High childcare costs linked to lower employment among mothers

New research published today by the Economic and Social Research Institute and Pobal, has found that mothers who face high childcare costs work fewer hours. Parents spent an average of 12 per cent of their disposable income on childcare for their three-year-old. This posed a significant barrier to employment for women, especially lone parents. For those who pay, the average hourly cost of care for one child was €4.50 at the time of the Growing up in Ireland survey in 2011, or €4.84 in 2017 prices.

The report found that, all else being equal, mothers with higher childcare costs at age three tended to work fewer hours when their child was aged five. “Our findings show that, for example, 10 per cent higher childcare costs were associated with 30 minutes less paid work by mothers per week,” commented Helen Russell, co-author of the report. The study used Growing Up in Ireland data to track employment of mothers across the first five years of the child’s life. As this estimate is based on one child, it is likely to represent the minimum impact on working hours.

The study finds that working arrangements for mothers with young children are dynamic and more complex than the choice between working full-time and staying at home. Between the ages of three and five years almost half of mothers (45%) changed their employment hours, including 9 per cent who left employment, and 7 per cent who entered employment.

How much do parents pay for childcare?

Half of the children were in non-parental care for at least eight hours a week at the time of the survey in 2011, when the child was aged three. However, 15 per cent of families did not pay for the care the child received and in almost all cases this unpaid care was provided by relatives. Families who paid for care paid for an average of 24 hours per week.

The average costs depended on the type of childcare used:

• For a childminder in the family home: €5.70 per hour ( €6.13 in 2017 prices)
• For a childminder outside the home: €4.43 per hour ( €4.76 at 2017 prices)
• For centre-based care parents paid an average of €4.48 per hour (€4.82 at 2017 prices)

Costs were higher for those living in Dublin, East Leinster and other urban areas. The financial burden was greatest for lone parents, who spent an average of 16 per cent of their disposable income on childcare and for low-income families, who spent 20 per cent of income on care. The costs are based on one child and so the burden is more severe for families with more than one child in childcare.

These figures represent the cost before the child was eligible for the free pre-school year and are therefore indicative of the costs that families face before they are eligible for this support.

Policy Implications

The research indicates that greater government support for childcare costs will increase maternal employment. Childcare costs are a greater barrier to employment for households with lower incomes, indicating that targeted supports are required for low-income families. Policies to address childcare costs are also important from a poverty perspective, as exclusion from the labour market due to childcare costs is associated with poverty risks and household joblessness. Additionally, increased female employment contributes to the sustainability of the welfare state through increased tax receipts.

Ela Hogan, Monitoring, Analysis and Outcomes Unit Lead at Pobal said: “The high costs of childcare has been widely recognised as a significant barrier to female labour market participation in Ireland. This report not only provides a supporting evidence on this, but also points out that this barrier is even more profound for lone parents and low income families.”

Minister for Children and Youth Affairs, Dr Katherine Zappone, responded to the findings saying:
“This research by Pobal and the ESRI adds to the substantial body of evidence showing that our radical new approach to childcare must continue. Since 2016 investment has increased by over 80% with an unprecedented 200,000 children registered in the last 12 months in various Government supported schemes – but more must be done. From the outset I have been clear that we are correcting decades of under-investment and this will take a number of budgets. In addition to measures which I hope to secure in Budget 2019, my officials have also been putting in place the legal, administrative and IT infrastructure so that the new Affordable Childcare Scheme will become a reality in the coming year and benefit children, parents and providers for generations to come.”

An infographic highlighting key findings from the study is available to download here.