Lyydia Alajääskö
Jonas Fluchtmann
Joining Forces for Gender Equality
What is Holding us Back?
24. Ensuring the availability, quality and affordability of childcare
Abstract
This chapter discusses the provision of early childhood education and care (ECEC) in OECD countries. It first considers differences in enrolment rates across OECD countries and age groups as well as recent policy efforts to increase childcare availability. It then discusses the variation in out-of-pocket childcare costs and how countries aim to support families that struggle with the affordability of ECEC. An overview of quality challenges in ECEC provision closes this chapter.
Key findings
Childcare availability is crucial for supporting both parents’ participation in the labour market. Enrolment rates vary widely across OECD countries and income groups – especially for children under three years of age. Much of this reflects differences in parental leave and public childcare supports as well as societal attitudes towards the provision of care to very young children.
For many families, affordability remains a key issue and can critically dampen the incentives to work for second earners. Although most OECD countries provide support to low- and middle‑income families, the policies in place are not always enough for those in vulnerable positions, including single mothers.
Many OECD countries still face difficulties with ensuring high-quality ECEC, reasons for which include shortages of qualified childcare workers and bad employment conditions.
The first years of life lay the foundations for children’s future. Children’s participation in formal childcare in their early life is positively associated with child development, learning, increased equality of opportunities and reduced poverty (OECD, 2020[1]). Early childhood education and care (ECEC) is also essential to facilitate both parents’ labour market engagement. This has recently been highlighted by the effects that extensive school and childcare facility closures during the COVID‑19 pandemic had on working parents (OECD, 2021[2]). OECD countries have taken some lessons from the pandemic, and some are aiming to modernise educational and childcare systems – see OECD (2021[3]) for a stocktaking. However, as mothers continue to bear a disproportionate amount of the caregiving burden in most families, ECEC remains particularly important to combine their return to full- or part-time work with the coverage of the child’s need for care (Sikirić, 2021[4]). ECEC is therefore a critical tool to advance on a range of family, child, and gender equality objectives.
Participation in ECEC varies widely among 0‑2 year‑olds
Approaches to early life family supports, including childcare, differ widely across the OECD. Public spending on the ECEC sector ranges from a minimum expenditure of 0.2% of GDP in Türkiye to a maximum of 1.8% in Iceland, while averaging 0.8% of GDP across the OECD in 2019. Most of this expenditure is concentrated on pre‑primary care for children over the age of three, but some countries also spend considerable amounts on ECEC for children aged zero to two (OECD Family Database).
The wide variation in public expenditure on childcare across countries and age‑groups is mirrored in the ECEC enrolment rates (Figure 24.1). On average across the OECD, 36% of 0‑2 year‑olds were enrolled in ECEC in 2020, compared to 88% of 3‑5 year‑olds. These differences across countries can often be attributed to variation in parental leave entitlements, the degree of public childcare support, and societal attitudes towards the provision of care to very young children – see e.g. Fervers and Kurowska (2022[5]). For instance, in the Netherlands, almost 70% of 0‑2 year‑olds are enrolled in formal ECEC – the highest participation rate in the OECD. However, mothers often work part-time while their children attend childcare for one or two days per week only. Scandinavian countries typically aim to provide conditions that facilitate full-time labour market participation of both parents, resulting in a well-funded sector and high ECEC-participation rates from early ages. Enrolment is notably lower in the Slovak Republic, where parental leave lasts until the child turns three, as well as in Mexico and Türkiye, where maternal and/or informal care is prevalent and public investment in family supports is limited compared to other OECD countries – see e.g. OECD (2017[6]) and Pekkurnaz (2019[7]).
Figure 24.1. Enrolment in ECEC services differs widely for the youngest
Note: The OECD average includes all OECD member countries with data available for both age groups. Data for 0‑2 year‑olds generally include children enrolled in early childhood education services (ISCED 2011 level 0) and other registered ECEC services (outside the scope of ISCED 0, because they are not in adherence with all ISCED‑2011 criteria). Data for 3‑5 year‑olds include early childhood education services (ISCED 2011 level 0) and other registered ECEC services, as well as primary education (ISCED 2011 Level 1). For 0‑2 year‑olds, data for Costa Rica, Iceland, and the United Kingdom refer to 2018 and for Japan to 2019. No data on 0‑2 year‑olds is available for the United States. For 3‑5 year‑olds, data for Belgium, Greece and Portugal refer to 2019 and for the United States to 2018. More details are available in the OECD Family Database.
Source: OECD Family Database, Indicator PF3.2, https://www.oecd.org/els/soc/PF3_2_Enrolment_childcare_preschool.pdf.
To support the enrolment of younger children, in recent years many governments have lowered the age of mandatory enrolment or expanded the right to preschool education for younger children (Austria, Costa Rica, Greece, France, Lithuania and Norway). Australia, Austria, France, Germany, Greece, Hungary, Italy and Switzerland are among the countries that have increased subsidies towards investment in the ECEC system by local government or private providers over the past five years, including employer-provided childcare. Some government responses to the COVID‑19 pandemic have also included aims for an expansion of ECEC capacity. For example, with the Recovery and Resilience Plan, Italy has committed investments to create about 264 000 new ECEC places by 2026 (Government of Italy, 2022[8]), while Germany’s COVID‑19 response committed an additional EUR 1 billion for the expansion of ECEC capacity between 2020 and 2022 (Eurydice, 2022[9]). Similarly, the United States has allocated parts of the pandemic response stimulus to the ECEC sector. For example, with the 2021 American Rescue Plan Act, the government authorised USD 39 billion for ECEC programmes and supports, of which USD 24 billion are allocated to childcare business grants by 2023, aiming to increase the capacity and quality of the sector (Quinton, 2022[10]).
Additional impetus for investment in ECEC may come from the recent upward revision of the European Council’s Barcelona Targets, which now prescribe a target ECEC enrolment rate of 45% among under 3 year‑olds in European Union (EU) countries – with specific targets for countries that have yet to reach the original 2002 target of 33% by 2010 – and 96% from the age of 3 up to compulsory schooling age, to be reached by 2030 (European Commission, 2022[11]). Some countries have also improved ECEC access for children coming from vulnerable groups. For instance, in Lithuania preschool education is mandatory for children growing up in families at social risk.
Childcare costs can be a heavy financial burden for families and a substantial barrier to employment
Out-of-pocket costs for ECEC can be an important barrier to enrolment for many families in OECD countries, particularly those with lower paid jobs. On average, a dual-earner couple on low earnings with two young children pays about 10% of an average wage on childcare fees, but this can reach almost 30% in the Czech Republic, New Zealand and the United Kingdom (Figure 24.2). The design of support systems often accounts for the challenges working single parents face, so that they pay 6% of an average wage across the OECD, but out-of-pocket costs can be considerable in the Czech Republic and the United States. While high childcare costs can make childcare unaffordable for some families on lower incomes, they can also seriously dampen the financial incentives to work for second earners (often mothers) in median income households. By raising participation tax rates, high childcare costs frequently act as a barrier to maternal employment. In some countries, such as Ireland, Lithuania Switzerland and the United Kingdom, participation tax rates in median earnings households can be 70% or above, with childcare fees often contributing half or more (OECD, 2021[12]; 2022[13]).
Figure 24.2. Net childcare costs are sizeable in some countries
Note: Net childcare costs are equal to gross fees minus childcare benefits/rebates and tax deductions, plus any resulting changes in other taxes and benefits following the use of childcare. Calculations are for full-time care in a typical childcare centre for a two‑child family, where both parents are in full-time employment and the children are aged two and three. Full-time care is defined as care for at least 40 hours per week. For couples, both parents earn 67% of the average wage. For more detail see the OECD Tax-Benefit model methodology.
Source: OECD Tax and Benefit Models, http://oe.cd/TaxBEN.
In many OECD countries, there is a significant gap in childcare use across income groups, particularly so among children under the age of three. For example, 0‑2 year‑olds from families with low incomes are much less likely to enrol in ECEC than those from high-income families in OECD-EU countries (Figure 24.3). As ECEC is also positively associated with a wide range of child and family outcomes – such as cognitive development, well-being and reduced poverty – this can perpetuate socio-economic inequalities in countries with substantial gaps in enrolment. Children from lower-income households, for which ECEC benefits are particularly valuable, may therefore be more likely to miss out later in life (OECD, 2020[1]). In some countries, such as Finland and Switzerland, relatively high net childcare costs likely contribute to the large gap in ECEC enrolment between children in families of the lowest and the highest income tertile. In other cases, such as in France, net childcare costs are below the OECD average as families are generally well supported; instead, the main issue is accessibility, with shortages in the supply of public places being a frequent problem, particularly in public crèche facilities catering to children below the age of three (OECD, 2020[1]). At the same time, higher-income neighbourhoods in France typically have noticeably higher supply of ECEC spaces than lower-income neighbourhoods (Gaudron et al., 2023[14]).
Figure 24.3. ECEC enrolment is lower among children in lower-income households
Note: Data for Iceland and the United Kingdom refer to 2018, for Germany and Italy to 2019. Data are OECD estimates based on information from EU-SILC. Equivalised disposable income tertiles are calculated using the disposable (post tax and transfer) income of the household in which the child lives – equivalised using the square root scale, to account for the effect of family size on the household’s standard of living – and are based on the equivalised disposable incomes of children aged less than or equal to 12. See notes to Figure 24.1 for more information.
Source: OECD Family Database, Indicator PF3.2, https://www.oecd.org/els/soc/PF3_2_Enrolment_childcare_preschool.pdf.
OECD countries have made efforts to make ECEC more affordable
Ensuring that those who need help paying for ECEC will receive adequate financial support and/or fee discounts is crucial. OECD countries have implemented a variety of childcare support programmes for low-income households, ranging from childcare allowances, tax concessions and fee rebates to increases in other benefit entitlements, such as childcare provided at reduced fees. Some countries have extensive discount schemes that reduce the out-of-pocket costs of childcare to a minimum. For example, Estonia limits childcare fees to 20% of the monthly minimum wage, while Germany exempts low-income and other vulnerable households from paying ECEC fees. In Norway, childcare fees are capped at a maximum of 6% of gross household income, and the government recently introduced a right to 20 hours of free childcare for lower-earning parents. Between 2021 and 2026, Canada is rolling out a large‑scale ECEC reform towards a country-wide Early Learning and Childcare System which, among others, includes a guarantee for a childcare fee of maximum CAD 10 a day. Earlier reforms with similar maximum fees (today CAD 8.7 a day) in the province of Québec contributed to an increase in mothers’ labour force engagement (Cleveland, 2022[15]).
Many other countries have improved their supports to increase the affordability of childcare over recent years. Some countries have increased financial supports and raised the hours of childcare provision (e.g. Australia, the Czech Republic, Luxembourg, New Zealand and the United Kingdom). Others widened the scope of financial supports to cover a larger number of families by, for example, extending childcare support including free ECEC for all 3‑5 year‑olds (Japan), extending childcare allowances to all children under three and those with chronic diseases (Italy) as well as expanding availability of childcare vouchers to non-resident workers (Luxembourg). Some countries have aimed to help with childcare costs by increasing tax deductions for childcare expenses (e.g. the Czech Republic and Switzerland) or by providing tax-free childcare (the United Kingdom). However, these policies risk reverse targeting, as individuals earning low income already pay little to no income taxes (Thevenon, Adema and Clarke, 2016[16]; OECD, 2020[1]). A good practice of targeting through tax deductions can nevertheless be found in the Canadian province of Ontario, where some of the out-of-pocket ECEC costs to single parents on low incomes are paid back as a refundable tax credit and are thus paid out independent of the tax burden. In combination with other childcare supports and because childcare costs are not counted in the income test for a range of other benefits, the net childcare cost for the eligible families is therefore practically negative (Figure 24.2).
Children and childcare staff suffer under low quality ECEC
In addition to improving availability and affordability, promoting high quality in ECEC is increasingly seen as a policy priority. Importantly, a growing body of literature suggests that only high quality ECEC achieves positive effects on children’s development, especially for disadvantaged children (OECD, 2018[17]; Thevenon, Adema and Clarke, 2016[16]). While access to at least one year of ECEC is offered in most OECD countries, universal access is a not a guarantee for high quality ECEC anywhere (OECD, 2018[17]). More specifically, OECD countries are struggling to recruit and retain highly skilled workers as workforces are ageing (OECD, 2019[18]). Ongoing shortages in the ECEC workforce result from poor working conditions, including low wages, limited opportunities for professional development and a lack of status and public recognition of the profession. Perhaps related to this there is a trend of feminisation of the workforce, as women continue to disproportionally enrol in care‑related educational fields (OECD, 2019[18]) (Chapter 9). The ECEC workforce needs increased enrolment of men to tackle existing staff shortages, so that a sufficiently large number of ECEC workers can ensure high-quality services.
Indeed, many OECD countries have developed strategies to achieve high quality preschool education. For instance, the Danish and Norwegian Governments have introduced minimum requirements for child-staff ratios. Other countries have introduced vocational standards or obligations for further education of carers (the Czech Republic) as well as devoted funds for further education of staff (Denmark). There have also been aims to improve quality by changing ECEC systems, such as integrating or dividing services according to needs (e.g. Korea) and by introducing more automation of administrative services (e.g. Hungary, Italy and Korea). Finally, several countries have implemented special support programmes for children in vulnerable situation to aid language learning (Austria and Luxembourg) and for children with disabilities or long-term illnesses (Hungary and Mexico). To bring more men into the ECEC workforce, some countries have run campaigns (Belgium, Denmark and Scotland [United Kingdom]) or affirmative action in ECEC hiring (Norway).
Key policy messages
OECD countries need to sustain their effort to ensure availability and affordability of places in ECEC by increasing public investment.
Governments need to reduce out-of-pocket costs for parents to a minimum, especially for low- to middle‑income earners. In the face of public budget constraints it is important to ensure that targeted policies preserve work incentives.
OECD countries need to increase efforts to enhance the quality of ECEC services. Actions include promoting both quality and accessibility of training, enabling in-service training, as well as improving the status and attractiveness of ECEC-jobs.
References
[15] Cleveland, G. (2022), Early Learning and Child Care in Canada: Where Have We Come From, Where Are We Going?, https://irpp.org/wp-content/uploads/2022/10/Early-Learning-and-Child-Care-in-Canada-Where-Have-We-Come-From-Where-Are-We-Going.pdf.
[11] European Commission (2022), Proposal for a Council Recommendation on the Revision of The Barcelona Targets on Early Childhood Education and Care.
[9] Eurydice (2022), National Educations Systems: Germany, https://eurydice.eacea.ec.europa.eu/national-education-systems/germany/germany.
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