19 January 2006
In demand
The Nannytax/Professional Nanny Annual Survey of UK Nanny Wages
The past 12 months have seen many changes In the financial aspects of the nanny industry, with the impact of childcare vouchers and the shortage of quality nannies beginning to push up salaries after a couple of years of slowing growth.
Our previous pay survey in January 2005 showed a marked dip in nannies' salaries across the UK. A clear majority of nanny agencies participating at that time predicted that pay was not likely to increase significantly. But our latest figures, compiled at the end of 2005, tell an altogether different story. Not only have salaries risen in all four regions, but more families are choosing to employ a nanny, a trend that is continuing from last year.
The most noticeable increase has been reported for live-in nannies in central London, where the average salary has gone up by a healthy 7.5 % from £292 net per week in 2004 to £314 net per week in 2005. Several nanny agencies report net weekly salaries in excess of £550 in central London, with the highest a £650. As these are exceptional figures they do not affect the average.
Despite this positive development agencies remain cautious. A modest 35 % of those responding anticipate a small pay rise in line with inflation over the coming year, while 60 % predict that salaries will remain the same. Only 3 % dare to hope that they will increase in real terms.
What is pushing wages up? Is supply failing to keep up with demand? Kizzi Barton of Annie's Nannies in London thinks so. She is responsible for the agency's live-in desk and is struggling to find good nannies to fill the live-in positions on her books, she says, “More girls prefer to live out, even though the salaries for live-in positions are nearly as good as daily salaries. Nannies prefer the independence that comes with a daily position.” Conversely, many families prefer a live-in nanny who offers more flexibility and is more likely to be available at short notice for babysitting.
The survey also shows that as part-time positions and opportunities for nannyshares continue to grow, more families are using a nanny not instead of, but rather in addition to other forms of childcare, Agencies report that the traditional full-time, sole charge position is not as common as it once was, and families are choosing to employ a nanny part-time. As full-time occupancy at UK day nurseries hit an all-time low of 75 % last year, according to a survey conducted for Nursery & Childcare Market News and published in October 2005, we decided to investigate why more families are choosing to employ at least a part-time nanny. Parents say that they can have much more involvement with a nanny, and are reassured having their children looked after in their home environment where they can feel happy and secure. Tailored routines can be established more easily, and there are more opportunities for outside activities. The one-to-one care offered by a nanny is a great attraction, and it often proves to be the more cost-effective option for families who have more than one child.
Approval scheme
The biggest issue for the nanny option in 2005 has undoubtedly been the new “light-touch” childcare approval scheme introduced in April. It entitles parents who use an approved nanny to some financial relief, in most cases through a salary sacrifice scheme at their own place of employment using childcare vouchers or, in some cases, tax credits. While Sure Start, the government body responsible for the scheme, claims a steady growth in the number of nannies applying, what do the agencies and their clients think of it?
All the nanny agencies in our survey are aware of the scheme – though many complain that it hasn't been publisised enough. They report that on average, 38 % of their client-base has made enquiries about the scheme, and the number of nannies who have actually been approved is about three per agency. But many find the scheme to be more hassle than it's worth, and say that most of the childcare courses recognised for it are over-subscribed. Another big gripe is that a nanny's Criminal Records Bureau (CRB) disclosure is not transferable from one agency to another, though more than 90 % of nannies already have a CRB check, and 80 % of agencies refuse to consider placing a nanny without one. Nestor Primecare Services, the approvals body, explains, “Certain information is only supplied to the employing organisation (in the case of nannies, it is the nanny agency on behalf of the employer). The nanny doesn't have access to this additional information, and so when a CRB check is transferred to another organisation (for example Nestor), some information may be lost.”' .
For a family to be eligible for tax credits for employing an approved nanny, their combined household income must not exceed £59,000. To most nanny employers, especially In London and the Home Counties, it is the saving that can be made by using childcare vouchers from their own workplace that is more attractive. Our survey however, suggests that a large number of agencies do not fully grasp the intricacies of how vouchers work. They often fail to mention this option to their clients altogether.
One thing is clear: the approval scheme is very much parent-driven through the financial incentive, rather than nanny-driven, through professional motivation, indeed, at present there is no real incentive for nannies to get themselves approved. However, in a competitive job market approved nannies will have an advantage over unapproved nannies, and approved status may help them to negotiate a better salary, given the benefit of the savings to their employer.
Many agencies also consider professional indemnity insurance essential if a nanny wants to represent herself as a professional and advise their nannies to take it out; some even think it should be made compulsory. They report that 20 % of nannies now have insurance, the same level as last year, and there are signs that the number of insured nannies will increase in the next few years.
Competition
Ten new countries joined the EU in 2004, but despite an initial influx of job-hunters, the effect of the “New Europeans” appears to have been insignificant at Britain's nanny agencies. Most agencies only want to place nannies who speak impeccable English and have at least two years' childcare experience in the UK. They may also resist taking on nannies from abroad because of the complexity of checking references and criminal records from non-English speaking countries. However, some agencies in our survey predict that the “New Europeans” will eventually replace the popular Australian, New Zealand and South African nannies, whose work visas now carry a new time limit of only 12 months. There is some concern that eastern Europeans are willing to work for less money, and so could contribute to bringing salaries down overall, but the immigrants are apparently becoming more aware of their employment rights.
Despite the rise in salaries and clear indications that nannies are increasingly becoming the preferred childcare choice for many dual working parents, across a wider range of the earnings spectrum, many agencies have struggled during 2005. With more nannies having two, or sometimes three, part-time positions, it is safe to say that the market has permanently changed. Some agencies seem to be struggling to keep up with the changes. They are faced with growing competition from childcare websites on the internet, while national statistics show that more than 12.9 million UK households are now online – with access to a cheaper, method of finding a nanny. While a wellestablished nanny agency can benefit from a good online presence, the agencies in our survey consider unregulated childcare websites a serious cause for concern often dispensing with the practice of meeting all potential candidates and checking their references.
The coming year will be an interesting one for nannying. Will salaries surprise us, and rise again? Will the light-touch approval scheme grow in popularity, and what effect will this have on nannies' salaries and the range of families employing them?