Who minds the children if grandma keeps working?

Increasing the retirement age may decrease the birthrate

Given a choice between a grandparent and a child-minding centre to look after a precious youngster so that a mother can return to work, chances are she would probably choose the former.

According to National Seniors, grandparents are the most popular form of childcare in Australia.

In 2014, 837,000 Australian children were cared for by their grandparents in a typical week, far outstripping other forms of childcare, such as long day care or before and after school care, according to Australian Bureau of Statistics figures.

As well as being cheaper and more flexible, time with a nanna or a pop is generally preferred, even if good childcare is readily available.

Exactly what would happen if grandparents were no longer available to care for their grandchildren because they were staying in the workforce is unknown.

But in some cases, women who would rely on their own parents or parents-in-law to mind the children may delay having children or decide against it all together if they couldn't get the help they needed and wanted, according to UNSW Business School lecturer Michele De Nadai.

"There are a number of pension reforms going on globally which are impacting on the amount of care that grandparents can provide that are going to be potentially bad for the next generation of individuals," he says.

In Roadblocks on the Road to Grandma's House: Fertility Consequences of Delayed Retirement, a paper co-authored by De Nadai, Erich Battistin and Mario Padula, the researchers conclude that pension reforms being undertaken worldwide could have important side effects on the transfer of time between the old and young generations.

One of the unintended consequences of raising the retirement age of a generation affects the decision by the next generation to have children which would in turn impact on society as a whole, they say.

‘Some Italian women would rather delay having children or not have any children at all if their mother – the child’s maternal grandmother – was not available for care’

MICHELE DE NADAI

 Long-term negative effects

Increases to the retirement age are a global solution to longevity and rising dependence on the age pension, the idea being that older people may stay in the workforce longer and boost their retirement savings at the same time as delaying any age pension payments.

In Australia, the present aim is to lift access to the age pension from 65 to 67 by 2023, with the first shift upwards occurring in July 2017. Plans to increase the pension age to 70 have gone quiet due to electoral backlash.

At least part of the justification for the increase in Australia came from the change being consistent with international trends: The US, Germany, Iceland, Norway and Denmark presently have, or are moving towards, retirement ages of 67. The UK is increasing its pension age to 68.

In Italy, age pension eligibility was significantly tightened between 1992 and 1995. The result of these reforms has meant that older Italians are staying longer in the workforce by five years on average and even more so for those working in the public sector, according to De Nadai.

He believes that what may be seen as a solution to easing the burden on the public purse, may be partially offset by long-term negative effects on future generations.

De Nadai says that in a family focused society such as Italy, the unintended consequences of pension reforms are already impacting on the next generation. Raising the retirement age has meant less time for grandparents to care for their grandkids.

"What our research found was that some Italian women would rather delay having children or not have any children at all if their mother – the child's maternal grandmother – was not available for care," De Nadai says.

Useful resource

While it is easy to argue that the strong tradition of Italian families living together and caring for each other irrespective of age could play a major part in the impact of pension reforms, informal childcare by grandparents is also high in many other countries.

The strength of the family ties – which vary considerably – was only one of the reasons the research focused on Italy.

Another reason was the length of time between the pension reforms and the ability to measure the effects, such as changes to the rate of reproduction.

"The evidence is that even in countries not as family focused as Italy, grandparents are a useful resource and pension reforms will impact on that resource," says De Nadai.

According to the Household, Income and Labour Dynamics in Australia (HILDA) survey in 2011: 65% of grandparents aged 40-69 years sometimes cared for grandchildren (with 28% at least once a week); 27% of grandparents aged 70 years and over sometimes cared for grandchildren (with 10% at least once a week).

Mostly it was grandmothers providing the care, with 54% providing care compared with 46% of grandfathers.

‘There is policy silence on the impact of regular childcare provision on grandparents’ labour market and retirement decisions’ –

NATIONAL SENIORS

Policy silence

National Seniors, an independent voice for Australians over 50, has been watching with interest the impact of government policy on grandparents caring for grandkids.

In its report, Grandparent childcare and labour market participation in Australia, National Seniors found that while the provision of childcare held many benefits and pleasures for grandparents, the costs of care – financial, health and leisure-related – could be significant.

While it is too early in the pension reform process to tell whether grandparents will choose to work longer rather than minding grandchildren, the present trend is to leave work earlier than they perhaps intended to help the next generation.

National Seniors pointed out that while there were important measures to support and encourage mature-age Australians to participate in the labour market, little attention has been paid to the role of care provision in shaping mature-age Australians' labour market participation.

There is 'policy silence' on the impact of regular childcare provision on grandparents' labour market and retirement decisions, it says.

This is despite data suggesting that providing regular childcare for grandchildren is so prevalent among Australian grandparents that its potential impact on labour market decisions is considerable, and must be recognised and accounted for in mature-age employment and retirement incomes policy.

As De Nadai found in Italy, grandparents are often the primary providers of childcare across the social ladder globally and policy-makers should be aware of some of the unintended consequences of reforms that may have an impact on them.