Cost of Living weighs heavily on childcare with workers cutting hours

This month’s PwC Cost of Living Tracker shows how the cost of living crisis is beginning to impact the ability for parents to manage childcare costs, while we also look at how consumers are taking another look at their savings and pension contributions.

Since 2015, childcare costs in the UK have risen dramatically, while income growth has slowed. Average nursery costs per week rose by more than 20% between 2015 and 2022, while average weekly earnings rose by 14% (both in nominal terms). With the increases in the cost of living over the past year, this is beginning to have a profound effect, as our research shows:

• A total of 85% of parents and carers of children under the age of 12, who were questioned, are concerned about the costs of childcare, with 54% either very or extremely concerned. Just 15% were not concerned about their ability to meet current costs.

• Of the parents and carers questioned, 10% said they have had to reduce their working hours in order to make childcare more affordable, while 24% have increased their working hours in order to afford childcare. Almost one in five (19%) have asked friends and family for additional support with childcare to allow them to work.

• Flexible working arrangements have been a factor with 12% of respondents who are responsible for children saying this has made it easier for them to continue working and manage childcare costs.

• This research follows the findings of PwC’s Women in Work Index, which revealed that childcare affordability in the UK acting as a barrier to progress, while policies that help redistribute childcare could deliver key benefits to women’s workforce participation, as well as to fathers, children and wider society.

• This month’s research also discovered that across the UK, people are cutting pension contributions, scaling back savings and dipping into reserves to make ends meet as high energy costs continue to weigh on households.

• In our representative poll of 1,000 consumers, of those who have pension schemes, almost a quarter (23%) have reduced or stopped contributions.

• Almost half (47%) have reduced or stopped payments into savings accounts, while more than half (52%) have lifted money from a savings account. One in five said they had taken out a loan in the last six months.

Jonathan House, Partner at PwC UK, comments:

“As consumers focus on the month to month essential living costs of everything from heating to eating, it is understandable that savings and pension plans fall down the list of priorities. It’s important however, for people to ensure that when costs allow - either through improved earnings or an easing in the cost of living - that they continue planning for their future.

“Another immediate challenge however is childcare costs, which is a growing issue for both consumers and businesses. 

“With 85% of the parents and carers questioned for our Cost of Living Tracker indicating they were concerned to some degree about meeting the costs of childcare, it’s clear that something has to give - and that is either increasing working hours to pay for childcare, or cutting hours to save costs.

“A wider conversation must take place between policymakers and businesses on enhanced parental leave policies and more flexible working so that all parents and carers can balance their own responsibilities, alongside meeting the costs of childcare.”

Ends.

Notes to editor

Since December 2022, PwC has been tracking the impact of the cost of living crisis on consumers in the UK. The research looks at the economic circumstances of different demographic groups, and the decisions they are making.

Our PwC Research practice conducts a fortnightly online survey of 1,000 UK consumers and monthly qualitative focus groups. This Cost of Living Tracker shows how attitudes and behaviours are changing across the UK as a result of the increasing cost of living.

Research was carried out on 23 February 2023 with a representative sample size of 1,000. For more information on PwC Research, please visit www.pwc.co.uk/pwcresearch