has experienced high turnover among both approved providers and staff.

“The high turnover staff and low pay mean the workforce has characteristics more like the retail and hospitality sector than education,” it said.

“The median hourly wage for educators is $34.30 (US$24.2), compared to $62 for schoolteachers and below the median hourly wage of $42.40.

“Income tax data from 2023-23 shows that 52 percent of jobs in the childcare sector were held for less than a year, compared to 25 percent for jobs in the school sector.”

Despite high staff turnover, the number of childcare centres has increased significantly across the country, particularly among for-profit operators.

Specifically, childcare places have grown from 190,900 to more than 720,000 over the past 25 years, with almost all of that expansion driven by private, for-profit providers, which now account for 74 percent of long day care places.

However, centres run by large private, for-profit providers are more than three times as likely to face enforcement action as those operated by large not-for-profit providers.

The Mitchell Institute argued the current funding model was not working as intended and was contributing to ongoing challenges across the sector.

“Australia has used sophisticated approaches from the research on markets and economics to grow the number of places while keeping costs down,” lead author and Mitchell Institute director, professor Peter Hurley, said.

“But these approaches bake-in the deficiencies of low-pay and high turnover and put enormous strain on the on the sector.

“They end up rewarding those providers who can produce an hour of care in the cheapest way possible while meeting the minimum standard.”

To address the issue, the report recommended the government adopt a cost-based funding model that “focuses on the actual costs incurred by providers to deliver services, including wages, infrastructure and operational expenses”.

The report said this would help remove some of the constraints and pressures built into the current system.

“Governments should play a greater role in addressing thin markets, ensuring that uneven supply across the country is better managed to ensure equitable access,” it said.

“Without this intervention, the market-based model will reproduce existing inequalities.”

In June, the Labor government announced a support package to fund a 15 percent increase in pay rates for early childhood education and care workers in response to the labour shortage and rising costs across the sector.

The move will cost taxpayers $3.6 billion over two years.

Minister for Early Childhood Education Jess Walsh said the industry had long been underpaid, which had caused workers to “walk out the door.”

“With the Albanese Labor Government’s 15 percent pay rise, we’re seeing that turn around,” she said.

“This helps create a long-term stable workforce, and that strengthens the whole sector.”