Sunday 20 October 2019

Dan O'Brien: 'High cost of living and poor services are a big problem - but they're not to blame for our low birth rate'

Calculations by the OECD found it would take a quarter of an Irish family’s disposable income to pay for the childcare of two children. (Stock photo)
Calculations by the OECD found it would take a quarter of an Irish family’s disposable income to pay for the childcare of two children. (Stock photo)
Dan O'Brien

Dan O'Brien

Last week's column on Ireland's birth rate - which is historically low and still falling - got plenty of reaction. Quite a number of people put the fall in the number of babies being born down to the high cost of living generally, and, in particular, to the cost of having children.

More than a few gave personal experiences on social media of wanting a child, but not having the financial wherewithal to do so.

In Ireland today, children can indeed cost a lot - from cradle to college, and sometimes beyond. But they didn't come cheap 10 years ago either.

The question is, therefore, has the cost of children risen over the past decade in way that could explain the fall in the birth rate over that time?

Overall, the cost of living today is - very unusually - almost identical to a decade ago. The wide range of consumer goods and services used by the State's statisticians to compile the cost of living statistics show that consumer price inflation last year was a mere 0.5pc. That, incidentally, was yet again one of the lowest inflation rates across the EU.

Thanks to globalisation and competition among large retailers, prices of clothing, food, and household goods have all fallen in recent years. These basic items are a sizeable share of the extra costs that come with adding a little person to the family.

While overall living costs have not risen over the past decade, this of course does not apply to everything and everyone. For many, when they hear that Irish birth rates are falling, the first things that come to mind are the cost of housing and the difficulties of finding a place in urban areas, where housing shortages are acute.

Here, too, the overall picture is not as bad as some might think - by several measures the cost of housing as a percentage of income and spending in Ireland is actually below the EU average.

That said, the housing shortage, and rising rents in particular, have affected people differently depending on their age and where they live.

How housing patterns have changed for younger people was the subject of a study by economist Dara Turnbull for the Nevin Economic Research Institute, a trade union-backed think-tank. Looking at household surveys going back to 1987, he found that 24-to-35-year-olds today have more difficulties with housing than previous generations.

Housing now accounts for more than 30pc of young households' expenditure, half as much again as it did 30 years ago, according to his research.

Another notable finding was the dramatic change in young people's tenure, and the security of same. From the 1980s to late 2000s, most young Irish households either had a mortgage or owned their house outright.

This collapsed during the recession, with a majority now renting in the private market. Less secure tenure is very likely to influence how younger people plan their families.

The other big cost issue around kids is childcare. It has been recognised for some time that paying to have your children minded in Ireland is high relative to elsewhere in the developed world.

Calculations by the Paris-based OECD found it would take a quarter of an Irish family's disposable income to pay for the childcare of two children.

This was the third-highest among the three-dozen odd countries surveyed and well above the average of 13pc. Without accommodating grandparents, the cost of childcare for many working parents is daunting indeed.

A related topic is early-childhood education, something that is increasingly seen as crucial for children's development by those who study such matters. Again, alas, it's an area in which Ireland performs poorly when compared with our peers. Enrolment, for example, is some way below the OECD average.

This is largely the result of successive governments' brainless preference for doling out cash to parents instead of providing services which could hasten the development of young minds. The €2bn spent each year on child benefit payments, when measured per kid, is among the highest in the entire world.

In fairness, the Government has acknowledged these issues - its 'First 5' plan includes provision for early learning and care - but don't expect any significant reallocation of resources from Child Benefit to child services.

While Ireland still has one of the highest fertility rates in the developed world, it shouldn't be forgotten that the downward trend reflects developments and attitudes to family that are influenced by attitudes elsewhere, and not just cost issues here.

The underlying factors driving the trend for fewer children throughout the world are also relevant for Ireland.

More effective contraception, for instance, has meant women in almost every corner of the planet have fewer children than their grandmothers.

A huge increase in the numbers of women pursuing careers is also a factor. The decline in the birth rate in Ireland is, in many ways, merely a convergence with the norm in the rest of the rich world.

Nor is it clear that governments can have much of an influence on broader fertility trends. One small policy example is the proposed introduction in Ireland of Finland's 'baby box', which contains essential baby items for new parents. This was cited by Government sources as one way to boost birth rates. Yet despite its famous baby box and other generous welfare provisions, Finland's fertility rate is currently at a record low, and below Ireland's.

Predicting population has always been very difficult, but the international trend is for fewer children and smaller families. This may not be halted, even with the introduction of family-friendly policies.

Of course, to make childcare, early education, housing, and all the other services more affordable can be endorsed on their own terms. They would benefit children and parents alike.

But the evidence is that the cost of caring for children is not the reason for Ireland's falling birth rate, no matter how intuitively many believe that to be the case.

Irish Independent

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