Parliament endorses more flexible childcare benefit scheme

In October 2007, the Austrian parliament passed a draft amendment to the current childcare benefit scheme, in order to curb the scheme’s negative employment effects for women. The modified scheme provides for three options with respect to benefit payments and the period of benefit eligibility. While employer organisations welcomed the new regulations, trade unions would have preferred more flexibility in relation to the rules allowing for additional earnings.

On 2 October 2007, the responsible ministries of the coalition government of the Social-Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative Austrian People’s Party (Österreichische Volkspartei, ÖVP) managed, after several months of intense negotiations, to agree on a draft amendment to the current childcare benefit scheme (Kinderbetreuungsgeld). The draft was endorsed by a majority vote in parliament on 17 October 2007 and will come into effect on 1 January 2008.

Characteristics of current childcare benefit scheme

The current scheme was originally introduced in 2001, in an attempt to offer parents of young children aged up to three years a broader choice in relation to childcare options. It grants payments to all parents with childcare obligations, regardless of their employment situation. In contrast to the previous system of parental leave allowance (Karenzgeld), it does not constitute a social insurance benefit and is thus not related to an employment relationship. In its current form, the scheme provides payments of €436 a month for a period of up to 30 months, or up to 36 months if both parents alternately assume childcare duties. To ensure that parents, in particular women, are not entirely excluded from the labour market during the period of parental leave, the scheme allows beneficiaries to earn an additional income of up to a maximum of €14,600 a year (AT0304201N).

However, as an evaluation of the scheme has shown, in contrast to its original aim to facilitate a better work-life balance for women, the childcare benefit scheme has, on average, delayed the return of mothers of young children to employment. Moreover, women are often confronted with significant income losses when they resume work. This is due to the fact that the extended period of benefit eligibility under the current scheme acts as an incentive for many mothers on parental leave to stay at home for a longer period (AT0701039I). Therefore, the present government – in line with the social partners’ views – agreed to render the scheme more flexible to better accommodate its provisions to the individual parents’ needs.

Amendment offers increased options

According to the amendment, parents are entitled to opt for one out of three alternatives offered under the modified childcare benefit scheme. In addition to the current option of receiving monthly payments of €436 for a period of 30 months (plus six months to be taken by the other parent), one may opt for payments of €800 or €624 for a period of 15 (plus three) or 20 (plus four) months, respectively. These alternatives to the current scheme are devised to encourage women to resume work earlier following a period of parental leave and thus to avert the de-skilling effects of long-term labour market absence. Moreover, the maximum amount of additional earnings on top of the childcare benefit payments will be increased from €14,600 to €16,200 annually. However, this merely numerical increase of legal additional earnings has been criticised by the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) and the Chamber of Labour (Arbeiterkammer, AK).

Views of social partners

The trade unions strongly call for the abolishment of the ceiling on additional earnings in case of part-time work. ÖGB and AK suggest introducing an option of reducing normal working hours up to 24 hours a week, in addition to the rigid threshold of €16,200 to be observed in order to retain the childcare benefit entitlement. They argue that, in particular, highly-skilled women earning good wages are – if they want to maintain their benefit eligibility – often hindered by this threshold from continuing to work, since a reduction of their working hours to only a few hours a week is frequently not feasible. However, the introduction of a working time-related criterion for childcare benefit eligibility, although it had been put forward by the SPÖ during the negotiations, was blocked by the ÖVP.

In contrast to the trade unions, the major employer organisations have, in general, approved the new regulations.

Georg Adam, Institute of Industrial Sociology, University of Vienna

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment