A diverse group of smiling preschoolers in a daycare

In 2016, the median cost per month for childcare was $998 in Ottawa, $1,360 in Vancouver and $1,758 in Toronto, compared to $168 in Montreal. (FatCamera/Getty Images)

Canada | Economy

Subsidizing childcare to increase the number of women in the workforce: What they’re not telling you

It takes 12 years for Canadian moms—outside of Quebec—to attain an income level similar to that of women who do not have children, a study says

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In a speech at Queen’s University this past March, Bank of Canada Governor Stephen Poloz said that Canada could benefit from emulating Quebec’s subsidized childcare model. Introduced in 1997, the program has helped close to 70,000 women participate in the workforce.

“An even more significant source of economic potential [than youth participation] is higher labour force participation by women,” he explained. In Canada, the employment rate for women is 83 per cent, compared with 91 per cent for men.

Unfortunately, there is a major barrier. In 2016, the median cost per month for childcare was $998 in Ottawa, $1,360 in Vancouver and $1,758 in Toronto. Such fees force many women to stop working. (According to Statistics Canada, in 2015, almost three-quarters of non-working mothers were stay-at-home moms) By implementing the Scandinavian, or Nordic, model for subsidized childcare, Quebec has been able to limit the average monthly cost to $168 in Montreal.

Pierre Fortin, professor emeritus of economics at the University of Quebec (UQAM), highlights the results of this family policy, “The employability rate of Quebec women aged 20 to 44, who have a job or are searching for one, is 87 per cent. This is the highest in the world and on par with women in Switzerland and Sweden. Their fertility rate has even increased.”

Of course, the economic environment has changed since the program was introduced (i.e. recession, crisis, automation, etc.), but this is true across the country. Yet, the numbers have been relatively stable. Between 1997 and 2016, the labour force participation rate of women in other Canadian provinces increased from 78 per cent to 80 per cent (+2 per cent), whereas in Quebec, it rose from 76 per cent to 85 per cent (+9 per cent). It is estimated that without the program, the rate would be 79 per cent. As for women with children aged five and under, the employment rate jumped from 64 per cent to 80 per cent (+16 per cent), compared with 67 per cent to 71 per cent (+4 per cent) in the rest of the country.

By recommending such a program, the Bank of Canada Governor is looking to stimulate employment without spurring inflation (to avoid having to adjust the key interest rate). “This implies a Canadian system where each province is responsible for its own childcare program,” says Fortin. “Except that the federal government would contribute, given the considerable economic spinoffs (taxes) involved.” In 2008, the Quebec program had a positive $919 million impact on government budget balances, even though it was fully funded by the province.

Another figure backs up Poloz’s argument. It takes on average 12 years for mothers in the rest of Canada to attain an income level similar to that of women who do not have children. In Quebec, however, it “only” takes women four years to catch up.

Marie Connolly, professor of economics at UQAM, is the co-author of a March 2018 study that raised the issue. “Some women return to work full time, while others put their careers on hold and go back part time, or even stop working altogether until their children start school. The role of daycares has yet to be proven [the study did not specifically address this topic], but these findings suggest that a connection exists between the two, which explains the eight-year gap between Quebec and the rest of Canada.”

The consequences are clear. “Lower income for mothers creates financial asymmetry in a relationship, especially in cases of separation. It then becomes very difficult to make up for the loss of a spouse’s salary,” Connolly explains.

Another challenge is the quality of the services provided. “Subsidies have had a positive effect on employment, but what about child development?” Connolly questions. “We need to look into this. Public policy that facilitates women’s entry into the workforce is great, but it’s not enough,” she says.

While Quebec’s program has led to the creation of childcare centres (CPEs), not-for-profit daycares, with an overall quality that is scientifically and globally recognized, many parents still have to turn to unregulated for-profit daycares or home childcare providers (they then receive refundable tax credits), which may not adhere to the same standards. Observatoire des tous petits estimates that 41.2 per cent of 0 to 18-month-olds attend poor or very poor quality private daycares. An alarming prospect for parents, indeed.