Personal Finance

Wednesday 20 August 2014

Subsidised childcare 'needed' to get parents off the dole

Colm Kelpie and Charlie Weston

Published 19/03/2014 | 02:30

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Laura Caffrey (34) with her daughter Rebecca. The cost of childcare was almost €1,000
Laura Caffrey (34) with her daughter Rebecca. The cost of childcare was almost €1,000
Minister for Children and Youth Affairs Frances Fitzgerald
Minister for Children and Youth Affairs Frances Fitzgerald

Parents who are trying to return to the workplace should be given subsidised childcare to make it easier to take up a job, an international think-tank has recommended.

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Ireland is now the most expensive country in the world for childcare, along with the United States.

New figures due for release later this month from the influential Organisation for Economic Co-operation and Development (OECD) show that a family with two children spends 40pc of the average wage to meet childcare costs. This compares with the OECD average of just 12pc and represents the highest cost of any of the OECD's 34 members.

The OECD suggested part of the cost of child-minding could be covered for an initial period of time when unemployed people take up a new job to ensure that they can get "a foothold in the labour market again".

The Department of Children and Youth Affairs has said it has various childcare support schemes for low-income parents, including for returning to work, education or training.

Parents qualify for the latter if they attend certain training or educational courses.

The global OECD study, which assesses the social impact of the financial crisis, also said there was little to be gained for a jobless couple if one half went off the dole and got a job. This was unlike the experience in other OECD countries, the report said.

Herwig Immervoll, a senior economist at the think tank and author of a new OECD study, told the Irish Independent that childcare costs were "a barrier to women in labour market participation across OECD countries".

"But because of the high costs and often the limited availability in Ireland, there is particularly a strong barrier there," he said.

Less than a third of children under the age of three are enrolled in childcare facilities in Ireland, compared with 40pc in the UK and 50pc in France.

A government-backed report released last year revealed that a quarter of parents were prevented from returning to work because of soaring childcare costs.

Nearly 26pc of parents with children at nine months said difficulties with childcare had prevented them looking for a job or training, or made them leave employment. This rose to 56pc among families on low incomes.

The study, by Indecon consultants, found that full-time monthly childcare costs were between €730 and €1,100 per month for young children.

The OECD, which is now finalising figures that show Ireland is the joint most expensive country for childcare, says Ireland needs to seriously consider a short-term subsidy scheme for childcare when parents are getting back into work after being on social welfare.

The Paris-based body is the latest organisation to warn of a welfare trap and suggested that people who go back to work could be given a job-start bonus to ensure they move from benefits to a job.

ADDITIONAL

But the Department of Social Protection said the vast majority of people on the Live Register – approximately 75pc – receive only a personal payment of €188 per week or less, and no additional benefits such as rent or mortgage interest supplement.

"For that reason, there is a clear incentive to work and this is demonstrated by the fact that, as jobs become available, they are being taken up," a spokeswoman said.

The OECD study also pointed out that the number of people living in a household without a job doubled during the crisis in Ireland, Greece and Spain.

More than one in six Irish adults live in a jobless household, up from one in 10 before the crisis.

It said household incomes had fallen by €1,800 per person since 2008, to reach €18,500 per person in 2012. This is one of the biggest falls in the eurozone.

But it said that income losses would have been far greater if it hadn't been for the social protection system, which it credited with ensuring relative poverty did not increase.

The Department of Children and Youth Affairs said Children's Minister Frances Fitzgerald was aware of the problems caused by expensive childcare.

But it pointed out that €260m was being provided this year to support childcare programmes, including the free pre-school year from which 68,000 children benefit. It said this saves a parent of a child about €2,500 a year.

The Community Childcare Subvention programme, which provides targeted benefit primarily to lower-income and disadvantaged families, is also accessible to parents who have relatively average incomes.

The Childhood Education and Training Support (CETS) programme, administered on behalf of the Department of Education and Skills, targets funding to support parents seeking to return to the workforce.

The CETS scheme provides childcare places subsidised at a rate of €145 per week.

Parents qualify if they attend certain training or educational courses and are required to contribute a maximum of €25 per week towards the cost of the place.

Irish Independent

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