Childcare benefit scheme to be amended again

The newly formed government plans to modify the current childcare benefit scheme again, by introducing an income-related option. This alternative to the current flat-rate scheme is devised to encourage highly-skilled women earning a good wage to resume work earlier after parental leave and to attract a higher proportion of men to stay at home with their children. The social partners have welcomed the government initiative.

Only a year after the last amendment to the childcare benefit scheme (Kinderbetreuungsgeld), which came into effect on 1 January 2008, the newly formed coalition government of the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative People’s Party (Österreichische Volkspartei, ÖVP) agreed to modify the scheme again. The aim is to render the scheme more attractive to men and women with a higher income, in that financial compensation for taking parental leave should be increased in exchange for a shorter period of leave. More precisely, the current flat-rate scheme is planned to be extended by an income-related option.

Provisions 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 (AT0710029I). In its current form – after the 2007 amendment – parents are entitled to opt for one out of three alternatives:

  • receiving 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);
  • receiving €634 a month for a period of up to 20 months (or up to 24 months if both parents alternately assume childcare duties);
  • receiving €800 for a period of up to 15 months (or up to 18 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 €16,200 annually (AT0701039I).

Problems related to scheme

Although the scheme in force offers increased options in terms of payment and eligibility period, which has enabled many women to resume work earlier after parental leave, it is still not attractive to highly-skilled women earning good wages and to many men, who continue to be the main breadwinner in most families. In Austria, only about 4% of fathers take parental leave, as they often complain that the financial compensation would be inadequate. This fact, however, perpetuates traditional gender stereotypes, both within the family and at the workplace.

Income-related option to come

In order to tackle the scheme’s inadequate financial compensation for better earning parents, the government plans to introduce – in addition to the three existing flat-rate alternatives – a fourth option, which is designed to be income related. Accordingly, the new option under the modified childcare benefit scheme will provide payments worth 80% of the net income, up to a ceiling of €2,000 a month, for a period of 12 months (or 14 months if both parents alternately assume childcare duties).

The plan is to introduce the new option by January 2010 at the latest. This measure is devised not only to make parental leave more attractive to fathers, but also to set an incentive for both women and men with higher incomes to plan a family. Such an incentive seems to be important against the background of the current demographic slowdown. The government estimates that the extension of the childcare benefit scheme will cost up to €30 million a year.

Overall positive response

Both the social partners and the opposition Green Party (Die Grünen, GRÜNE) have welcomed the government’s announcement to increase the scheme’s options. In particular the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) welcomed the government proposal, since the introduction of an income-related option within the current childcare benefit scheme has been among the confederation’s demands for years.

Nevertheless, both ÖGB and the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKÖ) have reminded the government of other measures in relation to policies aiming to reconcile work and family life, as announced in the government programme for the legislative period 2008–2011. Within this agenda, the government commits itself to increase – ‘in accordance with the parents’ needs’ – the supply of childcare facilities for children of pre-school age. Furthermore, the government also intends to render tax-deductible any expenditure related to childcare services up to an amount of €2,300 annually.

Georg Adam, Department of Industrial Sociology, University of Vienna

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