Ann and Sanjay are a couple with two young children, Dina, aged 9 months and Freya, aged 2. Ann has been on maternity leave and is due to go back to work full time as a healthcare assistant. Sanjay is employed full time as a landscape gardener. Both parents are in their late twenties and live in Sunderland. They are looking into arranging childcare once Ann returns to work.

2.1 Sanjay has the option to work flexibly by halving his hours from 40 to 20 for the next three years. Under this arrangement, his monthly gross pay will also halve to 772.

Sanjay says that if he takes this option, his financial sacrifice might be more than just the 772 per month in lost income over this three-year period. Identify two factors that might cause Sanjay to have a much larger financial loss over his lifetime if he takes this option of going part-time. (4 marks)

2.2 Ann could return to her gross annual full-time salary of 20,800 per year (based on 40 hours per week). Her employer introduces changes to working practices that will also allow her to reduce her hours and her pay by up to 50%. The household is discussing the short-term opportunity costs of Ann taking the part-time (50%) working option, rather than Sanjay.

With respect to gross monthly earnings only, explain and calculate the short-term opportunity cost for the household of Ann going part-time as opposed to Sanjay. (2 marks)