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Government announces substantial supports for the Reopening of Childcare

Real Cost of Providing Childcare Report Launch

September 29, 2016

Launch of Early Childhood Ireland’s report ‘Doing the Sums: The Real Cost of Providing Childcare’  in the College of Physicians, Dublin today

Early Childhood Ireland launched a new report today entitled Doing the Sums: The Real Cost of Providing Childcare with Meehan Tully & Associates Ltd. researching the viability of various childcare financial models in Ireland amongst 596 survey respondents (including 220 community based; 362 privately owned services and 14 services who did not give their status).

The aim of the research was to examine whether it is possible to operate a viable childcare service that operates within the confines of the existing funding models; supports professional development for owners, managers and staff; provides a career pathway for those working in the sector. The research addressed these considerations by scoping out the costs involved in running childcare services, of varying operational sizes.

The report findings show a real issue with sustainability in the childcare sector, with the average childcare service in Ireland, whether private or community run, urban or rural, operates on a breakeven basis. It states that, even when a surplus is generated by a childcare facility, it is often too little to meet the cost of re-investment in the business.

Speaking at the launch of this report which is the first ever comprehensive national review of the cost of running childcare services, Teresa Heeney CEO of Early Childhood Ireland highlighted some of the key issues in the report, namely that:

“The childcare sector in Ireland is in real crisis in terms of recruiting staff and keeping them and we’re seeing this as a direct result of low pay, low morale and an ever higher administrative burden. As a result we are losing great people from the sector and this will have a negative effect on the quality experience for children and the sustainability of services which are at breaking point.

“The cost of childcare is unaffordable for many parents with many families struggling to cope. In Ireland the average cost of childcare accounts for a massive 35% of household income, whereas across the EU and OECD childcare costs between 10-13% of a family’s income. We know that the Department of Children & Youth Affairs (DCYA) is very committed to evidence based policy and it is therefore important that they have a detailed understanding of the economics of childcare before launching the Single Affordable Childcare Scheme. We hope that our findings are useful in that regard.

“Meanwhile, concern has grown steadily around the current direction of childcare in Ireland and how to move toward a model that can deliver: quality for children; sustainability for services and their staff; and affordability for parents. This report highlights the fractured system that employs professional staff on the basis of the minimum wage, that sees services struggling to stay open and to be sustainable and a cost structure for the care of Under 3’s and afterschool which is the highest in Europe for parents. At the same time we know that a quality, affordable childcare system supports families to exit poverty, supports employment growth and can grow and expand to meet the needs of all the stakeholders.
“The difficulty faced by providers in retaining and recruiting well qualified staff will not be resolved without dealing with the low pay and poor conditions in the sector. Low pay cannot be addressed without proper funding models that also support sustainable business models for childcare provision. The viability of services depends on such funding models and ultimately, there can be no positive progression in any of these areas without significant investment by Government.” 

Early Childhood Ireland’s solutions / recommendations to address the problems with quality, sustainability and affordability, include:


Get Single Affordable Childcare Scheme right – making sure that it is planned & developed to ensure comprehensive & coherent supports for all children availing of childcare, including ECCE and Out of School Care, & provides a flexible & robust platform for future investment. Specifically, it needs to:

  • Be informed by the knowledge & expertise of the sector where the voices of providers & parents are heard.
  • Recognise that a ‘one size fits all’ approach will not suffice and that one level of capitation will not work. For example, where the needs in particular communities must be addressed or where there are geographic factors at play, it may cost more to deliver a service. In addition it must recognise that regulations differ for different ages of children and that too must be factored in.
  • Be based on year-round supports, and incorporate non-contact time and CPD for all staff.
  • Allows parents and providers to interface with a single, accessible and coherent system that is efficient and responsive.


As part of the Single Affordable Childcare Scheme, we recommend the introduction a Childcare Subsidy for under 3s as a priority

  • It seems from the media that this is the hot ticket item for the budget.
  • We recommend that a minimum initial €20 million investment is required for this subsidy in 2017
  • This subsidy needs to be increased consistently year on year, and achieve a minimum contribution of €60 per week by 2021. This subsidy should be rolled out as part of the Single Affordable Childcare Scheme, with higher subsidies for low-income households.


We must recognise the interconnectedness between affordability, sustainability and quality. We must recognise the strategic importance of investing in and building the childcare system, and most especially investing in the people. Without suitably qualified people there can be no expansion and we cannot predict the quality being delivered. We must not waste our money on poor quality. Staff are the key indicator of quality and we must invest in them. Therefore the subsidy must recognise the need to introduce decent salary scales for this sector. 

The financial viability and sustainability of childcare providers needs to be a key concern of policy makers, and politicians alike and the levels of subsidy must be based on a realistic assessment of the cost of providing childcare with adequate margins. 


Develop a ‘Capacity Plan’ for the sector

  • Government should develop a Capacity Plan, setting out the numbers and locations of required childcare provision, and work strategically to ensure this is provided in a way that ensures sustainability and avoids displacement. This Capacity plan must be linked to the developments currently underway as part of the planning for AfterSchool Provision.
  • Capacity planning should eliminate disincentives so that providers can offer a full suite of childcare. Government needs to carefully construct its supports for early education and care so that it does not inadvertently create disincentives and barriers to services providing a full suite of childcare for children up to the age of six, and for out of school provision. We are already seeing the cannibalization of baby places in favour of pre school places. We must actively manage this in order to avoid it in the future.


We need an Early Education and Care Workforce and Professionalisation Plan’ Government should conduct research and engage with the sector to develop a Workforce Plan that sets out a realistic assessment of the number of early childhood professionals that are needed, and where, over the next 5-10 years, including their levels of qualification and how we recruit and retain them. This obviously should be properly linked to the Capacity planning process.


The current inducement to providers to move to an ECCE-only model needs to be addressed immediately, where all community and private childcare providers offering ECCE-only services are exempt from commercial rates.


Work with the sector to agree recognised salary scales for early years educators

  • Government must recognise and address the impact of inadequate state subsidies in sustaining the low pay in the sector.
  • In order to ensure that Government can meet its own policy objectives to expand the childcare sector, it is critical that the sector is able to retain staff and attract new staff into the sector.
  • The additional investment in the sector needs to take account of the need to increase salaries, where Government works closely with the sector to develop agreed salary scales in the medium term. 


In conclusion, Teresa Heeney said that, “We are delighted that childcare is under a spotlight right now and we are sure that Minister Zappone is keeping the bulb well lit. Now is the time to be brave, make choices and invest directly into the early childhood education system, if we want a system that works and can do best by our children today and in the future.”


Echoing Early Childhood Ireland’s call for investment in childcare to be a key platform of Budget 2017 were Tanya Ward, CEO, Children’s Rights Alliance; Dr Kara McGann, Senior Labour Market Policy Executive, IBEC; Patricia King, General Secretary, ICTU; John-Mark McCafferty, Head of Social Justice and Policy, SVP and Orla O’Connor, Director, NWCI. Also attending the launch were representatives from all the major political parties and the Minister for Children and Youth Affairs, Katherine Zappone TD.



Read the Report Executive Summary

Read the Full Report


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