The Minimum Income Standard & The Cost of Childcare MESL Working Paper
Issued: March 2015
This paper quantifies the additional earning burden imposed on households by the high cost of formal childcare in Ireland.
The MEBS model expenditure data and Minimum Income Standard approach, are applied to quantify the income need burden attributable to the high costs of formal childcare for urban based, one child household compositions.
The paper examines the gross salary required to afford the full cost of a Minimum Essential Standard of Living (MESL), including the cost of formal full-time childcare; this is the Minimum Income Standard (MIS). The analysis then sets out to identify how much of the MIS is attributable to the cost of childcare.
The MIS rate required to afford formal childcare and all the essential elements of a socially acceptable minimum standard of living, is up to 150% of the National Minimum Wage for Two Parent household compositions, and up to 260% of the National Minimum Wage for One Parent household compositions.
The effects of two alternative approaches to childcare subsidisation are modelled, examining the impact on the MIS earnings need of each approach:
- An adjustment to the Family Income Supplement (FIS) which would take account of a household’s childcare costs in the FIS means test
- A Scandinavian model of childcare charges; capping childcare costs to the household at 30% of the actual cost