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Caring about employer-supported childcare: Good for business, good for development

Carmen Niethammer's picture

It is not often that I get to reflect on my own early childhood experience: Some 40 years ago, I attended a public kindergarten in a small town in Germany. My mother would take me there on her blue bike at 7 a.m., I would spend the morning with eight other children my age, and at around 1 p.m., she would pick me up. Many of my friends and colleagues had similar early childhood experiences.
 
Considering that the potential benefits from supporting early childhood development range from healthy development to greater capacity to learn while in school and increased productivity in adulthood, I consider myself very lucky. Across the world, nearly half of all three- to six-year-olds (159 million children) are deprived of access to pre-primary education (UIS, 2012). Evidence from both developed and developing countries suggests that an additional dollar invested in high-quality preschool programs will yield a return of anywhere between US$6 and US$17.
 
More broadly speaking, a new study by ITUC shows that investment in the care economy of 2 percent of GDP in just seven developed countries would create more than 21 million jobs and help countries overcome the twin challenges of aging populations and economic stagnation.  So the development case for investing in childcare is clear. What about the business case?

 
At IFC, we recently launched the "Tackling Childcare" project to further investigate the business case for employer-supported childcare services. Together with the World Bank Group’s Women, Business and the Law team, the "Tackling Childcare" project will also examine how laws and regulations can create incentives (or disincentives) for employer-supported childcare across the world.
 
Employers should have an intrinsic motivation to give family-friendly workplace policies more attention. SheWorks member Care.com (the world's largest online destination for care) puts it this way: At the company level, employers should be investing because there is a symbiotic relationship between care and work. "You can’t work without care, and you can’t pay for (extra) care without work." 
 
Supporting families is the right thing to do and makes business sense: Unstable childcare costs U.S. employers billions of dollars annually and contributes to unscheduled absenteeism, which has been identified as chronic problem in the country. A 2005 study by Circadian conservatively estimated that unscheduled absenteeism costs U.S. employers $3,600 per hourly employee per year.  
 
The business case for employer-supported care is supported by JP Morgan Chase, which recently shared evidence of the success of its global back-up childcare program with signatories of the United Nations Women’s Empowerment Principles. With 13,000 employees enrolled in the program (using 105,000 child days/visits throughout 2015), when they were asked what they would have done without back-up care, 80 percent of parents responded that they would have taken unscheduled time off from work. Seventy-seven percent of parents who used the program also reported that they were better able to focus at work. Thus, an investment in back-up childcare positively affected employees’ productivity. It helped employees avoid absenteeism and contributed to improved retention.
 
The business case argument for employer-supported childcare also seems to hold for companies in emerging markets. Take for example Nalt Enterprise, a Vietnamese garment factory participating in the IFC and ILO’s Better Work program: They reduced staff turnover by 10 percent through investments in health programs and an onsite kindergarten. An employee survey revealed that women employees at Nalt Enterprise feel that knowing their children are cared for and nearby gives them peace of mind during working hours.
 
Employer-supported childcare can include a range of strategies, from free or subsidized workplace childcare centers, to vouchers or subsidies towards the costs of childcare, and the provision of information or referrals to childcare providers.  Indeed, best practice suggests that successful companies support a mix of care policies and programs that reflects the varied needs of their employees at different stages in their lives. Associated benefits include improved productivity, reduced employee turnover, reduced absenteeism, reduced employee stress and workplace injuries, and an overall improved ability to recruit and retain employees.
 
Reflecting back at my childhood experience in Germany, I know that for many parents, it would have been impossible to work without the availability of public-sector provided childcare. An evaluation of marriage- and family-related benefits in Germany has shown there are three kinds of family benefits in particular, which promote the participation of mothers in the workforce: public funding for childcare, parental allowance, and childcare tax deductibility.  The Women, Business and Law team that analyzed data in 173 countries also confirmed: Where the government provides free primary childcare, women are more likely to receive a formal wage.
 
As we are on our journey to substantiate the business case for employer-supported childcare, one thing is clear: All parents are held back in their careers by a lack of affordable, accessible, high-quality care. Bright Horizon’s 2015 Modern Family Index shows that nearly half of U.S. dads say one of their daily stressors during working hours is childcare. Working fathers want to be more than bystanders in child-rearing, but 52 percent are stressed about work-life issues. To move the needle, we have to stop treating childcare as a side issue, or a women's issue—and address it as the government and corporate priority it is.

Comments

Submitted by Sevi Simavi on

Great piece, Carmen and I am really glad to see that this long neglected yet very important issue is being addresses by IFC.

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