Dublin Chamber Calls on Gov't to Double Childcare Support

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By Chamber Press Office, 21 August 2018

Dublin Chamber is calling on the Government to double the universal childcare subsidy in 2019.

Dublin Chamber, the largest chamber of commerce in Ireland, is the first business group to call for increased childcare funding in next year’s Budget, which will be announced in early October.

Dublin Chamber is recommending that the maximum universal subsidy be doubled from €80 to €160 per month for young children in full-time care, with further similar increases to follow in the coming years.

Speaking ahead of the launch of Dublin Chamber’s pre-Budget submission later this week, the Chamber's CEO Mary Rose Burke said: “Childcare affordability doesn’t just affect quality of life and family wellbeing. It is a hard business issue, impacting both the cost and availability of staff. Ireland’s greatest asset is its people. We need to invest in our workforce, both to protect quality of life and ensure business competitiveness ahead of Brexit. In particular, we need to start boosting female workforce participation.”

According to research by Dublin Chamber, three quarters (75%) of firms in the Greater Dublin Area report that the cost of childcare is having a material negative impact on their business. Meanwhile, almost 1 in 5 Chamber members have specifically identified easing female labour market participation as a solution to helping them access the skills they require.”

Boosting Female Workforce Participation
Mary Rose Burke said: “The Irish labour market is tightening quickly. Almost two thirds (63%) of businesses in Dublin are now struggling to find staff with the right skills. This problem will only increase as the economy grows. While inward migration plays a valuable role, more population growth carries its own challenges in terms of managing infrastructure and the housing stock. However, there is considerable untapped potential in Ireland due to our low level of female labour force participation.”

“Ireland has the largest gender gap in employment in Northern Europe, with the female employment rate in Ireland more than 10 percentage points lower than the male rate. This is clearly due to the burden of childrearing falling mainly upon women in a context of high childcare costs. Among people of childrearing age, there are 135,000 fewer women in the labour force than men. We need to turn this around,” she said.

“Dublin Chamber supports the development of a robust model of subsidised, high-quality childcare, and we welcomed the Single Affordable Childcare Scheme as a first step. But an ambitious expansion of the scheme will be needed to expedite progress towards greater affordability.”

She added: “To make a real dent in 2019, we recommend doubling the maximum universal childcare subsidy under the Affordable Childcare Scheme from €80 per month to €160 per month for a child in full-time care before the start of ECCE, with a commitment to similar progressive increases in subsequent years.”

Tax Reform
Mary Rose Burke said: “There is no one solution to this issue, and Government needs to examine the impact of its own taxation policies, for example. We need to ask: how does the combined tax and benefit system influence a parent’s decision on whether to return to work? It is clear that the attractiveness of returning to work, even at higher salary levels generally expected by skilled employees, is weakened by the structure of the tax system and the low level of childcare support currently available. Women are disproportionately affected, but the Government has shown little intention of addressing this problem. This is a problem for families and for the economy.”

She added: “Ireland has the second highest participation tax rate* in Europe for potential female entrants to the workforce, when childcare costs are taken into account. With a PTR of 94%, Ireland is second only to the UK in penalising second earners with children. Business feedback confirms that the tax system (USC, PRSI and income tax) is serving to discourage highly skilled people from re-entering the labour force.”

“To achieve gender equality, this will require comprehensive study at an official level. We are calling on Government needs to look at this problem in detail and commit to taking action on the basis of its findings by progressively removing barriers to entering the workplace, and by improving the targeted subsidy element of the Affordable Childcare Scheme.”

An exploratory analysis by Dublin Chamber suggests that someone who withdraws from the labour force to give birth or care for an infant may only add marginally to net family income by returning to work.