Working Women and the Growing Costs of Childcare

Brynne Moore

Last week, the Canadian Centre for Policy Alternatives (CCPA) released ‘The Parent Trap’, a report outlining the discrepancies between childcare costs across Canada, indexed to women’s earnings. The report found that parents in Toronto are paying the highest monthly childcare costs of any city in Canada, averaging about $1676 per child — amounting to 34 per cent of mothers’ salaries on average. Unsurprisingly, parents in Quebec cities, subject to the province’s universal childcare scheme, incur the lowest monthly costs at $152 per child or roughly 4 per cent of salaries.

Quebec’s “$7 a day” government-subsidized childcare program accounts for over 60 per cent of national spending on childcare. It is, quite clearly, an exception to the general rule. As a whole, Canada currently spends a mere 0.2 per cent of Gross Domestic Product (GDP) on childcare, an amount less than one third of the Organization for Economic Cooperation and Development’s recommended minimum.

The insufficient level of government spending on childcare is perhaps most apparent in the increasingly long wait lists for daycare in most provinces. Parents today are being forced to put their names on wait lists the minute they find out that they are having a child — or even before — in order to ensure a placement years down the road.

The high costs of childcare and lack of access to daycare services are particularly problematic insofar as they reduce mothers’ ability to return to the labour force. Canada has some of the highest rates of female employment of any OECD country, and more than three quarters of Canadian women with children under the age of six are working either full or part-time. But it could be better still. Research has shown that women are more likely to be active labour force participants if they have access to affordable childcare. It follows, then, that the extent to which the government subsidizes childcare plays a significant role in determining whether or not a mother returns to work.

Increasing public expenditures on childcare services by a single percentage point of GDP has been shown to result in as much as a six per cent increase in female labour force participation. In Quebec, the province’s heavily subsidized universal childcare program has led its female labour force participation to increase between 8 and 12 per cent. With more and more women entering the labour force in Canada over time, these numbers illustrate just how important it has become to provide a childcare system that allows mothers to exercise their right to decide whether – or when – to return to the work force, unconstrained by financial concerns.

More progressive policies exist abroad. Sweden, for example, spends roughly 3.1 per cent of its overall GDP on childcare, and guarantees a daycare placement for every child. The country’s universal program is administered by individual municipalities and was first adopted in the 1960’s in response to a growing labour supply problem. Roughly 40 years later, 71.8 per cent of women in Sweden are employed — the highest of any country in the European Union. Parental fees are directly proportional to income, and monthly caps are set at 3 per cent of income (with a maximum fee of $205 per month). The program has lowered the costs of childcare and increased access, and has had positive impacts on the Swedish labour force and economy at large.

Lacking access to affordable childcare services, it often makes more sense financially for a woman to stay home and care her children than it does for her to work. Women also still consistently earn less than men, at a rate of 25 per cent on average in Canada — a fact that is significant given that it is most commonly the lower earner who leaves the labour market to provide childcare. This can result in a loss of female participation in the labour force; in businesses losing trained and experienced employees; and on a broader scale, in Canada’s skilled labour force takes a significant hit.

The rising costs of childcare in recent years have placed significant financial burden on parents across Canada. Yet perhaps more importantly in the long-run, these costs have also created conditions for reductions in female labour force participation. There is a clear need for more affordable and accessible childcare services. Given recent strife between the Conservative and NDP parties, this issue is set to be a particularly salient one in the upcoming 2015 federal election — and better support for childcare may in fact just be an election away.

Brynne Moore is a 2016 Master of Public Policy candidate at the School of Public Policy and Governance, University of Toronto. She holds a Bachelor of Arts in Political Science from McGill University, and has recently worked for both the House of Commons and the City of Ottawa. Her main areas of policy interest include health policy and fiscal policy.


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