Controversy over childcare benefit

A study published in March 2003 questions the effectiveness of Austria’s recently introduced childcare benefit scheme in terms of women’s chances to re-enter employment after parental leave, claiming that it does not contribute to increasing women's labour market participation. The government has defended the scheme, but the opposition parties and organised labour are calling for amendments and new measures to improve women’s employment situation.

The childcare benefit scheme (Kinderbetreuungsgeld) introduced by the government in 2001 is designed to offer parents greater freedom of choice in matters regarding childcare. It aims to provide more financial security for families with young children, regardless of the parents’ previous employment situation. All parents with childcare obligations are thus eligible for the benefit. This scheme, covering all families with children born since 1 January 2002, has replaced the former system of parental leave allowance (Karenzgeld), paid out only to employed persons as a social insurance benefit. Moreover, the new childcare benefit scheme provides slightly higher payments - at present about EUR 15 per day - and for a longer period - up to 36 months (if both parents alternately assume childcare obligations). By allowing beneficiaries to earn an additional income up to a maximum of EUR 14,600 per year, the new scheme seeks to promote the labour market participation of women with small children, and to facilitate the reconciliation of work and family obligations.

In March 2003, a study of the effects of the new childcare benefit scheme was published. The research, by Hedwig Lutz of the Austrian Institute of Economic Research (Österreichisches Institut für Wirtschaftsforschung, WIFO), questions the positive effects of the scheme on the labour market participation of women. Ms Lutz states that, while it is true that women with young children no longer find themselves in a financially insecure situation for as long as in the past, their labour market participation and, above all, their level of active employment has declined at the same time. The percentage of mothers returning to the labour market before their children reach the age of 27 months dropped from 54% to 35% between summer 2000 and late autumn 2002. At the same time, the proportion of fathers involved full time in the care of children younger than 27 months declined from 2.5% in 2000 (under the parental leave allowance scheme) to 2.0% in 2002.

Representatives of the coalition government of the conservative People’s Party (Österreichische Volkspartei, ÖVP) and populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ) have rejected the study’s findings, arguing that a serious evaluation of the childcare benefit scheme so soon after its introduction is impossible. Furthermore, an additional 15,000 women who would not have been entitled to the old parental leave allowance have since 2002 benefited in financial terms from the new regulations. Therefore, the new scheme should be regarded as a great success.

However, given the WIFO study’s findings, the parliamentary opposition parties have criticised the effects of childcare benefit on women’s labour market participation. As a consequence, they are calling for a reform of the childcare benefit scheme, in particular, stating that the entitlement of beneficiaries to earn an additional income should no longer be limited to a maximum of EUR 14,600 a year. The current limitation is criticised as an obstacle to better-paid women re-entering the labour market soon after the child’s birth. At the same time, many fathers are hindered from taking part-time parental leave since their part-time income often exceeds the allowed additional earnings, claims the women’s organisation of the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB).

Given continued gender-related pay inequalities (confirmed by a 2002 study of the Ministry of Social Affairs) and a further growth in part-time employment relationships among women, the ÖGB women’s organisation and the Chamber of Labour (Arbeiterkammer, AK) have put forward a set of demands, as follows:

  • employees should be protected from dismissal during the whole period of receipt of childcare benefit;
  • the right to switch to part-time employment (which has recently been granted by the government to parents employed in companies employing more than 20 persons) should be generally introduced;
  • more childcare places should be created; and
  • in order effectively to combat gender-related pay inequalities (AT0103209F), a collectively agreed minimum monthly wage of EUR 1,100 should be introduced in all sectors.

Critics claims that recent government initiatives - eg further liberalising shop opening hours without providing additional childcare places, and making unemployed people accept a wider range of job offers AT0303202F) - are likely to increase pressure on women to accept low-paid, part-time jobs.

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