Anticipating the forthcoming general election, presumably in November, the Government is attempting to steer clear of potential controversies. Yet childcare is unfolding as a major concern. The shortfall of childcare positions, which has worsened over the past few years, is now reaching critical levels. Meanwhile, the fee freeze implemented prior to Covid is starting to collapse as certain childcare service providers withdraw from a national plan offering financial incentives for not elevating fees for parents. The scenario of companies rebuffing free cash and costs surging for parents indicates a significant problem.
Governmental involvement in commerce can be tricky, often leading to unforeseen repercussions. For instance, the terms and conditions along with the recent funding programme introduced in 2022, commonly known as core funding, demanded that fees should remain static, barring exceptional instances. However, operational expenses have surged for providers leading them to exit the scheme, with others shutting down entirely.
In certain instances, providers argue that fees have been static since about 2016 or 2017, while operational costs have since increased dramatically. Furthermore, retaining staff, typically lower-paid, is becoming challenging as many are being lured by better-paying sectors such as primary education.
Parents can expect to feel the pinch of this childcare crisis next month. Notwithstanding the Government subsidy offered under the National Childcare Scheme, which helps reduce costs for parents, expenses are set to rise from the current €998 per month to a staggering €1,165 per month. The real impact is even more pronounced, given that parents are set to benefit from increased payments under the same scheme this autumn. This means that, if it weren’t for these changes, the monthly expense would have dropped to as low as €864 per child.
The issue of affordability in the childcare sector is becoming more acute, a condition that would be far graver without government financial assistance. Yet, the freeze on fees paired with an onslaught of new rules and administrative work gives the childcare sector a similar appearance to the rental sector. These conditions are responsible for regular occurrences of substantial fee increases, in some instances up to 40%, across various regions. Moreover, these conditions may drive 40% or over of providers to think about discontinuing their participation in the central funding system. The decreased availability – a trend in recent years, wherein women typically enrol when pregnant – is expected to worsen.
This issue is causing economic as well as social precarity. The Central Statistics Office’s Labour Force Survey suggests that the lack of accessible childcare is a significant impediment to job seekers, specifically female ones. According to the survey’s findings, about 30% of those who are eager to work but cannot presently look for a job attribute their unemployment to childcare obligations.
The impact varies across families. Many families with low incomes reside in areas devoid of childcare services. Also, those earning over €60,000 a year receive less subsidy under the National Childcare Scheme, resulting in ‘the squeezed middle’ bearing the brunt, as the costs of childcare often match or surpass mortgage costs. The ICTU pre-budget submission highlighted that in 2022, only 19% of children under three years old were engaged in formal early-years services, just over half the 36% average of the European Union.
The significant rise in government investment in childcare in recent years deserves recognition. Nevertheless, without subsidies, the issue of affordability would be graver. The stagnation of fees alongside a plethora of new regulations has led the childcare sector to echo the rental sector. This has caused smaller operators to leave and larger chains to increasingly dominate the sector. While many of these chains have raked in good profits over time, especially during the Covid period, the recent exit of operators from the market coupled with issues in the core funding scheme and the dearth of new entrants imply that currently the profit margins for many operators are tight, or in some cases, nil.
Historical incidents provide ample evidence to highlight the challenges in collaborations between private and public sectors. This is often due to the inherent distrust between public service officials, wary of misuse of governmental money, and business leaders, critical about the lack of understanding of their operational needs and their significant financial contributions over time. Notably, the predicament in the childcare sector continues to intensify, in spite of additional funds from the government. Further, it leads to a growing divide between parents alleging profiteering by providers and some providers grappling with financial survival.
Unfortunately, there are no concessions for the government or parents in this scenario. However, routing a fraction of the total budget towards resolving this issue could prove beneficial in the long run. Despite being an addition to the persistent expenses, it could be a judicious utilisation of funds compared to wasting it on further universal subsidies for households. It might also facilitate parents, mainly women, to resume their professional careers, thereby contributing to income tax.
A part of the required solution necessitates acknowledgement of the escalating costs for childcare service providers — advocating their share in the extra funds as compensation. Given the 20% average increase in consumer prices in Ireland since 2019, it’s impractical to anticipate comparable cost for childcare services. If this goes unrecognised, a further decline in childcare availability is inevitable.
Whilst channelling resources and creative techniques might prevent the escalating childcare issue from spiralling into a more severe crisis in the coming months, there looms larger concerns about the sector’s future direction. The issues include decision-making authority, staff remuneration and fiscal responsibility. This necessitates addressing a broader dilemma regarding the societal services to be provided by the State and the responsibility of covering the costs – either the beneficiary or the taxpayer? If we consider an approach akin to childcare models prevalent in multiple northern European countries, who would bear the costs? The imminent decrease in tax revenue, alongside a population surge, will make these concerns pivotal political topics in the forthcoming years.