Indecon Report on Childcare for Working Families
and Implications for Employment
Alan W. Gray, Managing Partner,
Indecon International Economic Consultants
1. Introduction

Independent Report undertaken by Indecon International
Economic Consultants

Report was Commissioned by Donegal Childcare Committee

Main Focus is on whether Childcare Represents a Barrier to
Employment
2. Existing Childcare Arrangements in Ireland

405,000 households have children under 10 years of age, of
which 266,000 under five

Wide diversity of childcare arrangements - 77% of pre-school
children are cared for by parents or relatives

Non-parental childcare is very important for working parents 68% with pre-school children where both are working full-time
3. Cost of Childcare
Average Weekly Expenditure (€) on Paid Pre-School Childcare
2013
Paid relative
€118
Child minder/Au Pair/Nanny
€138
Crèche/Montessori
€114
Total
€133
3. Cost of Childcare
Full Time Monthly Childcare for Young Children
2013
Per Month
€730 - €1,100
Annual Cost for One Child
€ 9,150
Annual Cost for Two Children
€16,470
3. Impact of Childcare Costs on Employment
Impact of Difficulties in Arranging Childcare
- 21% restricted hours worked or study
- 26% prevented looking for a job/made turn down a
job/leave employment
3. Impact of Childcare Costs on Employment

Evidence shows childcare costs are high percentage of
average wages – 45% for sole parents

Lower exit rates from unemployment for families with children
7
3. Impact of Childcare Costs on Employment
Potential Impact of Childcare Incentives on Employment
Likelihood of Increasing Unemployed
Parents Participation in Employment
Likely/Very Likely
59%
Unlikely/Very Unlikely
24%
Don’t Know/Neither Likely nor Unlikely
18%
4. Targeting of Incentives
Proposed Main Focus for New Childcare Incentives
Estimated level of children who would be
funded under new incentives
Children of Unemployed Parents
8,000
Children of Low Paid Working Families
Currently Assisted under FIS
6,000
Children of Low Income Working
Parents Not Eligible for FIS
5,200
5. Cost Benefit Analysis
CBA Results for a Targeted Childcare Incentive for Long-Term Unemployed
€
Total Net Annual Economic Benefits
61,768,136
Total Net Annual Economic Costs
40,776,736
Economic Net Present Value
20,991,400
BCR (Benefit-Cost Ratio)
1.51
5. Cost Benefit Analysis
CBA Results for a Targeted Childcare Incentive for Low Income Working Families who
are Eligible for FIS
€
Total Net Annual Economic Benefits
17,186,196
Total Net Annual Economic Costs
12,629,635
Economic Net Present Value
4,556,560
BCR (Benefit-Cost Ratio)
1.36
5. Cost Benefit Analysis
CBA Results for Limited Tax Incentive for Low Income Working Parents on the
Average Industrial Wage
€
Total Net Annual Economic Benefits
18,292,313
Total Net Annual Economic Costs
15,655,680
Economic Net Present Value
2,636,633
BCR (Benefit-Cost Ratio)
1.17
6. Exchequer Costs
Net Annual Exchequer Costs of Various Childcare Incentives
Net Costs
€
FIS to long-term unemployed
5,264,358
FIS to eligible current FIS recipients
4,266,313
Targeted Tax Incentive
9,166,815
7. Recommendations

Targeted childcare incentives for lower income families in
employment or who are unemployed but secure
employment.

Childcare amendment to current Family Income
Supplement for Working Parents and Tax Allowance for
low income families not eligible for FIS.

Incentives restricted to childcare expenditures provided
by tax compliant and HSE registered childcare providers.