24. Ensuring the availability, quality and affordability of childcare

Lyydia Alajääskö
Jonas Fluchtmann

The first years of life lay the foundations for children’s future. Children’s participation in formal childcare in their early life is positively associated with child development, learning, increased equality of opportunities and reduced poverty (OECD, 2020[1]). Early childhood education and care (ECEC) is also essential to facilitate both parents’ labour market engagement. This has recently been highlighted by the effects that extensive school and childcare facility closures during the COVID-19 pandemic had on working parents (OECD, 2021[2]). OECD countries have taken some lessons from the pandemic, and some are aiming to modernise educational and childcare systems – see OECD (2021[3]) for a stocktaking. However, as mothers continue to bear a disproportionate amount of the caregiving burden in most families, ECEC remains particularly important to combine their return to full- or part-time work with the coverage of the child’s need for care (Sikirić, 2021[4]). ECEC is therefore a critical tool to advance on a range of family, child, and gender equality objectives.

Approaches to early life family supports, including childcare, differ widely across the OECD. Public spending on the ECEC sector ranges from a minimum expenditure of 0.2% of GDP in Türkiye to a maximum of 1.8% in Iceland, while averaging 0.8% of GDP across the OECD in 2019. Most of this expenditure is concentrated on pre-primary care for children over the age of three, but some countries also spend considerable amounts on ECEC for children aged zero to two (OECD Family Database).

The wide variation in public expenditure on childcare across countries and age-groups is mirrored in the ECEC enrolment rates (Figure 24.1). On average across the OECD, 36% of 0-2 year-olds were enrolled in ECEC in 2020, compared to 88% of 3-5 year-olds. These differences across countries can often be attributed to variation in parental leave entitlements, the degree of public childcare support, and societal attitudes towards the provision of care to very young children – see e.g. Fervers and Kurowska (2022[5]). For instance, in the Netherlands, almost 70% of 0-2 year-olds are enrolled in formal ECEC – the highest participation rate in the OECD. However, mothers often work part-time while their children attend childcare for one or two days per week only. Scandinavian countries typically aim to provide conditions that facilitate full-time labour market participation of both parents, resulting in a well-funded sector and high ECEC-participation rates from early ages. Enrolment is notably lower in the Slovak Republic, where parental leave lasts until the child turns three, as well as in Mexico and Türkiye, where maternal and/or informal care is prevalent and public investment in family supports is limited compared to other OECD countries – see e.g. OECD (2017[6]) and Pekkurnaz (2019[7]).

To support the enrolment of younger children, in recent years many governments have lowered the age of mandatory enrolment or expanded the right to preschool education for younger children (Austria, Costa Rica, Greece, France, Lithuania and Norway). Australia, Austria, France, Germany, Greece, Hungary, Italy and Switzerland are among the countries that have increased subsidies towards investment in the ECEC system by local government or private providers over the past five years, including employer-provided childcare. Some government responses to the COVID-19 pandemic have also included aims for an expansion of ECEC capacity. For example, with the Recovery and Resilience Plan, Italy has committed investments to create about 264 000 new ECEC places by 2026 (Government of Italy, 2022[8]), while Germany’s COVID-19 response committed an additional EUR 1 billion for the expansion of ECEC capacity between 2020 and 2022 (Eurydice, 2022[9]). Similarly, the United States has allocated parts of the pandemic response stimulus to the ECEC sector. For example, with the 2021 American Rescue Plan Act, the government authorised USD 39 billion for ECEC programmes and supports, of which USD 24 billion are allocated to childcare business grants by 2023, aiming to increase the capacity and quality of the sector (Quinton, 2022[10]).

Additional impetus for investment in ECEC may come from the recent upward revision of the European Council’s Barcelona Targets, which now prescribe a target ECEC enrolment rate of 45% among under 3 year-olds in European Union (EU) countries – with specific targets for countries that have yet to reach the original 2002 target of 33% by 2010 – and 96% from the age of 3 up to compulsory schooling age, to be reached by 2030 (European Commission, 2022[11]). Some countries have also improved ECEC access for children coming from vulnerable groups. For instance, in Lithuania preschool education is mandatory for children growing up in families at social risk.

Out-of-pocket costs for ECEC can be an important barrier to enrolment for many families in OECD countries, particularly those with lower paid jobs. On average, a dual-earner couple on low earnings with two young children pays about 10% of an average wage on childcare fees, but this can reach almost 30% in the Czech Republic, New Zealand and the United Kingdom (Figure 24.2). The design of support systems often accounts for the challenges working single parents face, so that they pay 6% of an average wage across the OECD, but out-of-pocket costs can be considerable in the Czech Republic and the United States. While high childcare costs can make childcare unaffordable for some families on lower incomes, they can also seriously dampen the financial incentives to work for second earners (often mothers) in median income households. By raising participation tax rates, high childcare costs frequently act as a barrier to maternal employment. In some countries, such as Ireland, Lithuania Switzerland and the United Kingdom, participation tax rates in median earnings households can be 70% or above, with childcare fees often contributing half or more (OECD, 2021[12]; 2022[13]).

In many OECD countries, there is a significant gap in childcare use across income groups, particularly so among children under the age of three. For example, 0-2 year-olds from families with low incomes are much less likely to enrol in ECEC than those from high-income families in OECD-EU countries (Figure 24.3). As ECEC is also positively associated with a wide range of child and family outcomes – such as cognitive development, well-being and reduced poverty – this can perpetuate socio-economic inequalities in countries with substantial gaps in enrolment. Children from lower-income households, for which ECEC benefits are particularly valuable, may therefore be more likely to miss out later in life (OECD, 2020[1]). In some countries, such as Finland and Switzerland, relatively high net childcare costs likely contribute to the large gap in ECEC enrolment between children in families of the lowest and the highest income tertile. In other cases, such as in France, net childcare costs are below the OECD average as families are generally well supported; instead, the main issue is accessibility, with shortages in the supply of public places being a frequent problem, particularly in public crèche facilities catering to children below the age of three (OECD, 2020[1]). At the same time, higher-income neighbourhoods in France typically have noticeably higher supply of ECEC spaces than lower-income neighbourhoods (Gaudron et al., 2023[14]).

Ensuring that those who need help paying for ECEC will receive adequate financial support and/or fee discounts is crucial. OECD countries have implemented a variety of childcare support programmes for low-income households, ranging from childcare allowances, tax concessions and fee rebates to increases in other benefit entitlements, such as childcare provided at reduced fees. Some countries have extensive discount schemes that reduce the out-of-pocket costs of childcare to a minimum. For example, Estonia limits childcare fees to 20% of the monthly minimum wage, while Germany exempts low-income and other vulnerable households from paying ECEC fees. In Norway, childcare fees are capped at a maximum of 6% of gross household income, and the government recently introduced a right to 20 hours of free childcare for lower-earning parents. Between 2021 and 2026, Canada is rolling out a large-scale ECEC reform towards a country-wide Early Learning and Childcare System which, among others, includes a guarantee for a childcare fee of maximum CAD 10 a day. Earlier reforms with similar maximum fees (today CAD 8.7 a day) in the province of Québec contributed to an increase in mothers’ labour force engagement (Cleveland, 2022[15]).

Many other countries have improved their supports to increase the affordability of childcare over recent years. Some countries have increased financial supports and raised the hours of childcare provision (e.g. Australia, the Czech Republic, Luxembourg, New Zealand and the United Kingdom). Others widened the scope of financial supports to cover a larger number of families by, for example, extending childcare support including free ECEC for all 3-5 year-olds (Japan), extending childcare allowances to all children under three and those with chronic diseases (Italy) as well as expanding availability of childcare vouchers to non-resident workers (Luxembourg). Some countries have aimed to help with childcare costs by increasing tax deductions for childcare expenses (e.g. the Czech Republic and Switzerland) or by providing tax-free childcare (the United Kingdom). However, these policies risk reverse targeting, as individuals earning low income already pay little to no income taxes (Thevenon, Adema and Clarke, 2016[16]; OECD, 2020[1]). A good practice of targeting through tax deductions can nevertheless be found in the Canadian province of Ontario, where some of the out-of-pocket ECEC costs to single parents on low incomes are paid back as a refundable tax credit and are thus paid out independent of the tax burden. In combination with other childcare supports and because childcare costs are not counted in the income test for a range of other benefits, the net childcare cost for the eligible families is therefore practically negative (Figure 24.2).

In addition to improving availability and affordability, promoting high quality in ECEC is increasingly seen as a policy priority. Importantly, a growing body of literature suggests that only high quality ECEC achieves positive effects on children’s development, especially for disadvantaged children (OECD, 2018[17]; Thevenon, Adema and Clarke, 2016[16]). While access to at least one year of ECEC is offered in most OECD countries, universal access is a not a guarantee for high quality ECEC anywhere (OECD, 2018[17]). More specifically, OECD countries are struggling to recruit and retain highly skilled workers as workforces are ageing (OECD, 2019[18]). Ongoing shortages in the ECEC workforce result from poor working conditions, including low wages, limited opportunities for professional development and a lack of status and public recognition of the profession. Perhaps related to this there is a trend of feminisation of the workforce, as women continue to disproportionally enrol in care-related educational fields (OECD, 2019[18]) (Chapter 9). The ECEC workforce needs increased enrolment of men to tackle existing staff shortages, so that a sufficiently large number of ECEC workers can ensure high-quality services.

Indeed, many OECD countries have developed strategies to achieve high quality preschool education. For instance, the Danish and Norwegian Governments have introduced minimum requirements for child-staff ratios. Other countries have introduced vocational standards or obligations for further education of carers (the Czech Republic) as well as devoted funds for further education of staff (Denmark). There have also been aims to improve quality by changing ECEC systems, such as integrating or dividing services according to needs (e.g. Korea) and by introducing more automation of administrative services (e.g. Hungary, Italy and Korea). Finally, several countries have implemented special support programmes for children in vulnerable situation to aid language learning (Austria and Luxembourg) and for children with disabilities or long-term illnesses (Hungary and Mexico). To bring more men into the ECEC workforce, some countries have run campaigns (Belgium, Denmark and Scotland [United Kingdom]) or affirmative action in ECEC hiring (Norway).


[15] Cleveland, G. (2022), Early Learning and Child Care in Canada: Where Have We Come From, Where Are We Going?, https://irpp.org/wp-content/uploads/2022/10/Early-Learning-and-Child-Care-in-Canada-Where-Have-We-Come-From-Where-Are-We-Going.pdf.

[11] European Commission (2022), Proposal for a Council Recommendation on the Revision of The Barcelona Targets on Early Childhood Education and Care.

[9] Eurydice (2022), National Educations Systems: Germany, https://eurydice.eacea.ec.europa.eu/national-education-systems/germany/germany.

[5] Fervers, L. and A. Kurowska (2022), “Local cultural context as a moderator of the impact of childcare on maternal employment: Evidence from a natural experiment”, Journal of European Social Policy, Vol. 32/3, pp. 239-253, https://doi.org/10.1177/09589287221080395.

[14] Gaudron, C. et al. (2023), L’ accueil dans les structures de la petite enfance des enfants de moins de 3 ans en situation de pauvreté: un état des savoirs [Childcare for children under 3 years of age living in poverty: a review of knowledge], https://hal-cnam.archives-ouvertes.fr/hal-03989894/document.

[8] Government of Italy (2022), Piano nazionale di ripresa e resilienza [National Recovery and Resilience Plan], https://www.governo.it/sites/governo.it/files/PNRR.pdf.

[13] OECD (2022), “How taxation and income support policies shape the payoff from fulltime employment for single mothers and partnered women”, OECD, Paris, https://www.oecd.org/gender/Gender-Data-Expansion-TaxBen.pdf.

[2] OECD (2021), “Caregiving in Crisis: Gender inequality in paid and unpaid work during COVID-19”, OECD Policy Responses to Coronavirus (COVID-19), OECD Publishing, Paris, https://doi.org/10.1787/3555d164-en.

[12] OECD (2021), OECD Employment Outlook 2021: Navigating the COVID-19 Crisis and Recovery, OECD Publishing, Paris, https://doi.org/10.1787/5a700c4b-en.

[3] OECD (2021), “The state of education during the COVID pandemic”, OECD, Paris, https://www.oecd.org/education/state-of-school-education-one-year-into-covid.htm.

[1] OECD (2020), “Is Childcare Affordable?”, OECD, Paris, https://www.oecd.org/els/family/OECD-Is-Childcare-Affordable.pdf.

[18] OECD (2019), Good Practice for Good Jobs in Early Childhood Education and Care, OECD Publishing, Paris, https://doi.org/10.1787/64562be6-en.

[17] OECD (2018), Engaging Young Children: Lessons from Research about Quality in Early Childhood Education and Care, Starting Strong, OECD Publishing, Paris, https://doi.org/10.1787/9789264085145-en.

[6] OECD (2017), Building an Inclusive Mexico: Policies and Good Governance for Gender Equality, OECD Publishing, Paris, https://doi.org/10.1787/9789264265493-en.

[7] Pekkurnaz, D. (2019), “Employment Status and Contraceptive Choices of Women With Young Children in Turkey”, Feminist Economics, Vol. 26/1, pp. 98-120, https://doi.org/10.1080/13545701.2019.1642505.

[10] Quinton, S. (2022), Federal Aid Is Propping Up Child Care. It Isn’t a Long-Term Fix,, https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2022/01/12/federal-aid-is-propping-up-child-care-it-isnt-a-long-term-fix.

[4] Sikirić, A. (2021), “The Effect of Childcare Use on Gender Equality in European Labor Markets”, Feminist Economics, Vol. 27/4, pp. 90-113, https://doi.org/10.1080/13545701.2021.1933560.

[16] Thevenon, O., W. Adema and C. Clarke (2016), “Who uses childcare? Background brief on inequalities in the use of formal early childhood education and care (ECEC) among very young children”, OECD, Paris, https://www.oecd.org/els/family/Who_uses_childcare-Backgrounder_inequalities_formal_ECEC.pdf.

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