Childcare costs prevent 26% from returning to jobs

A quarter of Irish parents have been prevented from returning to employment or training due to prohibitive childcare costs, a new report shows.

However, among parents in lower income groups are particularly badly hit when it comes to the cost of child care: 56 per cent have been prevented from looking for a job due to child care costs according to the research.

The report, which was commissioned by the Donegal County Childcare Committee (DCCC) and carried out by Indecon, an economic consultancy group, shows that the average cost of full time childcare for a two-child family stands at €16,500 a year.

Ireland has the second highest childcare costs as a percentage of average wages across the OECD.

Co-author of the report, economist and managing director of Indecon, Alan Gray, said before the report was commissioned four months ago, economists were very uncertain as to the factual position around childcare costs.

“We knew that childcare costs were high but we didn’t know to what extent was that a barrier to employment,” he said , adding that the evidence was “quite stark”.

The report makes three recommendations for amendments to policy to incentivise people to take up employment:

“First of all for long-term unemployed individuals that there should be a subsidy of 67 per cent of childcare costs up to a limit of €5,000 per annum,” he said.

“For low income families who haven’t been long-term unemployed we think there should be a 50 per cent subsidy…and then finally for families who are just missing that eligibility but are just earning the average industrial wage there should be a tax break equal to 40 per cent of their childcare support.”

Mr Gray said it was estimated that the net cost to the exchequer would be in the region of €20 million per annum but said this was a “relatively trivial” amount in terms of the wider economic and societal benefits.

He added that the subsidies should apply to all tax-compliant and HSE approved childcare facilities and not just community childcare centres.

Avril McMonagle, manager of DCCC which commissioned the report, said that Donegal had a high percentage of low income families:

“Parents frequently tell us that that they have had to turn down work or leave employment, especially lower paid work when their children are under five,” she said.

Ms McMonagle said it was a mistake to look at childcare costs in isolation adding “we need to think about the real-life consequences of the hight cost of childcare in Ireland and what that means for families with young children, especially mothers,” she said.

Minister for Children Frances Fitzgerald, who was on hand to launch the report said she would examine the recommendations in the report in the context of a planned review early next year of two childcare subsidy schemes.

“Affordable, accessible, high quality childcare is essential for economic growth because we want our families to take up employment, to have the opportunity to take up employment and what’s very clear and this report particularly highlights this: for a significant number of families, particularly families who are less advantaged economically, the cost of childcare actually stops women and men taking up work.”

She said the report was an “important contribution” adding that she would be discussing the recommendations with Minister for Social Protection Joan Burton.

Responding to the report, Start Strong, a coalition of organisations and individuals seeking to advance children’s early care and education in Ireland, said that while high childcare costs had to be addressed “we also have to ensure that services are of high-quality”.

Director Ciairín de Buis said benefits can only arise when services are of high quality adding that “unfortunately, the Indecon report does not address this crucial issue of quality services”.

“If we design childcare subsidies without putting the quality of care at their heart, we risk encouraging further practice of the type revealed in the Prime Time investigation,” she said, referring to a RTÉ expose into the alleged mistreatment of children at three Irish crechés which aired in May.

“Affordability and quality must go hand-in-hand,” she said.

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Childcare costs prevent 26% from returning to jobs
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