Posted: 02 Jun. 2020 5 min. read

COVID-19 and participation potential

Weekly economic briefing

As Australians turned to online schooling in response to COVID-19, many parents were left to decide how to balance their jobs with caring for and teaching their children.

Some insight into the decisions parents made is provided in the results of the fourth Household Impacts of COVID-19 Survey, released by the ABS last week.  The survey found that females were three times as likely as males to have stayed at home to look after their children on their own (46% compared with 17%). This is not overly surprising, with the 2017 Household, Income and Labour Dynamics in Australia (HILDA) survey finding that females undertake more housework and childcare than their male partners, even when the female is the main breadwinner of the household.

The sudden increase in the need to care for children has contributed to the recent exit of many females from the workforce. The female labour force participation rate dropped by 5% between January and April this year, compared to a 3% drop for males.

Labour force participation rate in Australia, by gender

Source: Australian Bureau of Statistics (6202.0 Labour Force, Australia)

Prior to the disruption from COVID-19, female participation had been increasing, but at a sluggish rate. In 2012 the Grattan Institute found that if Australia could boost female workforce participation to the level of Canada (which had 6% more women in the workforce than Australia at the time), Australia’s GDP could increase by $25 billion. As our current participation rate is lower than in 2012 - let alone at a rate to match Canada’s - there is clearly still room for improvement. 

A number of steps can be taken to support an increase in the female participation rate and, fortunately, existing responses to COVID-19 have given us a head-start on 1) changes in childcare funding, and 2) attitudes to flexible work.  

  • The Federal Government introduced (temporary) free childcare in response to COVID-19. Prior to this, the mix of tax, welfare and childcare policies meant that many working mothers faced high effective marginal tax rates on income from extra days worked, discouraging further workforce participation. Retaining free childcare - or eIsabexploring similar changes – would be a strong positive contribution to encouraging female participation
  • Over a short period, flexible work arrangements have gone from an optional extra offered by some, to a necessary tool utilised by many. As we move into economic recovery, we would be well served to retain some of this flexibility. Some people may want to work, but need to do so in a remote location, for fewer hours, or at a particular time in a flexible working day. When these options are not available, they may leave (or may not re-enter) the workforce. In addition, if males are supported to engage in flexible work, this may encourage greater balance between partners in unpaid work and care, and further empower female partners to increase their own workforce participation.  

While female participation has suffered some pain in the short-term, the recovery from COVID-19 presents a real opportunity; not only to regain previous losses in female participation, but to realise a move to higher levels, and increase economic growth and contribute to Australia’s recovery.

More about the authors

David Rumbens

David Rumbens

Partner, Deloitte Access Economics

David is a macro economist with extensive experience in applied economic and quantitative analysis of the Australian economy, along with considerable experience in labor market analysis.  David is a regular commentator on macroeconomic trends, and prepares a weekly economic briefing newsletter.

Isabelle Layton

Isabelle Layton

Graduate Economist

Isabelle is a Graduate Economist with a strong interest in gender, equity and sustainability economics. Isabelle holds a Bachelor of Economics (Honours) from Monash University, where she wrote her thesis investigating the leading contributors to changes in the gender pay gap within occupations in Australia between 2001 and 2017.