Could The High Cost of Childcare Even Affect Your Pension?
Updated: Apr 6, 2022
The contentious issue of under-investment in the childcare sector in Ireland is not a new one, it has been ongoing for many years but has been particularly topical in the current media discourse. What is the wider social impact of this under-investment and could it even affect your pension?
It is undeniable that this sector is vastly underfunded in Ireland. A recently published 2021 report from the UNICEF Office of Research on childcare policy in “41 rich countries” has found that childcare in Ireland is among the least affordable in the OECD (Organisation for Economic Co-operation and Development). In fact, this report found that a couple in Ireland, who are both working and earning an average salary and require childcare for two children, would end up spending between 33% and 50% of one of their salaries to cover childcare (Gromada & Richardson, 2021).
These costs are staggering to say the least. In an economic climate where other issues such as house prices and rent affordability are also crippling some families in Ireland, how can we possibly expect parents to juggle the cost of childcare on top of everything else? Not to mention another current topic of retirement and pensions!
Future Impact & Wider Social Benefits
The Irish Fiscal Advisory Council has reported sustainability issues in relation to the public pension scheme. Our ageing population is growing, due to longer life expectancy, yet birth rates are declining. As a result, there may not be enough workers in 30 years’ time to make sufficient PRSI contributions to fund state pensions. Yet, how are average families supposed to afford a private pension to supplement them in their golden years when they are worn out working to pay mortgages and childcare fees?
It is possible that the astronomically high cost of childcare could be a contributing factor to the current reduction in birth rates. However, it is important to remember that if people do not have children now, then there will be an insufficient future workforce to pay taxes to fund pensions.
It all comes full circle in the end. Investing in the childcare system in Ireland by easing the cost of working for parents is surely beneficial for everyone. Children will benefit from quality early childhood education and care while parents can afford to work (sounds counterintuitive doesn’t it!). Also, if parents have a little cash left at the end of the week that didn’t have to go towards an astronomical childcare bill, then this additional disposable income may increase their spending therefore potentially boosting local economy.
High childcare costs are exacerbating socio-economic inequalities such as deterring women from returning to the workforce (Gromada & Richardson, 2021). This finding was previously highlighted in a 2017 research study which maintained that maternal employment rates increase when families can access affordable childcare (Browne and Neumann, 2017).
Other OECD countries have a much higher rate of public spending on childcare, Iceland for example spends almost 2% of GDP on the sector which is a stark contrast to Ireland’s seemingly paltry 0.1 – 0.3% (OECD, 2020).
The Government need to substantially up this investment as a matter of priority to improve outcomes for children, support working parents and enable women to return to work. The benefits of adequate investment now will surely benefit society as a whole for decades to come.
About the Author: Paula Walshe is an ECEC trainer and placement assessor in the further education and training sector and a freelance writer. She currently holds a BA (Hons) in Early Childhood Education and will complete her studies for a Master’s Degree in Leadership for ECEC in 2022. Paula has extensive ECEC experience in both pedagogical practice and ECEC management. You can learn more about Paula’s work at her website (www.thedigitalearlychildhoodeducator.ie), where she writes a weekly blog on current topics in Early Childhood Education and Care in Ireland and provides useful professional and academic resources for students and professionals in this sector. Paula is also one of the creators of an ECE community of practice based on Twitter: ECE Quality Ireland (@ECEQualityIRL) / Twitter Contact Paula: LinkedIn: Paula Walshe / Twitter: @digitalearlyed / Instagram: @digitalearlychildhoodeducator. References:
Browne, J. and D. Neumann. (2017). Childcare Costs in 2015 - OECD Tax Wedge and Effective Tax Rates on Labour. OECD, Paris.
Gromada, A, Richardson, D. (2021). Where Do Rich Countries Stand on Childcare? - Innocenti Research Report. UNICEF Office of Research: Florence.
OECD. (2020). “Is Childcare Affordable?” Policy Brief on Employment, Labour and Social Affairs. OECD, Paris.