Thursday, September 29, 2016

Can we talk about affordable childcare now?

This article is written to raise awareness about the need to ensure good quality childcare are available at affordable price in Malaysia. 

Picture with my nieces and nephew, who like every Malaysian child,  
deserve good quality childcare when it is needed, regardless their parents income level. 

Why is affordable childcare an important topic? 

I have no children but affordable childcare is something that is very close to my heart because making childcare affordable is a serious matter in terms of human development as well as social and economic justice. 

1. Childcare is a financial burden to many families. 

Now, full-day childcare monthly fees in Klang Valley ranges from RM 350 to more than RM2,000 per child depending on the quality of the childcare centers. Childcare expenses have become an increased burden to many young families. 

2. The quality of childcare depends on who can pay more. 

Only those who are well-to-do can send their children to good quality childcare centers. In another words, children of the haves and havenots will have completely different starting points, feeding into the vicious cycle of inequality. 

3. Unaffordable childcare increases inequality. 

The lack of good quality childcare at affordable price drives women out of the workforce as it is more economical for them to stay at home to teach and take care of their children. When women stop working, the households go from dual-income and single-income, reducing the total household incomes. Worse still, various reports have shown that this is more likely to happen in low and middle income families, resulting in increased gap between the rich and the poor.

4. When women don't work, it is an economic loss to the country.

Women dropout from the workforce is an economic loss to the country. This is especially true for Malaysia as our women are increasingly better educated than men -  the enrollment to tertiary education is currently about 60% women and only 40% men.  As of now, Malaysia has one of the lowest female labour participation rate in South East Asia with only 54% of women in working age in the workforce. The United Nation Development Program (UNDP) calculated that increasing female participation rate to 70% would boost Malaysia gross domestic product (GDP) by 2.9%, which is equivalent to around RM 33 billion every year.

5. Investment in children gives the best return on investment for government in term of human development. 

James J. Heckman, Nobel Laureate in Economics and an expert in the economics of human development, has been advocating government invesment in early childhood care and education (ECCE). Heckman’s Equation proves statistically that investing in early childhood saves taxpayer monies in the long run - good ECCE results in lower social welfare cost, decreased crime rate and increased tax revenue.  In fact, ECCE investment produces the highest rate of return on investment in human capital development (as shown in the figure below).

What can we do about it? 

To provide good and affordable childcare, Malaysia can learn from Singapore, Australia, Finland and many other Scandinavian countries. Childcare in those countries are subsidized by the the government whereby tiered subsidies are given - amount of subsidies differ according to household income level. The childcare centers in those countries are mainly run by private operators at competitive market. To be eligible for the subsidies, they must meet certain requirements set by the government, which usually comprise of student-teacher ratio, qualifications of the teachers, safety standards and so on, to ensure good quality childcare.The amount of subsidies are computed in such a way that households spend similar percentage of disposable income on childcare. 

In addition, Government must also identify the structural barriers faced by the childcare industry and work to improve macro-environment so that childcare businesses can be run more competently and efficiently, offering better services at cheaper price. 

What does the Selangor government do about it? 

The Selangor government has similar subsidy programs such as TUNAS (Skim Bantuan Tadika Selangor) and Si Kembar (Skim Bantuan Asuhan Selangor). However, they are only limited to households with the income level less than RM2,500 and provide only small amount of subsidies. To expand the program to middle income families and increase the amount of subsidies to include better quality childcare centers are beyond the state government’s financial capability and jurisdictions. The Selangor state government budget is only 1% of the federal government budget and childcare is supposed to be developed by Education Ministry as well as Women, Family and Community Development Ministry. Therefore, we need political will from the federal government to make a more holistic reform in childcare industry. 


I hope that Putrajaya can consider the proposal above and derive a comprehensive and strategic plan to ensure that good quality childcare is available at affordable price, so that all our children will have equal opportunity to learn and develop in the early age, regardless of the income levels of the families.