The Business Case for Childcare

One Pagers

By Susan Green, IWPR Affiliated Researcher

Nearly one in 10 people in the world are younger than five, but in many parts of the world, affordable and quality child care and early childhood education are hard to find.  Since caring for children is still mainly seen as women’s responsibility, the lack of child care has a much stronger impact on women than on men. Less than half of women participate in the global labor force, compared with roughly three in four men, according to the International Labour Organisation (ILO).

Many women are stuck between a rock and a hard place: earn money to support yourself and your family, but leave the children in suboptimal care; or care for your children yourself, but reduce your and your children’s economic security and future prospects.

Research shows that affordable child care can substantially increase women’s employment in the formal economy, the number of hours they work, and their family income.

The benefits of subsidized child care extend far beyond individual families. More women in the workforce means higher economic growth. A McKinsey Global Institute study projected that closing gender gaps in employment would increase global gross domestic product (GDP) by 26 percent by 2025.

Employers, too, benefit when their workers have access to child care. IWPR recently worked with the World Bank’s International Finance Corporation to produce Tackling Child care: The Business Case for Employer-Supported Child care.  The study examines ten employers around the world who support their workers’ child care needs in a wide array of industries and regions. The companies report substantial gains in recruitment, retention, productivity, diversity, and access to markets related to their investments in child care.

For example:

  • In India, with one of the lowest labor force participation rates for mothers in the world, IT firm Mindtree finds that its workplace child care center is essential for recruiting and retaining highly qualified software engineers; 40 percent of new graduates in the field are women and 90 percent of its female employees continue to work when they become mothers.
  • Providing child care can reduce costly employee turnover and improve recruitment in regions where mothers rarely enter formal employment. Once they offered child care, Martur, a Turkish auto parts manufacturer, saw staff turnover decline by roughly 15 percent, and Jordan-based textile company MAS Kreeda Al Safi-Madaba saw absences fall by close to 10 percent.
  • By offering child care and related initiatives, such as extended maternity leave, The Bank of Tokyo-Mitsubishi UFJ, Ltd., dramatically improved retention of mothers, saving an estimated equivalent of $45 million in U.S. dollars in costs related to employee turnover.
  • South African farmworkers at Afrifresh and food processing workers at Pandurata Alimentos Ltda. (Bauducco) in Brazil report being better able to focus on work when they know their children are safe. Pandurata even noted that this piece of mind and improved focus has also reduced workplace injuries.
  • Akamai, an IT firm based in Cambridge, Massachusetts, recovers more than it spends on offering back-up child care because workers remain productive despite child care crises. Schön Klinik hospitals in Germany reported that they would not be able to operate 24/7 and achieve their high quality goals without their investments in summer camps and child care in the early hours of the day.

The report highlights the variety of options available to employers who want to support child care and provides guidance on deciding what option(s) may work best for specific businesses. In the United States, as in countries around the world, the lack of quality, affordable child care is a major obstacle to women’s equal participation in employment. This report provides examples and resources on how employers can supplement public child care  and benefit both their bottom line and their employees.

The full report is available at IWPR.org and IFC.org.