Brief analysis 15: Reconciling work and family life – what does it cost?

In this analysis, the economic research institute EcoAustria has estimated the additional costs that would be associated with a substantial expansion of childcare. The calculated expansion scenario addresses two of the main bottlenecks in the current situation by (1) extending opening hours to an extent that would allow caregivers to work full-time and (2) expanding care for children under the age of three.

The first sub-scenario is based on the opening hours of the facilities in Vienna. The second sub-scenario is based on the childcare rate for under-threes in Denmark. The additional costs of the expansion are added to the actual public expenditure in the status quo.

A distinction is made between the status quo, i.e. the existing model, and the expansion scenario, whereby the additional costs of the expansion are shown separately for the two sub-scenarios - i.e. (1) the extension of opening hours and (2) the expansion of childcare for under-threes.

Government spending on institutional childcare

The additional expenditure resulting from the expansion of institutional childcare is considered on the basis of education expenditure statistics. Expenditure by federal states and municipalities for childcare facilities is used here. In order to avoid double counting, this is done with reference to the last spending body.

The expenditure for 2019 is currently published in the 2020/2021 childcare statistics. State expenditure on childcare amounted to EUR 2.9 billion in 2019. Expenditure has recently risen significantly over time, from EUR 2.6 billion in 2017 to EUR 2.7 billion in 2018 and EUR 2.9 billion in 2019.

According to the results of the cost estimate, the additional costs of expanding childcare across both partial scenarios amount to around 1.6 billion euros. Around 300 million euros are attributable to the expansion of opening hours and around 1.3 billion euros to the expansion of childcare for under-threes.

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Summary and conclusion

According to the cost estimate, the additional costs of the simulated expansion of childcare in Austria amount to just over EUR 1.6 billion. This simulates a nationwide expansion of opening hours to a VIF-compliant level and an increase in the childcare rate for under-threes to the level of Denmark. Differentiated by sub-scenarios, the additional costs of childcare for under-threes amount to around 1.3 billion euros. The additional costs of extending opening hours amount to around 300 million euros. Accordingly, the partial scenario with the expansion of childcare for under-threes is the significantly more cost-intensive of the two scenarios. This is due to the more cost-intensive childcare structure for young children, but also to the scope of the scenario itself. Here, an expansion of the childcare rate for the under-threes from 27.6% to the Danish childcare level of 67.7% is simulated.

By way of comparison, the Barcelona targets for childcare provide for a rate of 33% for infant care, which is well below the Danish benchmark.

The sub-scenarios for the expansion of childcare were deliberately defined as "ambitious" and signal a substantial expansion of childcare. The results of EcoAustria's performance indicator on childcare show that Denmark is a pioneer in institutional childcare in Europe. Denmark is ranked first among the 27 EU member states plus Norway and Switzerland.

Austria is only in 20th place in this ranking, meaning that Denmark has the most developed childcare model of all the countries considered. Across both sub-scenarios, the total expenditure for Austria after the simulated expansion would amount to around 4.5 billion euros or 1.14% of GDP.

For comparison: According to OECD data from 2017, public spending on primary education and childcare in Denmark amounted to 1.25 %.