Policy Note 50: Efficiency potential in childcare in Austria

In a recent policy note, we looked at efficiency potential in the Austrian childcare system. In particular, we examined the potential for increasing and improving services within the existing funding framework, such as the number of children in care or extending opening hours.

Past calculations by EcoAustria have shown that an expansion of opening hours or childcare ratios in the existing care model can be associated with additional expenditure. In order to catch up with international models in terms of both quantity and quality in the area of institutional childcare, either additional funds need to be made available or efficiency potential in the existing care system needs to be considered as a financing option.

EcoAustria therefore determined which output figures would be technically feasible if all Austrian municipalities were as efficient as their most efficient reference municipalities at constant expenditure. The result: Across all Austrian municipalities included in the analysis, efficiency potentials of around 46,700 additional children cared for or 9,940 additional opening hours were identified. This results in an efficiency potential of 12% to 13% in relation to the entire care system recorded in the daycare center statistics.

The results of the study confirm that even within the current funding framework, there is potential for quantitative and qualitative improvement that can result from cooperation between municipalities and providers. In order to exploit this potential, the Institute recommends bundling smaller facilities with a smaller number of children and staff or shorter opening hours into larger units. However, more incentives are needed at municipal level for this type of cooperation. Corresponding framework conditions for such incentive systems could be provided for in the new financial equalization system, which will be negotiated in 2023.