Childcare voucher scheme brings many benefits

CHILDMINDING: New childcare vouchers provided by employers will be available to Irish employees later this year. The vouchers can be used by employees to pay for any type of childcare in the formal economy.

Employee benefits company Accor Services Ireland is introducing a pilot scheme with one employer next month and the full launch is planned for September.

The main advantage of the vouchers for employees and employers is that they are exempt from PRSI.

They are also very flexible. The vouchers can even be paid to a family member caring for a child or children, provided they are registered as a childminder.

For the scheme to work, more childminders need to be encouraged to join the formal economy. The benefits to the childminder of going formal are far-reaching. It means she can use up tax credits, qualify for a State pension and be eligible to apply for grants.

There is no central register for childminders in the State. A childminder who is minding four or more pre-school children is required to notify the local health board. Anyone minding three or fewer children is not.

This voluntary notification system is the only equivalent to a State register for childminders.

Most children are cared for in small groups in home settings in the informal economy and their minders operate without any support, supervision or regulation from the State.

Childminding Ireland, the national association of childminders, maintains an independent register of childminders who are trained and insured and provide high-quality family-based day care. It also provides training, support and advice to childminders and parents.

A childminder registered with this organisation could receive payment in vouchers.

The Accor vouchers have been available in Britain for seven years and are the most widely used form of employer-funded childcare in the public and private sectors.

The vouchers can be given to the employee in two ways, Mr Frederic Lluch of Accor explains. They can be treated as an extra benefit in addition to pay or the employee can decide to have part of their salary paid in vouchers. Companies taking part in the scheme will also provide an information service on family issues and childminding services.

Those involved in this employer initiative acknowledge that the informal status of most Irish childminders may act as a barrier to the success of childcare vouchers.

"We've seen a lot of demand from employers for this kind of flexible benefit but we will have to see how childminders react," Mr Lluch said.

But anything that helps parents meet the prohibitive cost of childcare is worth a try.

A recent ICTU childcare survey showed that 71 per cent of respondents were using at least one form of paid childcare. The largest number of children - 43 per cent - were being minded using informally paid childcare services.

One in three children were being minded using formally paid childcare, mostly in homes. The remaining 22 per cent of all children were being minded using non-paid childcare services provided by family, friend or neighbour.

The most common range of weekly expenditure was between €101.58 and €125.70.

The survey showed there was no significant difference in the average amount spent on childcare between full-time and part-time workers. On average, each child was minded 23 hours a week.

The chief executive of Childminding Ireland, Ms Patricia Murray, welcomed the vouchers initiative and said employers had to be part of the solution.

"We would love to see anything that demystifies the formal economy for childminders. Many of them have no idea how easily they could professionalise their service," she said.

Whatever efforts employers and parents make, it is the State that can do the most to address childcare standards and affordability problems. Last week Labour published its childcare policy document, which included a proposal to bring childminding out of the informal economy by making the first €7,618 of annual earnings exempt from tax.

The party is also proposing a €50 weekly "recognition payment" to parents of children under three years of age.

Reforms of this sort will cost money and require borrowing. From the employers' viewpoint, childcare vouchers are seen as an effective example of a family friendly policy that can be introduced on a cost-neutral basis.

The business case for these vouchers is quite strong, particularly when compared with provisions such as workplace creches, Mr William Turriff of consultants Watson Wyatt says.

"While workplace nurseries are suitable for some employers, the average start-up cost is €330,000, with subsidy rates of over €80 per week, and the number of places cannot be adjusted to match the changing needs of the organisation."