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Childcare in Crisis in 2002: an article I wrote for Business Ireland

Childcare in Crisis


Flurry of Activity

Under the National Development Plan 2000-2006 the Department of Justice, Equality and Law Reform set up the Equal Opportunities Childcare Programme to address the dramatic growth in demand for childcare services. The programme is funded by the Government and the European Union to the tune of €436m.

The National Framework Committee for the Development of Family Friendly Policies was established under the Programme for Prosperity and Fairness 2000 - 2006. One of its initiatives is a website, www.familyfriendly.ie, that proposes company policies to help employees combine job with family life, including statutory entitlements such as maternity leave and other non-statutory measures such as childcare schemes.

As a Committee member, the ICTU’s statement presents one carefully worded view of the matter, naturally favouring the worker, but clearly with employers very much in mind: “Work is an essential factor of human life from the perspective of quality of life and social integration. Workplaces that respect and recognise the diverse needs of workers, including their family responsibilities, will gain from the diversity of talents and skills that they will attract and retain within their workforce.”

In turn, IBEC’s statement puts a slightly different emphasis on the issue, more confident in expressing what employers need: “The development of appropriate measures to assist in reconciling work and family life are important to underpinning economic, social and equality objectives. IBEC believes that family-friendly policies, if designed and managed correctly, can serve a dual purpose of contributing to the needs of the business as well as meeting the needs of employees with family responsibilities.”

ESB is one of the companies cited as having enthusiastically adopted such policies. It maintains that flexibility in the workplace enables each individual “to combine their working career with family life and other commitments and thus assist them in reaching their full potential as valued employees.” As part of this policy, a Joint Equality Council (JEC) was constituted in which representatives of both ESB Group of Unions and Management meet to act on issues such as childcare within the company.

The practices adopted by ESB and many other companies include options such as flexi time, job-sharing, reduced working hours, career breaks of up to five years, and five months additional maternity leave (without pay). Others have on-site information and referral services for childcare facilities, and funds to help develop child-minding facilities in their locality. Fewer companies are in a position to build their own childcare facilities, but IBM Ireland is nearing completion of its new 120-place facility in Blanchardstown to cater for the growing demands of its workforce.


Social Transformation

The root cause of all these state and corporate initiatives to take care of our children and be good to the family is a fundamental change in our socio-economic character: the increased participation of women in the workforce has created new pressures on the family and a massive increase in demand for childcare services. Dare we call it outsourcing?

A survey of members conducted recently by the ICTU showed that a surprising three quarters of parents were using childcare facilities of one form or another. A turning point was noted: that there are more women with children now working than there are without. The most recent CSO figures show that approximately 60% of mothers with children in the 5 to 14 age group are in employment. That figure goes down to about 30% for younger ages. Both figures would be sure to increase if the government meets its commitments to the EU target of 60% of women participating in the workforce. And of course, men haven’t abandoned working life in equal proportion, so the care of our children has transformed.

Indeed, we appear to have arrived at a time when some parents have more confidence in childminders’ ability to rear their children than in their own. In particular cases this is not very surprising considering how much of their day children spend away from their parents, with childminders, at the crèche, in preschool.

The social infrastructure to handle this transformation is lagging far behind, and the word crisis has been used for many years now to describe the situation. There’s the nightmare modern routine: pre-dawn rush to get the children ready, stress of loading car and trying not to forget anything, traffic, hurried stop at the childminder’s, more traffic, work interrupted by worry about children, same ‘preschool’ run in evening.

We are also familiar with the stories of those affected by the crisis, including the woman who works full-time outside the home and is also trying to be a traditional mother to her children; the private crèche for which burdensome legislation and high running costs make it difficult to stay in business or expand to meet the growing demand; the mother who works full-time in the home but feels under appreciated and is losing confidence of ever returning to employment; the father who leaves home before his children are up and gets home after they are in bed; the young couple, both working to pay off such a massive mortgage that they fret about having a child.

In terms of fiscal cost, in the ICTU survey childcare worked out at approximately 1/5th of peoples’ gross incomes, and whether it was formal or informal didn’t make any difference. Childcare in Dublin now costs up to £150 per child per week.

The 1999 National Childcare Strategy’s prediction that the demand for childcare would rise to the level of 220,000 places in 2011 seems easily on course. Unfortunately the solution proposed back then - to simply service that demand – does not appear to be on target. Another recent target, agreed to in the Employment Chapter in Barcelona, is to create sufficient childcare places to cater for at least 90% of children between 3 years and the mandatory school age and for at least 33% of children under 3 years of age. This will only put further pressure on the system.

On the supply side, in many areas parents realise that they have to book their children in for crèches as soon as they find out about the pregnancy. Facilities in major population centres all report long waiting lists for places, and being businesses many operators have stopped offering places for babies altogether. (The regulations introduced in 1996 that insist on a one minder to three babies ratio, as well as strict space regulations, have depressed the supply of such facilities.) There is a chronic lack of infrastructure for those trying to establish new premises. Poor take up of grant aid, planning delays, and a failure among companies to develop on-site childcare facilities are also blamed for the ongoing shortages. Less than a quarter of the €436 million available for childcare provision under the National Development Plan has been granted out to date. And anyway it seems likely that that investment will neither resolve the current shortage on the supply side nor meet the targets set out in Barcelona.


Politicised Responses

Predictably, the imminent elections have lobby groups, special interest groups, political parties, policy experts and lone voices clambering for the communications ether that surrounds our collective opinions. Childcare is to the fore.

You hear a lot of glib statements like “Providing affordable childcare is fundamental to a civilised society,” and “Investing in our children will bring long-term benefits to our society. They are our future. They deserve nothing less.” But what we need now is precise detailing of how the problem can be solved on both supply and demand sides.

The Labour Party’s recent childcare policy document set out a very radical approach. It comprised the following elements: improvements in childcare infrastructure, paid parental leave, free preschool, early years care subsidy, per capita subsidy to registered childcare, support for after-school youth programmes, child minder support and childcare inspection, grants for toys and materials, and a books for babies scheme.

The party admitted that this would be an expensive package, requiring an initial capital investment of €300 million, and resulting in a total annual expenditure on childcare of €820 million when fully implemented in three years. (This would bring our spending close to the target of 1% of GNP set by the European Childcare Network and being sought by Ireland’s main childcare organisations.)

Such an initial expenditure would be funded by borrowing in Labour’s case, who, as we know, said they would increase employers’ PRSI by 1.25 per cent bringing it back to pre-Budget 2002 levels. This “investment by business” would raise €400 million annually of the expenditure on the childcare proposals.

Predictably, this approach to funding was attacked by Fianna Fáil, who argued that such a tax on businesses would merely end up costing jobs and “bring Ireland back to the 1980s”. FF points to the current government’s record: trebling Child Benefit, extending maternity and adoption leave, funding 30,000 care places and investing heavily in child welfare, without increasing the cost of employing workers, or increasing taxes on business in any way.

Fine Gael’s proposals are more modest, and perhaps more attractive for being so. They want to offer parents a personal tax credit of 20 per cent on childcare expenses per child up to the age of five; and then generally: the right to quality pre-schooling, an annual pre-school capitation payment, after hours use of school premises for childcare, and an enhanced tax position for stay at home parents. Fine Gael estimates the cost of implementing these measures at €481 million on a current basis and €25 million on a capital basis. This will be paid for by sustained growth in the economy that they expect to rise again.

The PDs didn’t have a particular brief in relation to childcare in the government but take some of the credit for seeing the money provided for the first ever national childcare programme. Under their stewardship the Parental Leave Act has also been brought into operation, providing a statutory entitlement to both men and women to avail of 14 weeks unpaid leave from work to take care of their young children. They also helped establish the Equal Opportunities Childcare Programme, “to support local communities and employers who are trying to facilitate men and women who have childcare responsibilities while accessing training, education and employment.”


Consensus?

In the meantime, other groups have been calling for various levels of action:

As far back as 1999 the government-sponsored report from the Partnership 2000 Expert Working Group said that the cost of childcare in Ireland ranked among the highest in the EU, and suggested that a special tax allowance be made to cover child minding earnings, and those earnings be ignored when minders are being assessed for social welfare. It also suggested giving personal tax reliefs at a standard rate on receipted minding expenses.

The ICTU more recently called for a package of measures including tax relief on childcare costs, and contribution by employers towards childcare costs. The tax relief they propose is balanced by the suggestion that it be in the form of a refundable tax credit or similar to rent relief so that it is weighted according to means. The ICTU survey also revealed that a far greater % of the childcare economy is formal than had been previously thought, and therefore such tax relief approaches should still be considered by the government.

Yet the idea of tax breaks for childcare was abandoned by the administration in favour of increases in child benefit payments. The government’s policy has been to increase the resources available to families with particular emphasis on those on lower incomes. However, costs have continued to outstrip the money being paid out to parents in this way.

Most groups do appear to be against the un-weighted approach of tax relief, and all seem to concentrate on sorting out the supply side problems as a matter of priority.

The National Children's Nurseries Association argue for greater financial incentives for employers and private operators to provide childcare, including a doubling of the capital grant allowances, Benefit in Kind exemption, capitation grants per childcare place, and simplification of the current application process in respect of the smaller grant applications.

Again, the ICTU has an interesting proposal to help the home child minding end of the market. Their proposal is that this situation be treated for tax purposes in exactly the same way as room rental income.

The Dublin Chamber of Commerce recognises the current government policy of supporting childcare through increased child benefit. “There are merits to this approach, which should be supported,” it says. Nonetheless, other measures are required – aimed primarily at increasing the level of supply of childcare facilities, and in providing support for lower paid workers. The Chamber recommends a range of measures in Budget 2002 to support
childcare:

  • childcare subsidies for low income families
  • capital grants for providers
  • tax allowance for childminders
  • tax relief for employers investing in childcare
  • increase in the earning ceiling for lone parents
  • use of school facilities for after-school childcare services

Minister for Children, Ms Mary Hanafin TD, has described quality in childcare as “an evolving process as new standards, learning and understanding are developed,” but this will not be of much consolation to the next generation who may well someday feel that their EU counterparts have had a better start in life than they. One thing seems sure: that if we want the necessary childcare facilities any time soon we must not rely on the state. Companies will have to play a bigger role in actual provision, in funding facilities in their locality, and in lobbying for the necessary taxation policies.

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