Canadian families spend almost one-quarter of their income on child care, a ratio that is much higher than in other parts of the world, the Organization for Economic Co-operation and Development says.
In a wide-ranging report on the status of young people around the world, the group of wealthy nations found Canada to be among the most expensive for daycare among its 35 members.
Across the OECD, the average two-income family spends about 15 per cent of its net income on child care. In Canada, that ratio is as high as 22.2 per cent of net income. That’s higher than all but five countries that the OECD monitors. The U.K. led the way, where the average two-income family spends 33.8 per cent of its money on child care.
The figure would be even higher were it not for government subsidies and rebates.
And single parents, not surprisingly, fare much worse. Single parents in Canada spend, on average, almost a third or 32 per cent of their income on child care.
Only two countries — the United States and Ireland — fare worse than Canada, with ratios of 52 and 41 per cent of single parents’ income on child care.
Disincentive to work
“Such high costs are a strong deterrent to employment,” the paper says. “It may not be financially worthwhile for both partners to work, especially in families with several children.”
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The OECD says child-care costs are a major issue for young people, since many are forced to take time away from the workforce while their children are young. “It is usually the mother who stays at home,” the report says. “Resuming employment after some years out of the workforce is difficult, and women often face wage penalties upon their return to work.”
That’s bad news for those families, but it’s also bad news for the economy and society, as they pay less tax and have less money to spend.
The group says it’s a particular issue for what they call NEETs — a term for young people of working age but who are “Not in education, employment, or training.” It’s a demographic group whose members are at risk of becoming permanently unemployed as they go through life, and likely to pass on that status to their offspring.
The OECD singles out affordable child care as of the easiest and most affordable way of targeting and limiting the number of NEETs.
“NEETs are not only more likely to have lower educational attainment and skills, but are also more likely themselves to have parents with low educational attainment and parents who are out of work,” the OECD said. “Ensuring access to high-quality child care can, therefore, help to break the cycle of disadvantage from one generation to the next.”
The paper singles out a number of programs for having shown quick and easy benefits:
- In Denmark, municipalities are obliged to offer all children older than six months a place in publicly subsidized child care.
- In Sweden, municipalities must provide at least 15 hours of childcare per week to children over one. This obligation rises to full-time hours in cases where both parents are employed or in education.
- In Iceland, the government provides greater subsidies for single parents needing child-care spaces.
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