The Minister of Social Affairs is making it compulsory for employers to contribute to childcare costs, which will come into effect from 1 January 2007. The minister believes that the current, voluntary scheme is not functioning as intended. Under this scheme, parents, the government and employers are each required to pay one third of childcare costs. Employer organisations have opposed the new proposal, while the AbvaKabo trade union has spoken in favour of the initiative. It is suggested that a better solution would be for childcare to constitute a basic provision, primarily financed through government funds. The biggest opposition party, the Labour Party, supports this idea and has presented an initiative bill to this effect to the Lower House of Parliament.
Background
In 2005, the Childcare Act stipulated that parents, the government and employers would each pay one third of childcare costs. An agreement was then made with employer organisations and trade unions that, in 2008, up to 90% of all employees would be reimbursed by their employer for a third of these costs for children from birth up to the age of 12 years. In practice, this means that both parents would receive one sixth of the costs from their respective employer. On the basis of recently released research results, the Minister of Social Affairs, Aart Jan de Geus, believes that it is unlikely that the target figure will be achieved in time. Therefore, the minister is now proposing to make the employer contributions to childcare costs compulsory.
Low contribution to childcare costs
A recent study of the Ministry of Social Affairs, presented in June 2006, shows that over one third of employees do not receive a full contribution from their employer for the costs of daycare or lunchtime and after-school care for children. Of the employees who are covered by a collective labour agreement, over 72% receive full reimbursement, while the remaining 28% receive no contribution or a lower contribution than stipulated. The situation is less favourable for employees who are not covered by a collective agreement. More than half of these employees have no such arrangement with their employer; only 34% of workers have a fully-fledged arrangement in place.
This finding was the reason for Minister De Geus’s decision to make such a contribution compulsory for employers. The minister plans to introduce the compulsory employer contribution by adding a supplement to the unemployment premiums that employers are currently paying. The premium will not have a huge impact on employers, because the general rate of tax on profits for companies is to be simultaneously decreased from 29.6% to 25.5%. Moreover, by spreading the costs among all employers, those employers in certain (non-commercial) sectors where a relatively large number of women work stand to benefit. The Dutch cabinet considered the minister’s proposal at the end of June 2006.
Preference for basic childcare provision
The Council of State (Raad van State), which has also discussed the matter, agrees with the minister’s proposal, as it represents an improvement on the current situation. However, the council has expressed its preference for childcare to become a basic provision that is paid for from general funds. The council is comparing the situation in the Netherlands with that in other EU countries, where childcare is financed by the government as a basic provision.
The results of the study and the conclusions of Minister De Geus have been discussed with the social partners in the Labour Foundation (Stichting van de Arbeid, STAR). The Confederation of Netherlands Industry and Employers (VNO-NCW) believes that the introduction of the statutory obligation for employers, as of 1 January 2007, is somewhat premature. The confederation emphasises that over 86% of employees are already eligible for such a contribution, a significant increase compared with the 73% of employees who availed of such a scheme last year. It should be noted, however, that some such schemes fulfil the requirements more than others; the minister has argued that the fixed standard of a full contribution was not met in many cases. The AbvaKabo trade union, affiliated to the Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV), expressed its satisfaction with the proposed introduction of a compulsory employer contribution for childcare. However, although it views such an initiative as a step in the right direction, the trade union considers that it would be better if childcare became a basic provision for everyone in the future.
Labour party proposal
The trade union’s view is not only supported by the Council of State, but also by the biggest opposition party, the Labour Party (Partij van de Arbeid, PvdA). According to the PvdA, childcare is comparable to basic provisions such as education and healthcare. The party pointed out, however, that it is unusual in an EU context for employers to contribute to childcare costs. PvdA has drafted a proposal which stipulates that the government should bear the greater part of childcare costs and that the party would make €800 million available for this. This plan is supported in the Lower House of Parliament by conservative parties such as the liberal People’s Party for Freedom and Democracy (Volkspartij voor Vrijheid en Democratie, VVD) and the Pim Fortuyn List (Lijst Pim Fortuyn, LPF). The plan will be discussed in parliament in the autumn.
Marianne Grünell, Hugo Sinzheimer Institute (HSI)