January 1999
Money, money, money...
First the good news! Nannies' average wages in all types of employment and in all parts of the UK – but especially in London and the South East - have been rising steadily in real terms (i.e. above inflation) over the past four years. Comparisons of average wages for each year for both live-in and live-out nannies in tables 1 and 2 show how wages have increased on the previous year. However, the notso-good news is that these comparative figures also show that the rate of wage increases over the past year has definitely slowed down.
For example, where the average net weekly salary of a live-in nanny working in central London increased by 9 per cent (to £175) during 1996 and by 8 per cent (to £189) during 1997, the increase over the past 12 months was just 6 per cent (bringing the salary to £200). And this slowdown seems set to continue during 1999. The other types of nannying tell a similar story.
Well over half of the 55 nanny agencies throughout the UK who took part in the Nannytax Wages Survey at the end of 1998 thought that nannies' wages were not likely to increase significantly over the next 1 2 months. Thirty three agencies thought that wages would stay roughly the same, while a further ten thought that there would be a small rise but only enough to cover inflation (i.e. an increase in the cost of living). Even allowing for the tendency of nanny agencies to be cautious or even pessimistic about the prospect for wage increases for nannies, this majority viewpoint does seem to be borne out by studying the comparative figures for wages increases over the past four years.
An ongoing shortage of experienced and qualified nannies, due to ever increasing demand from professional career mothers, especially in London and the Horne Counties, has tended to push up salaries over the past few years. But nannies' wages - like those of all other types of employment - tend to follow the overall performance of the UK economy quite closely. In the strong economic years of 1996 and 1997 real average increases in nannies' wages in all parts of the UK, and in town and country alike, comfortably outstripped inflation, while the tables show that during 1998, in line with the down turn in the economy, nannies' wages only kept a little ahead of inflation. The slowdown in pay rates for nannies started earlier, during 1997, outside London and the Home Counties, but certainly reached the capital during 1998. And at present this trend looks almost certain to continue through 1999.
However, around the average salaries for each category and location of nannying shown in the tables, a wide range of salaries - low and high continue to be paid, reflecting the isolated and fragmented nature of nanny employment by comparison with many other, more collective, types of work. A number of nanny agencies in the survey reported exceptional wages – as low as £80 or £ 1 00 per week for nannies in the country town and small cities and more than one agency reported wages as high as £400 net per week in central London.
CHANGING PATTERNS
Another trend highlighted by the survey was the steadily increasing demand by parents for part-time nannies throughout the UK. Nanny agencies find these jobs are more difficult to fill, especially part-time after-school positions (as against two or three full days a week).
Most qualified nannies would still probably prefer to work full-time for one family and clearly see more potential job satisfaction in such an arrangement. But more career mums are either working part-time from home, a trend made possible by the new computer and phone technology, or simply working part-time themselves for the first few years of their childrens’ lives, thus creating a growing demand for part-time nannying positions.
Another factor in the demand for part-time nannies is likely to be the considerable cost to many parents, relative to their own salary, of employing a full-time nanny, since parents in the UK pay nannies' wages out of their own already taxed income - with no tax benefit in return. More nannies are now holding down two part-time jobs with two different families and the demand for this type 0 arrangement seems likely to continue to grow. For nannies who would enjoy the challenge and variety of working for more than one family each week, going part-time would currently seem to present no shortage of job opportunities.
HIDDEN COSTS
As nannies' net wages rise, even modestly, so the amount of tax and NI that an employer pays on your behalf rises more steeply as a proportion of your net wage. This is because the first £80 gross per week (in the current tax year 1998/99) that an employee earns is free of tax and the next £82 gross per week is taxed at the lower ratl of 20 per cent. All pay above this level (i.e. over £ 162 gross per week) is taxed at the standard rate of 23 per cent.
All this means that any increase in the top slice of your salary (for nannies earning above £162 gross a week) will cost your employer as much as an extra 43 per cent in tax and National Insurance contributions – tax at 23 per cent and NI on a sliding scale up to 20 per cent - in addition to the increase in your take-home (net) pay. This includes the additional employers’ NI contribution your employer has to pay on top of your net wage.
So an experienced live-in nanny working in the country or a town or city other than London and earning the survey average of £139 net per week is actually earning a gross annual salary of £8,754, while an experienced daily nanny earning the survey average £262 net per week in Central London is actually earning a gross annual salary of £ 18,306 per year.
Of course, live-in nannies – who at face value may not be getting such a good wage deal – have many of their living expenses taken care of, and the value of these to an employee may be as great as or greater than the difference between wage levels of live-in and daily nannies in the same part of the country. The accommodation provided is an important issue, some nanny agencies commenting that only a separate flat or at the very least a separate floor of a house was considered acceptable by many live-in nannies.
PERKS OF THE JOB
Our survey also asked nanny agencies which perks were being offered to their nannies. Most frequently mentioned was use of a car (or a petrol allowance for those running their own car), though this is arguably only a perk for those nannies for whom this includes private use in their own free time. The other perks most frequently mentioned were membership of a gym or health club and a mobile phone. Significantly the offer of a pension funded by the employer was sufficiently rare to be listed as an unusual perk, suggesting that this is not yet considered an important issue amongst nannies or their employers, despite all the recent publicity given to the need for everyone to make private provision for retirement. According the regional nanny agencies which took part in the survey, outside London and the Home Counties few, if any, perks were on offer.
More unusual perks mentioned included free dental treatment free hairdressing, a dress allowance, free tickets to concerts, private use of the family holiday home, free travel abroad, driving lessons, an interest-free car loan, free stables for a nanny's own horse and free use of a bike! One nanny agency commented that as the number of daily nannies increases so fringe benefits mean less (and perhaps a decent wage means more).
If your salary is falling well behind the average for your location and type of work, it might prompt you to ask for a pay rise, and we'll be covering this next month. While pay is by no means the only consideration in what makes your job worthwhile, it remains an important issue in a profession that often demands long hours and considerable dedication, and we hope our annual survey will help you to assess realistically whether you are receiving the financial rewards that you deserve!