#195 Care and Fertility

Care

A Financial Times article this week describes a shortage of professional childcare providers in Germany. It focused on the economic impact and the impact on children’s education. It failed to highlight the impact on future fertility or offer insights for other areas of care

A Five-Minute Read

Germany has one of the lowest fertility levels within the EU. At 1.46 children per female is well below the replacement level of 2.1. The population has started to decline based on the latest UN Forecasts. Without immigration the population would be in greater decline. Germany now has one of the highest percentages of women in the workforce at 76%. This is helping to make up for a declining working age population. Those working women are dependent on family and professional care, particularly childcare.

If Germany follows the UK pattern, then “grandmothers” will be providing significant support. They are seen as more flexible and perhaps able to respond more in a crisis. They are particularly helpful for the youngest children. Unfortunately, grandparents are “drawing a line”. They will help working children but set a fixed amount of help. After that parents are dependent on formal childcare. (See Newsletter #191 “£3.5BN of Family Childcare”). This is reflected in the German numbers. Only 27% of mothers with children under 6 will work. They also tend to work part time.

The Reliability Problem

German offers an insight into our understanding of “consumer behaviour” for childcare. Germany has some of the cheapest childcare in Europe. The Government spends €46Bn on its childcare program for the under 6’s. That is 1.2% of GDP. For many parents childcare is free. The problem is not cost.

The problem is reliability. 40% of parents say that their childcare center has closed for one or more days in the past three months. The reason given is the shortage of staff. These closures are often at very short notice, often “on the day”. Like any other service business, a childcare center must be reliable to be of any use. It is almost worse to cancel than to never be there at all. Most of the cancellations are due to the high level of staff sickness absence. Childcare has a sickness level 50% higher than the German average.

The Care Staffing Problem

There are 900,000 trained childcare professions in Germany. At the moment like other care roles, there are unfilled jobs. In the case of childcare there are 125,000 unfilled roles. Germany rates of pay for these roles are not felt to be the issue. The monthly salary is lower than the average but a long way from minimum wage. Managers and unions agree that the issue is circular. The shortages are causing high levels of stress. Professionals are asked to operate at levels they find unacceptable. In some cases, they are asked to take responsibility for 60 children. They are offerred only non-professional support. This in turn is causing illness and a recruiting problem.

Across the whole of the European care sector the problems are the same. In some countries the issues are compounded by lower wages. The World Health Organization estimates that there is a shortage of 1.6m care workers of all kinds in Europe today. This will rise to 4m by 2030. At that point Europe will be short of 600 000 doctors, 2.3 million nurses and 1.1 million social care staff and assistants. There is a looming crisis driven by the ageing of Society

This week the UK Government announced yet another inquiry into social care. It will not report until 2028. Many commentators believe it will be too late. The problem is both supply and funding. Funding is a massive political issue. One UK solution to supply has been immigration. The UK Home Office granted 116,000 “Health and Care Visas” to social care workers in 2023. Only 1% came from Europe, the majority came from Asia and the Indian subcontinent. There was a political reaction to the scale of these numbers. Visas were changed to prevent care workers from bringing their family with them. The minimum salary of the necessary job offer was also raised. Supply is already contracting. The long run solution cannot be dependent on immigration.

Care in the home can be made more efficient with technology. Smart ceiling lamps that can prevent falls are emerging. They track movement and using AI spot potential “trip” points in daily life. Visiting care workers can reorganize homes accordingly. The best use of the resultant “efficiency” is not clear. Should it increase the number of people a carer can deal with or allow more time for a carer to talk to a lonely old person? Childcare is currently much less amenable to this kind of technology. It seems intelligent automation and chidren don’t mix.

The Long Run Impact

Care of all kinds is needed to boost labour productivity and supply. Childcare allows women, especially, to work more. They can also return to work sooner. Home Care for the elderly relieves siblings and children. It allows them to avoid missed workdays or hours or indeed stopping to work. The quality of care is important to all users.

Child and home care are bound to influence the decision of whether to have children. This is another closed circle. We saw in other Newsletters that the decision to have a baby is integrally linked to a woman’s ability to have a career (Newsletter # 191 “Bargaining for Babies”). The availability of reliable care for children and ageing parents is an integral part of that “bargain”. If they are not available, then fertility will continue to fall. The resultant shrinking workforce puts further pressure on the care providing system.

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