EMCC European Monitoring Centre on Change

Childcare services in the EU - what future?

Childcare services are at different stages of development in the EU Member States and continue to be one of the fastest growing care markets in Europe. In some of the 10 new Member States, the childcare market is relatively immature and is therefore expected to grow rapidly in the near future. In the former EU15, where childcare services have matured and developed, policy now focuses more on the quality of services provided and on flexibility for parents. This article, the first of three in the Sector Future series on the childcare services sector in Europe, provides an overview of the key trends and drivers shaping the future of this sector.

Demographic, economic, social and political factors act together to ensure that childcare in the EU is set to continue growing rapidly as an industry. In some Member States, relatively underdeveloped childcare services have greater scope for growth than in other countries. In other states, which in fact constitute the majority of EU Member States, childcare is better developed and hence, the current tendency is to concentrate on improving the services for pre-school children. Here, the focus lies on the quality of childcare services provided by the carers. Until now, public funding has mostly been directed at children aged from three years up to school-going age, in order to prepare them for the education system. More recently, however, childcare investment has begun to be directed towards care services for children below the age of three.

So far, the EU’s main interest in childcare has been to facilitate the parent’s entry into the EU labour market, by making childcare more available at an early age. The EU’s first political commitment to childcare was outlined in its first European-wide review of services for young children in 1988. In March 2002, the European Council set out targets for childcare by 2010 (pdf 300Kb; European Council, 2002). More recently, in March 2005, the improvement of childcare was once again described as a key means for attracting more people into the labour market as well as promoting equal opportunities in the workplace.

Childcare services in Europe

For the purposes of this article, childcare services will refer to services encompassing formal and informal care, including parental care of children below school-going age, with particular emphasis on children under three years old. From three years up to school-going age, children generally start a ‘pre-school education curriculum (sometimes referred to as ‘pre-primary education’) in most EU Member States. Thus, there is less of a focus on childcare for this age-group in recent years, although care is still an integral part of services for children of any age.

The expression ‘early childhood education and care’ is often used to describe childcare and education services for children from birth to school-going age. Another generic term used in many European countries to describe the care, development and education of children is ‘pedagogy’.

Childcare services are also provided to children of school-going age outside of school hours. However, this article is less concerned with childcare services for school-age children. Many of the issues discussed are, nonetheless, relevant to childcare at all ages.

A key feature of childcare in Europe is its diversity in terms of:

  • social attitudes and child philosophies;
  • supply structure and service provision;
  • public and private funding mix as well as funding mechanisms;
  • childcare preferences;
  • childcare workforce structure, i.e. qualifications, training, employee characteristics and regulations.

No one EU country’s childcare model is the same as another’s. This is mainly due to historical differences in childcare structures; differences are also related to the time at which the childcare market developed. The Nordic countries, for example, developed their core childcare market in the mid 1990s and are generally seen as the forerunners in European childcare thinking, with other countries learning from their example. Other childcare systems, such as that of the United Kingdom (UK), are more indebted to non-European models such as that of New Zealand; however, they too are also learning from the successful lessons of the Nordic countries.

The diversity presents many interesting modelling scenarios for policymakers, but it also means that quantitative comparisons across Europe are problematic and inconclusive. For instance, there are no estimates available about the size of the EU childcare market. What is clear, however, is that a strong growth trend took place in the 1990s and that this has continued so far into the 21st century.

As shown in Figure 1, investment in childcare can vary significantly by country. Denmark and Sweden, for example, have the highest public-sector investment in early childcare. Most other Member States publicly invest only around a quarter of that of Denmark and Sweden. Since the late 1990s, the UK’s spending on early childcare has doubled.

Figure 1: Public investment in childcare services as % GDP in some EU Member States

Source: OECD, Babies and Bosses, Volumes 1-4, 2002-2005

In all EU Member States, the largest portion of public investment in childcare has been channelled into pre-school education for children aged from three years to school-going age. This has been a priority for most governments, and is consistent with achieving improved outcomes for children. The comparison between pre-school public and private spending by country (see Figure 2) reveals that Norway is the largest investor, closely followed by Sweden.

Figure 2: Proportion of children aged 0 years to school age entering childcare and education facilities in some EU Member States

Source: OECD, Babies and Bosses, Volumes 1-4, 2002-2005

In most EU Member States, with the exception of Sweden and Denmark, formal childcare for children aged 0-3 years is much less developed than for children from three years of age to school-going age (see Figure 3). Childcare for the 0-3 years age-group is predominantly informal, being provided by parents, relatives and friends. Although there has been a greater political commitment to pre-school education rather than in the early years (0-3 years), the low take-up of formal childcare for 0-3 year-olds also reflects the strong demand for informal/parental childcare, whether this is because parents prefer such an option or because costs for formal childcare are high. The trade off between formal and informal or parental childcare is covered in greater detail in the second article of this series, The childcare services sector - visions of the future.

Figure 3: Annual expenditure on public and private pre-primary education, 1997 and 2002

Source: OECD Statistics Database, 2005

Just as levels of investment in childcare differ greatly between Member States, investment also varies significantly in relation to the childcare workforce. This is underlined by the marked differences in employment levels (overall volumes and staff/child ratios), training, qualifications and expertise, occupational classifications, earnings, regulations, and employee characteristics. For instance, in many Member States, a clear distinction remains between the education (such as teacher) and the social care (such as childcarer, nursery nurse) workforce looking after young children. However, in some countries, childcare workers are qualified in all aspects of early childhood learning and care. The number of staff allocated per child also varies widely, ranging from one carer for every three children to one carer for every 13 children. These differences are particularly significant, since workforce investment across Member States determines overall levels of childcare provision as well as quality of provision. The biggest spenders on childcare, the Nordic countries, also invest the most in their childcare workforce per capita. Moreover, the Nordic childcare or early childcare worker is now normally qualified to degree level and receives further education training, as well as a better salary, compared with most other EU countries where qualifications and training are less comprehensive.

Since there is no common definition of childcare workers, it is not possible to obtain consistent statistical data from which to make comparisons between childcare workforces across the EU. Definitions typically distinguish between education, and nursing and social care. Nonetheless, although there are no definitive statistics available on the size of the EU childcare workforce, it is clear that the workforce has expanded considerably, in parallel with the rapid growth in childcare services in the past 10 to15 years.

Trends and driving forces

Population and fertility

The number of children aged under five years in Europe has not been a significant driver in relation to demand for early childcare services in the past, nor is it expected to be in the future (see Figure 4).

Figure 4: Proportion of children aged under 5 years in the EU, 1975-2050

Note: Proportion of children for 2004-2050 projected

Source: Eurostat, Statistics Database, 2005

In Europe, the share of the total population under five years of age is declining at a faster rate than in other continents. Europe’s fertility rate currently ranges between 1.5% to 2% compared with a rate of around 2% in Australasia (covering Australia, New Zealand and Melanesia) and over 2% in the US. The demographic data in this section are taken from the Eurostat Statistics Database - Demography Data.

Labour force participation

A key driver of childcare demand in Europe has been the strong growth in female employment, which stood at just below 56% in 2004 for the EU25, compared with 51% in 1997. The increasing participation of females in the workforce, throughout the EU, has raised the overall level of employment in the economy and has thereby helped to increase economic output and reduce child poverty (see Figure 5). The female workforce has grown strongly for a number of reasons, the key ones being:

  • desire for a career;
  • need to generate a second income;
  • more flexible working practices, particularly wider choice of working hours;
  • changes in maternity legislation;
  • women’s preference for financial independence;
  • job-seeking incentives, for example, changes to benefit systems to encourage job-seeking;
  • increased childcare availability.

Figure 5: Growth in EU employment by sex, 1993-2004

Note: EU15 covers 1993-1997 and EU25 1998-2004

Source: Eurostat, Statistics Database, 2005

However, although the proportion of females in employment has increased, the share of females in part-time employment has also risen. This is significant, as part-time workers are likely to have a lower demand for childcare than full-time workers. In the EU25, some 31.5% of females in employment work part time (2004), a rise of just under 30% since 1997.

Delayed family formation

Another key factor affecting demand for childcare is the fact that more women are now having children later on in life, at an age when the propensity to use childcare services is greatest. The reason behind this is that employed women in their 30s are more likely to be established in a career and to have a higher level of income. Thus, the incentive to return to work is greater and they tend to have more resources to pay for childcare than working women in their 20s. As illustrated in Figure 6, the age group showing the highest proportion of births in Europe has shifted from the 25-29 age group to the 30-34 age group in the last 20 years, while the proportion of women giving birth aged 35 years or over has doubled over that period.

Figure 6: Breakdown of women giving birth by age group, EU15, 1981-2001

Source: Eurostat Statistics Database 2005; 2001 Laing & Buisson estimates, 2005

Childcare preferences

The wider range of choices in childcare available to parents has encouraged a greater demand for it, not only directly but also indirectly by increasing the motivation to enter the workforce. Greater availability of choice in childcare has, in turn, led to a shift from informal to formal childcare. Whether this shift continues in the future depends largely on its effects on children’s development, the cost of formal care, and changes in maternity and paternity allowances.

A far weaker driver pertains to actions by companies to provide childcare.

Social drivers

By far, the greatest social driver of childcare has been the quest to reduce poverty in Europe. The Amsterdam Treaty began this fight against social exclusion as an EU objective, while in 2000, the EU asked Member States to take decisive measures to eradicate poverty by 2010. Building an inclusive EU is considered essential for achieving economic growth, more and better jobs and greater social cohesion.

An underlying long-term social driver of childcare demand is the trend towards urbanisation. Although a far less significant trend for Europe than for other continents, particularly Africa, the impact of urbanisation leads to less ability to rely on extended families for childcare, as well as an increase in formal employment.

Although it may be considered a social benefit rather than a social driver, it is important to note that provision of formal childcare for children aged 0-3 years, from disadvantaged backgrounds and areas, tends to raise their ability to benefit from education and learning over the long term. It has also been found, over the long term, to reduce crime, unemployment and healthcare costs.

Political drivers

Politically, the EU (through its Social Agenda 2005-2010 ico_pdf 2.3Mb) is committed to expanding Europe’s labour market, improving flexibility for working parents, and removing barriers to employment, particularly for women. To help achieve these goals, the EU is encouraging the expansion of childcare services to meet increasing demand. Targets set out by the Barcelona European Council aims at providing, by 2010, childcare services for 90% of children between three years of age and the mandatory school age, and for 33% of children under three years of age (European Council, 2002 ico_pdf 300Kb).

As part of Europe’s drive to improve flexibility and equality for working parents, a key driver in the childcare market was the EU’s directive setting minimum standards for maternity and paternity leave in 1993 and 1996, respectively. Another driver for change in the EU was the cross-national group, the Childcare Network, which ran from 1986 to 1996. This focused on three particular areas, inclucing: services for children; leave for parents; and men as carers.

International drivers have also come from the Organisation for Economic Cooperation and Development (OECD) and the United Nations Educational, Scientific and Cultural Organisation (UNESCO). For example, in the late 1990s, the OECD launched a childcare review, which initially involved a comprehensive review of 12 countries including 10 European countries, with a second round of reviews in 2001 including five European countries. As part of this review, the OECD supplied the participating countries with detailed recommendations on how to improve their childcare model. One of UNESCO’s medium-term objectives (2002-2007) is to expand and improve comprehensive early childcare and education, especially for the most vulnerable and disadvantaged children (UNESCO, 2003 pdf 474Kb).

An underlying EU driver of childcare services is a political commitment to reverse the decline in fertility and birth rates to levels below that needed for population replacement. The European Commission estimates that a continuation of this trend could reduce the EU’s annual economic growth rate from its current 2-2.5% to 1.25% by 2040. The Commission’s view is that: ‘Europeans want to have more children, but they are discouraged from doing so by all kinds of problems that limit their freedom of choice. It is also the case that families do not find the environment in which they live conducive to child rearing. If Europe is to reverse this demographic decline, families must be further encouraged by public policies that allow men and women to reconcile family life with work’ (European Commission, 2005). One of the key policies aimed at enabling parents to achieve a better work-life balance is to increase childcare support, particularly for families that have difficulty accessing childcare or where affordability is a problem. In March 2005, in its Green Paper consultation on demographic change, the Commission asked how childcare structures in the EU can be improved by the public and private sectors. Although the Commission may currently be looking for policy direction, its political objectives will continue to drive forward the expansion and development of childcare services in Europe.

Uncertainties and issues

Finding the right childcare path

The more alternatives, the more difficult the choice. (Abbé D’Allanival)

A distinct feature of childcare services in Europe is their diversity. For example, a review of EU childcare statistics in 2002 found 136 formal types of childcare in the EU15, ranging from the lowest number of types in Greece (four) to 14 in the UK. In the other Member States, the number of types ranged from between five and 11 (Eurostat, 2002). Since the enlargement of the EU in May 2004, which also brought about a growth in informal childcare, this range is likely to have widened even further.

An underlying driver of such diversity has been the distinction made across Europe, with a few exceptions, between care and education (the future of early childcare and education is covered in greater detail in Article 2 of this series). In today’s consumerist world, such diversity of choice is seen as being favourable for the customer, although it causes some difficulties. In many Member States, for example, the customer (i.e. the parents) may have the option of several choices of childcare. However, this choice may often be restricted due to income, geography, and accessibility. It can also often happen that the state will, in effect, direct parents to government-funded childcare services without giving them the possibility of real consumer choice.

Nonetheless, the issue of choice is making its way up the political agenda in Europe, whether in relation to healthcare, social care, education or childcare. Thus, in any future scenario, the issue of choice is likely to take on much greater importance than in the past. Within childcare, the choice issue is likely to focus on the following variables:

  • work-life balance preferences;
  • cost burden;
  • information.

Economic, social and political momentum has led to a greater emphasis on enabling parents of young children to make work-life balance choices. Through improving parental leave entitlements and introducing flexible working practices, parental choice in relation to childcare has improved and is set to continue.

The cost of different childcare services, whether borne by individuals indirectly through taxation or directly through fees, remains a key determinant in the type of childcare chosen by parents in the EU. Moreover, the balance of costs between formal and informal childcare, taking into account also the decision of choosing not to return to work, remains a key issue in many Member States. Certainly, the key to sustaining childcare services continues to be linked to the cost of such services, whether these are borne by the state or by parents.

Perhaps the greatest uncertainty surrounding choice in the future lies in the information available to parents. Over the past two years, there have been several research studies on childcare outcomes, which have provided parents with mixed recommendations about the basis for making a choice. Some studies concluded that the ‘best’ outcomes for early years’ children are derived from formal childcare; others argue that ‘close-parenting’ leads to better outcomes, while some conclude that there is little difference between formal and informal childcare. The debate, which is likely to shape future childcare choices, is covered in detail in the second article of this series, The childcare services sector - visions of the future.

Figure 7 illustrates the types of childcare paths that parents can choose for their children and for themselves, and the impact that their decisions have on the economy and society.

Figure 7: The childcare pathway

Source: Blackburn, 2005


Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for.(Peter Drucker)

Quality is the key issue facing EU childcare policy in the immediate future, certainly in those countries with mature childcare markets. Whereas increasing the coverage and accessibility of childcare services was at the top of the political agenda in many Member States during the 1990s, the focus of childcare policy in the present and immediate future is shifting towards improving the quality of services and introducing effective techniques to measure and monitor quality. Research shows that there is a significant relationship between quality of childcare and positive outcomes for children. To make more informed choices about childcare services in the future, parents are certain to demand quality indicators, which are currently lacking.

There is still a long way to go in terms of achieving a comparable quality agenda in Europe which can be attributed to inherent differences in the structure of childcare services, welfare systems, regulation, and attitudes to quality. This is particularly the case in relation to the childcare workforce, which varies from employing qualified graduates in Nordic countries to those with very low levels of qualifications (or even none) in some Member States. Staffing requirements (in relation to staff-child ratios) also vary widely from 1:3 to 1:13, although the type of childcare is not comparable in most instances.

In its detailed review of early childcare and education, the OECD in 2001outlined its future expectations of quality improvement and assurance. Accordingly, defining, ensuring and monitoring quality should be a participatory and democratic process that engages staff, parents and children. Pedagogical frameworks focusing on children’s holistic development across the age group can support good practice.

The Thomas Coram Research Institute of London University concluded that there is little cross-national evidence providing information on the regulation and means of assuring quality in childcare and early education, nor is there much evidence about the effectiveness of different approaches (various publications in October 2003). This, therefore, makes it all the more crucial for a quality agenda sharing good practice to be prioritised in Europe. Many commentators, for instance, have called on the EU to set minimum quality standards for its Member States.


Following strong periods of growth in childcare services in Member States over the past ten years, expectations are high regarding the future development of childcare services. To meet these expectations, governments, parents and employers are expected to continue investing increasing amounts in childcare, to cover a greater number of children, deliver improved services and raise quality standards. The question remains, however, if there is likely to come a point when childcare investment will become difficult to sustain, and whether governments and parents can be persuaded to invest higher amounts, year after year, in formal childcare.

Demand for childcare services in the future is certainly not guaranteed. Negative trends - including the decline in the proportion of under five year olds in the EU’s total population, low fertility and falling birth rates - all indicate that growth in demand could well come to a halt. On the supply side, the key constraint is the childcare workforce. This is particularly the case in countries where childcare work is low-paid and requires only low qualifications, and where the workforce is largely made up of young females. Therefore, one of the challenges for EU Member States wishing to develop a sustainable childcare system is to ensure that childcare work is attractive to and rewarding for both men and women of all ages.

The OECD’s review of childcare reported that two of the largest EU investors in childcare, Sweden and Finland, both needed to address long-term pressures on financial sustainability (see OECD, Babies and bosses - reconciling work and family life: Volume 4 - Canada, Finland, Sweden and the United Kingdom, 2005). The OECD recommended Sweden to maintain a place for cheaper family day care, and hold back from any increases in parental leave. For Finland, the OECD recommended it should maintain less expensive family day care in place of centre-based care services.


A key issue of European policy on childcare is the degree of harmonisation in childcare services across the EU. Arguments in favour of harmonisation purport that it promotes equality for children, for parents and for childcare workers. Certain barriers to harmonisation currently exist because of differences between childcare systems across Member States, including: types of childcare; funding arrangements; school entry; qualifications, training, earnings, and employment benefits of the childcare workforce.

Potential areas for harmonisation in the EU’s childcare services could include:

  • employment - including entitlements and allowances for maternity/paternity leave;
  • fiscal incentives to use childcare (tax credits/exemptions);
  • regulation of quality standards;
  • poverty rates;
  • qualifications and status, training, and earnings of childcare staff;
  • childcare statistical collection and analysis.

There are considerable variations in the areas just listed: some, for example, would be much more difficult to harmonise than others. The first three would require primary legislation. Reform and restructuring of childcare labour markets would require a massive level of investment in some Member States, to help bring their childcare systems up to the standards of countries with the highest levels of investment per capita in the childcare workforce. Ensuring standardisation in the collection and analysis of statistics about childcare appears to be the one area that is currently receiving closer attention.

One particular area that is being successfully promoted at present is cross-national learning across Member States. The ‘open method of coordination’, adopted by the EU in 2000, is one practice aimed at facilitating cross-national learning. Its objective is not to find a common policy or political objective, but rather to share policy experience and best practice. According to several 2003 publications of the Thomas Coram Research Institute, there are at least three ways in which cross-national work can be useful: by provoking critical thinking, opening up choices, and enhancing policy learning and innovation (2003e).


All links accessed on 31 March 2006.

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Blackburn, P., Children’s nurseries: UK market report 2005, Laing and Buisson Ltd, March 2005, available at: http://www.laingbuisson.co.uk/ProductsServices/ MarketReportsList/tabid/380/List/1/CategoryID/7/Level/1/SortField/3/Default.aspx.

Daycare Trust, Learning with other countries: International models of early education and care, July 2005, available at: http://www.daycaretrust.org.uk/mod.php?mod=userpage&menu=16&page_id=26.

European Commission, Confronting demographic change: A new solidarity between generations, Green Paper, DG Employment and Social Affairs, Brussels, March 2005, available at: http://europa.eu.int/comm/employment_social/emplweb/publications/publication_en.cfm?id=36.

European Council, Presidency conclusions, Barcelona European Council, 15-16 March 2002, available at: http://ue.eu.int/ueDocs/cms_Data/docs/pressData/en/ec/71025.pdf (pdf 300Kb).

Eurostat, Feasibility study on the availability of comparable childcare statistics in the European Union, Luxembourg, Office for Official Publications of the European Communities, 2002.

Eurostat Statistics Database, Demography Data, available at: http://epp.eurostat.cec.eu.int/portal/page?_pageid=0,1136184,0_45572595&_dad=portal&_schema=PORTAL.

Melhuish, E., Childcare benefits: The importance of investing in quality childcare, Facing the Future, Policy Paper 9, Daycare Trust, June 2004, available at: www.daycaretrust.org.uk/mod/fileman/files/Child_Benefits.pdf (pdf 121Kb).

Moss, P., The UK at the crossroads: Towards an early years European partnership, Facing the Future, Policy Paper 2, Daycare Trust, September 2001, available at: www.daycaretrust.org.uk/mod/fileman/files/UK_at_Crossroads.pdf (pdf 162Kb.

Organisation for Economic Co-operation and Development (OECD), Starting strong - early childhood education and care, Paris, June 2001, available at: www.oecdbookshop.org/oecd/display.asp?sf1=identifiers&st1=912001011P1.

OECD, Babies and bosses - reconciling work and family life: Volume 1 - Australia, Denmark and the Netherlands, 2002, available at: http://www.oecd.org/document/32/0,2340,en_2649_201185_30652384_1_1_1_1,00.html.

OECD, Babies and bosses - reconciling work and family life: Volume 2 - Austria, Ireland and Japan, 2002, available at: http://www.oecd.org/document/37/0,2340,en_2649_201185_28932069_1_1_1_1,00.html.

OECD, Babies and bosses - Reconciling work and family life: Volume 3 - New Zealand, Portugal and Switzerland, 2004, available at: http://www.oecd.org/document/63/0,2340,en_2649_201185_31588543_1_1_1_1,00.html.

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