Increasing Employers’ Role in Childcare, and How Development Organizations Can Offer Support

TEXT: Amar Numanović - 31. March 2021

The COVID-19 crisis has made gender inequalities – such as the enormous burden of unpaid childcare work on women – more obvious than any other global event in recent history. How can the private sector help address this burning issue in the Western Balkans? And what is the role of the development sector in rectifying this inequity?

The pandemic has caused turmoil in the labor market, and early analyses suggest that women have been disproportionately affected. Unemployment among women in the US has increased by 2.9 percentage points more than men's unemployment at the moment when the overall unemployed rate reached its peak, and recovery benefited men's employment notably more. This can be explained by two factors: first, female employment is more concentrated in contact-intensive sectors and usually in jobs that are more vulnerable to shocks; and second, family duties have been predominately borne by women, negatively affecting their participation in the labor market and leading to unemployment. In the latter case, it means that the temporary closure of childcare providers has left a gap that is being filled by traditional in-family childcare, mainly performed by women.

The reliance on women for childcare is not a new trend. According to ILO's 2018 data, around 606 million working-age women do not participate in the labor force because of unpaid family care duties, compared to only 41 million men. The pandemic has simply exacerbated an omnipresent issue.

How poor public services affect women’s careers

Childcare capacities in Western Balkan countries are vastly under-developed, which creates worrisome implications for the education of these countries’ youngest learners. According to 2018/2019 data, only 6.3% of children under three years were covered by registered childcare services in Bosnia and Herzegovina, below the EU average of 35.1%. In the 0-6 age cohort, it is estimated that only 13% of children are accommodated by childcare institutions. In 2019/2020, more than 4,300 children (around 12.4% of all children whose parents applied) were not enrolled in preschool due to insufficient capacities of both public and private institutions to absorb them. This number increases year over year. Similarly, only 2.3% of children under 3 years participated in preschool education in Kosovo, which is largely attributed to a lack of childcare facilities. Additional 2018/2019 data shows that 34% of municipalities in Kosovo did not have public kindergartens, while private ones are often not affordable to parents. Other Western Balkan economies face similar issues.

The pandemic has further exacerbated the situation. Our colleagues from the EYE project in Kosovo, in cooperation with the Association of Private Pre-School Institutions (APPI), recently commissioned a study on the impact of COVID-19 on women’s employment in the childcare sector and the sector itself. The study shows that 90% of 67 surveyed private kindergartens in Kosovo have experienced a decrease in the number of children attending – and according to some respondents, this is due to parents' lost income. As a result of the pandemic, the drop in the number of children and reduced revenue, 42% of the surveyed kindergartens had to decrease the number of employees.

Our colleagues from the EYE project in Kosovo, in cooperation with the Association of Private Pre-School Institutions (APPI), commissioned a study on the impact of COVID-19 on women’s employment in the childcare sector and the sector itself.

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As a result of the pandemic and drop in the number of children and the reduced revenue, 42% of the surveyed kindergartens had to decrease the number of employees.

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Inaccessible and unaffordable childcare services create challenges for balancing the professional and private life of parents, especially women, resulting in dropouts from the labor market and longer career breaks. In other words, reasons for higher inactivity rates among women in the Western Balkan countries can be often found in care duties. This is especially prevalent in rural areas (accessibility issues), among poorer families (affordability issues) and among low-skilled women (where the difference between wage-based income and costs of formal childcare is not sufficient to incentivize participation in the labor market). As a result of long career breaks – where skills decline, creating difficulties in keeping up with emerging technologies and sectoral trends – and challenges in balancing care duties with economic realities, women often become less employable, are paid less, and slip into long-term unemployment or even completely drop from the labor market.

A business case for corporate childcare

The inability of governments to adequately address the issue of poor childcare availability can be partially compensated by private-led solutions such as corporate childcare. Corporate childcare is sponsored by the employer and provided to employees. It is usually based in-company and on-site, but can also be in the form of vouchers for private kindergartens or through partial or full coverage of childcare services for employees.

Corporate childcare is usually part of companies’ social responsibility policies. However, it yields clear, tangible and extensive business benefits. Business drivers for employer-supported childcare include reputation gains, promotion of diversity, and returns associated with improved human resource management.

What are these returns? Corporate childcare improves workforce recruitment and retention. The ability to attract quality workers is especially relevant in sectors facing labor shortages or a highly competitive labor market. Corporate childcare also incentivizes the inactive labor population to start participating in the labor force if the absence is related to caring duties. Evidence suggests that companies also improve retention by introducing childcare support for their employees, thereby reducing the costs of turnover.

Corporate childcare also has the potential to make businesses benefit from productivity gains by reducing care-related absences, accelerating parental return to work, and enhancing the motivation and concentration of employees (e.g. parents can keep eye on their children, can spend some time with kids during their lunch break).

How development projects can support private-led solutions

To tackle this issue, which has been recognized as one of the most dominant concerns of human development and women’s participation in the labor market in the region, Helvetas launched various initiatives and interventions in collaboration with partners in Albania and Bosnia and Herzegovina.

In Bosnia and Herzegovina, the MarketMakers project has been working since 2019 to promote private-led solutions to under-developed and limited childcare. Recognizing the role that in-company childcare provision could play as an HR strategy in service sectors struggling with labor shortages – such as BPO and IT sectors – MarketMakers has offered co-investment options to companies ready to experiment with the model. CaDa Solutions, one of the prominent local BPO companies, opened a kindergarten on its premises in Sarajevo in mid-2020, providing care services to 25 kids and employing three nannies. Although CaDa offers a successful pilot case, there is an important barrier for spreading this model among other companies: employers’ provision of childcare services to their employees is treated as a taxable non-salary benefit, which brings massive additional costs to companies, especially if the service is provided at a larger scale. Therefore, MarketMakers shifted its focus to promoting a policy framework that would stimulate corporate childcare development and partnered with the Centre for Policy and Government, a local think tank, to explore and evaluate policy solutions that best fit the local context.

In Albania, the Bashki te Forta project identifies and showcases best practices of public-private partnerships that could help municipalities expand childcare provision. At this time, seven local governments are trying to learn from and replicate the successful case of Fish City in Elbasan municipality. Fish City, a large Albanian company, has opened a free private kindergarten for the children of staff. The educational activities are funded by the municipality, while the school’s infrastructure, transportation and food are covered by the company. The practice satisfies the demand and supply side: the company attracts more employees, almost 100% of which are women, and employees can work, free of care duties, while their children learn in a friendly and safe environment.

The benefits of these childcare endeavors are immediate and evident for both employers and employees. The case of CaDa Solutions in Bosnia and Herzegovina has led to increased productivity and satisfaction of employees. Adela Hadžiomerović, the manager of CaDa Kids Corner, said to the local news that parents have been able to save time by no longer having to drop kids at kindergarten and that parents now arrive at the workplace more often on time. On the other side, one of the mothers who use this service said that she is much more relaxed knowing that her child is always around and that she does not have to hurry and worry if she is going to arrive on time to the kindergarten to pick up the child due to traffic jams. This benefit, along with other benefits provided to employees, is seen not only as productivity-enhancing but also as a retention strategy by CaDa Solutions.

Development projects: an irreplaceable trigger

Although the projects are different in terms of approach, the efforts in Albania and Bosnia and Herzegovina share the same goal: encourage private-led childcare solutions that enable women to have a more active role in the labor market.

These types of development projects can play a driving role in promoting and mainstreaming private-led solutions for childcare. Governments typically search for solutions within the public childcare sector or in a form of public subsidies to private kindergartens, thus overlooking the potential of private companies to tackle this issue. On the other side, private companies often lack the technical knowledge or motivation to start the journey of establishing in-company kindergartens or childcare benefit schemes. Development projects can be an irreplaceable catalyst in this chain of events. They support change by providing technical and financial support to companies willing to experiment with corporate childcare, promoting successful examples across the private sector, and demonstrating these solutions’ potential to decision-makers, thereby encouraging the creation of a more responsive policy framework for private-led solutions.

Amar Numanović is a public policy expert and economic development practitioner with extensive experience working with multilateral institutions, international organizations, think tanks, academia and businesses.

This article appeared in the March 2021 issue of Helvetas Mosaic. Subscribe to never miss an issue.

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