Expansion of childcare in Styria

In a recent study commissioned by the NEOS Lab, EcoAustria examined the expansion of childcare in Styria in terms of costs and benefits for the province and its regional economic performance. Two different scenarios were analyzed in this context.

The first scenario simulates the expansion of childcare for young children to a childcare rate of 38% for children under the age of three. This means an increase in the childcare rate of 13 percentage points and includes around 4,230 additional children in care. The associated additional financial expenditure amounts to around 84 million euros. In the second scenario, extending the opening hours of childcare facilities by one hour was examined. With this measure, the average opening hours in Styria would exceed the current Austrian average. The associated costs would amount to around 9 million euros.

A combined scenario was also calculated in accordance with the objectives of the federal government's childcare offensive and the resources provided for in the financial equalization of the Future Fund: The expansion of infant care for children aged 0 to 2 years to 38 percent as well as an extension of the average opening time by one hour. The additional financial outlay in this case would be around EUR 95 million. The funds provided by the federal government for Styria in the Future Fund amounting to around EUR 69.5 million in 2024 will cover around three quarters of these costs. This leaves the province and its municipalities with additional expenditure of around EUR 26 million.

The results of the study clearly show that an improvement in childcare in Styria already brings economic benefits in the short to medium term, particularly through higher labor market participation of parents, especially women.

According to the simulation, employment would increase by 1,200 to 1,560 people, depending on the scenario, as parents would work more and previously inactive or unemployed people would find employment. This leads to a positive net fiscal effect of EUR 38 to 54 million in the first scenario and EUR 24 million in the second scenario. At the same time, expenditure on social benefits would fall by EUR 10 to 14 million. Private household consumption would increase by EUR 57 to 78 million in the first scenario and by EUR 21 million in the second scenario. Overall, the expansion of early childcare in the first scenario increases gross regional product by EUR 66 to 93 million, while the expansion of opening hours in the second scenario leads to an increase of EUR 71 million.