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« Prudence is a Socialist Virtue | Main | The Spectre Haunting Europe »

November 23, 2017

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Paul sweeney

Sorry public spending not speaking!

Fact Checker

Hi Michael

Childcare costs are indeed rising. But this is hardly suprising.

On the demand side there are 20 per cent MORE married women aged 35-44 in employment than 5 years ago. Also a high in absolute terms.

This means more demand for creche services and, presumably, creche workers. You cannot get very fine grained data on this sector. But there are clues.

Social work activities without accommodation (NACE code 88) has seen steady increases in hourly wages for two years, up 6% since 2013. The human health and social work activities sector (which admittedly includes more than childcare workers) has seen the vacancy rate rise to 1.4% in Q2, the highest on record.

A higher vacancy rate and rising wages (not surprisingly) go together. This puts upward pressure on input costs in what is as you say a labour-dense sector. Barriers to entry for new creches are not very high, but they do exist, and there is going to be some lagged response to demand.

There is zero data on profit margins in the sector from what I can find. What we do know is that these firms tend to be small and Irish owned, and these firms are generally not particularly profitable by European standards. So there is probably not much room to eat into margins.


So to sum up I am not sure at all that this increase in prices is much to do with the subsidies. It is much more likely the result of a tightening labour market.

Michael Taft

Thanks for that, Fact Checker. As I pointed out in the post, rising incomes and employment would contribute. As there were no subsidies during this report's review we can't know what the impact will be. However, there is a strong argument that with rising expenditure - in particular, professionalizing the sector - the subsidies will not be fully passed on.

I'm no sure that profitability can be compared in a European context since in so many EU countries childcare is a public service, or much more regulated than here in regards to wages, fees and subsidies. All in all, we have to make a decision - persist with a market model or opt for a public service. My argument is that only the latter can dramatically reduce fees in an efficient manner.

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