State should pay childcare wages directly to ensure stability and quality, committee hears

The State should pay the wages of childcare workers directly to ensure better value for public money and a more affordable service for parents, an Oireachtas committee has heard.

A model of funding similar to the one for primary schools whereby the State pays educators’ salaries “could achieve several objectives at once”, trade union Siptu told the Committee on Children on Thursday.

This would ensure “professional wages and careers for educators, greater stability for providers, better workforce retention and quality for children and greater value for money for the State”, the union said in a statement to the committee.

“It would also give the State a mechanism for reducing fees for parents towards the Government’s commitment of childcare costing no more than €200 per month, without making services financially unsustainable.”

The State has been providing a core funding scheme for the sector since 2022, whereby childcare providers receive grants towards their running costs. In order to access the scheme providers must comply with fee-freezing and fee caps.

Some €1.7 billion of State investment has been delivered through the scheme since its inception, with another €482 million approved for this year.

The National Childcare Scheme is another Government payment that subsidises the cost of childcare for parents by paying providers directly so they can discount the cost for eligible parents.

Another State investment, the Early Childhood Care and Education scheme, provides payment from the Government towards a set number of free hours of childcare and education for preschool-aged children.

However, many providers are unhappy with how the core funding scheme operates because it limits what they can charge, which they say makes their businesses unsustainable.

This approach was “fundamentally broken” and private childcare providers were not being consulted on new policy, Childhood Services Ireland (CSI), the Ibec trade association, told the committee.

This meant “the frontline reality of how policy actually functions – and fails – on the ground is entirely absent from the Department’s approach”, it said.

The maximum fees providers can charge was further reduced in Budget 2027, which the CSI called a “weaponisation” of an essential scheme.

The childcare group also told the committee that the Government’s aim to reduce the cost of childcare to €200 a month for all children “comes at a direct cost to quality” and was a “reckless pursuit” without proper State support.

Speaking after the committee hearing, Emer Currie, Fine Gael TD and committee member, said “with staffing accounting for around 70 per cent of providers’ operating costs, I think it’s fair to ask whether direct State funding of staff pay would offer better value for taxpayers’ money and help providers recruit and retain staff.

“The proposal goes beyond the commitments in the programme for government. I think the early years action plan offers an opportunity to examine it and assess its merits, including how it could work with providers continuing to employ staff and manage payroll.”