GroenLinks, D66 and trade union FNV want childcare in the Netherlands to become a free basic service for everyone. D66 joined a plea this morning by GroenLinks. But what would be the consequences if this plan was implemented?
What are the costs?
Free care for children under the age of 12 is estimated to cost the state €5.4 billion more than the current arrangements. This wrote Secretary of State for Finance Van Huffelen in a letter to the House of Representatives last year following policy research.
These costs can also be significantly lower if parents pay a small own contribution, or if the income-dependent combination discount (IACK) is abolished. This is a tax deduction which should encourage the participation of parents with young children in the labour market. If childcare becomes free or almost free, that financial incentive is no longer needed, is the thought.
Are parents going to work more if childcare is free or almost free?
A reconnaissance study by the Centraal Planbureau shows that free or much cheaper childcare has a relatively limited effect on employment in the Netherlands. This study shows that the IACK is a more effective measure to promote employment participation.
On the other hand, abolishing this discount makes working for parents of young children less attractive. From that report: “The IACK is aimed at single and two-earners with young children (often women), a group that responds relatively strongly to financial incentives. The IACK is more effective in stimulating labour supply per euro than the childcare allowance.” The lower the contribution, the lower the impact on labour participation.
If the reception becomes free for workers and non-employed, it is expected to have another effect. If non-employed people also receive free childcare, this does not bring any financial advantage anymore, but they do improve because childcare is now accessible to them (free of charge). According to the CPB, a small part ceases to work.
Are there any effects on income inequality?
The effects on income inequality are also very small, according to the study of the Centraal Planbureau. First of all, the group in the Netherlands that uses day care is relatively small, compared to all incomes in the Netherlands. In addition, lower incomes in the Netherlands are reimbursed a lot of costs (up to 96% of the costs, at a maximum hourly price).
the end, the most benefit is the middle and high incomes, which in the current system receive less reimbursed by childcare allowance than lower incomes. As a result, income inequality increases slightly.
Does free child care affect the birth rate?
According to social demographer Jan Lattens, many laws and regulations imposed by the government unintentionally have a negative effect on the birth rate. “Look, for example, at the flexibility of the labour market and allocation rules for social rental housing. This creates uncertainty among young people and when they are insecure they start less on children.”
Therefore, the introduction of (almost) free child care can have a retarding effect on the ever-decreasing birth rate, says Lattens. “The introduction of free childcare is not meant by policymakers, but a financial threshold is removed when it comes to having children.” Battens do not expect a huge correction in the birth rate.
What does the childcare industry think?
Director of the branch organisation Kindergarten Emmeline Bijlsma is very critical of free childcare for several reasons. “I think that if you offer something for free, it loses value. Parents then deal with the shelter more freely. That would mean that they would bring their children later and would be less involved in childcare.”
No research has been carried out on the effects of the quality of free or almost free reception. Bijlsma points to Scandinavia, where the reception is largely reimbursed by the government. “There, the quality of childcare is no higher than here. Childcare in the Netherlands now belongs to the top of Europe.”
Another objection by Bijlsma is the feasibility of the plan. “We are already dealing with waiting lists and underoccupancy, and they are probably only increasing. This means, in practice, that new buildings need to be created for reception and that zoning plans need to be adjusted. That can never be done within short notice.”
Bijlsma therefore considers that the additional public costs of EUR 5.4 billion are not justified. “Basically, you invest a huge amount to ultimately relieve the higher incomes. Free is never really free, because that money has to come from somewhere.”