Childcare costs biggest barrier to mothers working

Childcare costs would have to fall substantially to encourage more mothers to go to work or to work more hours.

A 20% drop in childcare costs results in a mother taking up just one extra hour of work, so an 80% reduction could be needed to turn that into an extra half-day’s labour.

The finding is from a study by the Economic and Social Research Institute (ESRI), which examined the childcare arrangements in place for more than 9,000 children and their mothers’ participation in the workforce when those children were aged nine months, three years and five years old.

It found that childcare costs remain a barrier to women taking up work, but particularly for lone mothers and women in low-income households.

Childcare for the individual child cost between 12% and 20% of a family’s disposable income depending on their socioeconomic group, with low-income households paying the greatest proportion. Families with other children could pay much more.

Fewer than half of mothers, 45.7%, had any paid work when the child was nine months old although that rose to 54.5% when the child was three years old, and 59.4% at five years old, but fewer than one in five mothers worked in excess of 30 hours a week at any stage in those first five years.

At almost all stages up to a child’s 14th birthday, workforce participation by mothers in Ireland is lower than the average among 36 wealthy countries measured by the OECD.

The study found that, at three years old, 50% of children were in full-time parental care, 27% were in a creche or other childcare centre full or part-time, 11% were with a relative (just over half of whom were unpaid), 8% had a childminder in their own home, and 4% were in a childminder’s home.

Having a childminder in their own home was the most expensive option, at €6.13 per hour in 2017 prices, followed by care in a dedicated centre at €4.82 per hour and care in a childminder’s home at €4.76 per hour. Parents who paid for childcare paid for an average of 24 hours per week.

For that one child, that accounted for an average of 12% of after-tax income across all families, 16% for lone parents and 20% for low-income families.

The study found that for every 10% increase in childcare costs, a mother worked 30 minutes less. The converse was also true. That meant for a family paying €100 in childcare weekly for the child at the centre of the study, a cost drop to €50 would result in a 2.5-hour increase in weekly working hours.

ESRI research professor, Frances McGinnity, one of the four study authors, cautioned that financial gain was not the sole reason mothers went to work and many would work even if childcare costs cancelled out their wages, in order to safeguard their job for when the child was older, to maintain their skills or for other reasons.

However, the authors jointly concluded that greater government support for childcare costs would increase employment among mothers and this would have particular benefit in increasing access to employment for low-income households.

Policies to address childcare costs are also important from a poverty perspective, as exclusion from the labour market due to childcare costs in associated with poverty risks and household joblessness,” they said.

“Additionally, increased female employment contributes to the sustainability of the welfare state through increased tax receipts.”

The study was carried out before the introduction of the Affordable Childcare Scheme which is still being rolled out and replaces existing government supports with a new system of universal and means-tested financial supports.

Children’s Minister Katherine Zappone said this was a “radical new approach” to childcare but admitted: “More must be done.”

“We are correcting decades of under-investment and this will take a number of budgets,” she said.

Dublin families pay most for childcare

Families in the Mid-West pay the lowest hourly rate for childcare while Dublin families pay the most. The figures, €3.70 and €5.18, are from 2011 but are estimated to have since increased by about 7% across the board.

Dublin families also have the fewest hours of unpaid care provided by relatives.

An average of 10% of childcare for Dublin children is provided by unpaid relatives compared to almost 20% in the Midlands.

In the South-West, unpaid relatives provide 15% of care and the average hourly rate for paid care was €4.70.

Parents in the professions had the lowest amount of unpaid care, at just 7%, and the highest hourly rates for paid care. The majority of parents availing of childcare used one kind only — just 14.4% used a mix of care, most popularly a combination of centre-based care and a relative.

The report states: “The families most likely to use paid childcare are those where the mother has a university-level education, is in full-time employment and the household is the professional or managerial social class. It is likely that parents see the price as a signal of childcare quality although it is unclear whether this is the case as we do not have measures of quality.”