By virtually any measure, the cost of out-of-home childcare in Ireland is depressing. Parents who have two young children in a crèche in an urban area will often have little change out of €2,000 a month.
To be able to afford to spend that €24,000 annually, they will need to earn a gross salary of around €50,000. Not many do with the average annual earnings for full-time employees in 2017 put at €46,402 by the Central Statistics Office (CSO).
The CSO also offers a glimpse of how Ireland’s children – at least those under the age of 12 – are cared for. Its figures suggest that 70 per cent of children are being looked after by a parent or a partner while 16 per cent are being cared for by an unpaid relative or friend.
Nearly half of three-year-olds are in nonparental care at least eight hours a week. The families of 15 per cent of these children do not pay for care provided by relatives
A further 3 per cent are minded by a paid relative or friend while 10 per cent looked after by a childminder, an au pair or a nanny. The remaining 13 per cent or in a crèche or other form of after school day care.
But the CSO figures do not paint a complete picture of the choices parents face and the financial consequences of childcare costs.
A recent report published by the Economic and Social Research Institute (ESRI) fills in more gaps. It reports that women are being shut out of the workplace by the high cost of childcare, and parents with one child aged three typically spend about 12 per cent of disposable income on childcare, climbing to 16 per cent for lone parents and 20 per cent for those from lower-income households.
It found that nearly half of the three-year-old children in the Republic were in non-parental care for at least eight hours a week, with the families of 15 per cent of these children not paying for care provided by relatives – mostly grandparents.
As the financial burden grows for parents of young children, what is the best option, in pure financial terms? If a couple with two young children have to hand over the first €50,000 they earn to cover childcare costs does it make more sense for one parent to give up work? And if they do, what will the long term consequences be?
Is a crèche the best option? Or is a childminder worth the expense? And what about au-pairs? When it comes to deciding what makes financial sense there are many variables – not least location and the number of children who need to be looked after.
The cost of a crèche in rural Ireland might be as little as €550 a month or in excess of €1,200 a month in Dublin. While discounts are available for more than one child they tend to be negligible. Crèches also tend to be less flexible for working parents.
Who looks after our under-12s?
- 70% Parent or partner
- 16% Unpaid relative or friend
- 3% Paid relative or friend
- 10% Childminder, au pair or nanny
- 13% Creche, afterschool
Breakdown of childcare used for under 12s, according to CSO figures in 2016
More flexible
Au pairs on the other hand can be a lot more flexible. In the past this option was viewed as the cheapest form of childcare available and sometimes for all the wrong reasons. The isolated nature of an au pair’s working environment and their unfamiliarity with Ireland and employment law here meant many were exploited – either knowingly or otherwise.
But as the Workplace Relations Commission has made clear in recent years, au pairs have the same rights as any other employee. They can only be asked to work a maximum of 30 hours a week and must be paid the minimum wage minus a deduction of just over €54 if they live in the family home on a full board basis.
With the minimum wage set to increase to €9.80, parents looking to employ a live-in au pair working 30 hours a week can expect to them pay just under €240 a week. For a family with one child, that is not much less than the cost of a crèche although savings really do kick in if there are two or more children to be minded.
Giving up work is clearly an option chosen by many – or forced upon them. It might save a couple with two young children €50,000 gross each year until their children start school but career goals have to be postponed – and in some cases abandoned – and it can be financially ruinous.
Grandparents are an option for some but by no means all.
In my experience, most mothers would prefer to spend time with their very young children before returning to the workforce when the children are four or five
Barry Mooney is the managing director of Bellweather, a Dublin-based financial planning business. As a father of young children himself, he knows all about the cost associated with raising them and says the childcare direction parents take will always depend on individual circumstances.
He says that in his experience many don’t even start planning for longer term care options until very late in the day.
“In most cases couples don’t start thinking about what is best for them until close to the end of maternity leave, “ he says.
While all sorts of factors are play when it comes to childcare, he suggests that it is “the financial ones which are really significant” in forcing the hands of parents.
“In my experience, with all things being equal, most mothers – and let’s call a spade a spade, it is mostly mothers we are talking about – would prefer to take time out from work and spend time with their very young children before returning to the workforce when the children are four or five.”
Bitter pill
He says that apart from wanting to spend more time with their babies, “having to earn €50,000 gross to put two children into a crèche is a bitter pill to swallow”.
He also says “au pairs can make an awful lot of sense in pure financial terms but you need to recognise there is always going to be a trade off and you will be giving up some of your living space”.
The no-cost “grandparent option can be great if it works and it can make a lot of sense but a many grandparents don’t want to look after their grandchildren full-time and that is understandable”.
When asked which option made the most sense, he pauses before saying “taking into account individual circumstances and all sorts of different cases I think that, financially and mentally – and remember financial and mental wellbeing are both connected – staying at home to look after the children for the first five years if you can afford it or if you can dip into your savings probably makes the most sense”.
He accepts that parents who take that route have to make “real sacrifices” in career terms and financially.
“It is tough financially and most of us would have to cut back on holidays and other luxuries for several years to make ends meet but if you recognised that there was light at the end of the tunnel financially and that after four years you would be back in the workforce and hopefully with a good job then it could make sense.”
