The declining birth rate is a serious problem facing society. It has implications not just for the labor force, but also for the sustainability of the nation’s social welfare system. The imbalance in the ratio between the population contributing to the state’s pension and care systems and the number of elderly people requiring support is causing significant problems.
Minister of Health and Welfare Chen Shih-chung (陳時中) has established an office tasked with slowing the effects of the declining birth rate. The office, headed by former minister of health and welfare Lin Tzou-yien (林奏延), will seek to coordinate resources to provide childcare subsidies and deal with daycare availability.
Lin has said that he believes the government should use public funds to subsidize privately operated childcare providers so that they will cost the same as their state-provided equivalents.
Lin’s suggestion raises several questions.
Aside from problems inherent in the state’s involvement in childcare subsidies and other financial assistance, a key question is how the government would be able to regulate the market price to prevent childcare costs from rising in proportion to the addition of subsidies.
When formulating its childcare policy, the government should study the experience of the Taichung City Government, which has implemented an integrated public-private childcare system.
The idea of a public childcare system has been discussed for some years, yet a common problem that such a policy comes up against is the eye-wateringly high cost of providing a comprehensive, state-funded system, in addition to the large amount of space and the significant human resources that it would require.
Although the New Taipei City Government promotes public childcare facilities, it is only able to provide childcare for roughly 4 percent of the city’s children. Parents must apply and wait for their names to be drawn from a list; it is a slow process and these parents cannot afford to wait.
Perhaps it is time that the problem is approached from a different angle. One solution would be to create a community-based childcare system: Government, market and families working in unison to solve the problem.
The government, through subsidies, would be able to reduce the cost of childcare for families, without a corresponding regulation of market prices, subsidies will simply end up lining the pockets of businesspeople, instead of helping alleviate the financial burden families face.
If such a situation were allowed to develop, the government might fail to get more parents to use childcare. Many of the younger generation, seeing that they would have to perform this role by themselves, would still feel unable to raise a family, as is the situation now.
Taichung’s childcare system based on the idea that childcare provision is a form of social investment — that welfare must be treated as an investment and not simply as a provision of childcare subsidies.
The Taichung City Government is also investing in other areas of childcare in the hope of creating a positive chain reaction that will improve different aspects of the city’s childcare services.
Steps to improve the public childcare system must be complemented by measures to regulate the market, preventing companies from arbitrarily raising their prices and making sure that parents can afford them.
In Taichung, daycare centers and in-home childcare services have to follow local regulations, which require them to charge according to the prices set by the government per area and to obtain approval from the city’s Education Bureau if they want to raise prices.
These measures expand the reach of the public childcare system by creating an integrated public-private system, effectively increasing the number of affordable services across the city.
Of the six special municipalities, Taichung has the highest rate of affordable childcare, surpassing Taipei, New Taipei City, Taoyuan, Tainan and Kaohsiung.
Daycare enables parents — usually mothers — of small children to work. This not only helps improve a family’s financial situation; it also creates more jobs in the childcare service industry. Since the Taichung government began implementing the policy to create an integrated public-private childcare system in July, 2015, children that have benefited from affordable childcare services supported by subsidies, which have increased 28.6 percent.
Meanwhile, the number of children enrolled in kindergartens has grown by 41.4 percent and nannies, daycare staff and preschool teachers have increased by 21.3 percent, 25 percent and 41.4 percent respectively.
Infant daycare centers co-run by government and private companies have increased by 11.7 percent, and the policy of treating childcare as a social investment has brought positive effects in a wide range of areas.
At present, children at the age of five receive full subsidies for their kindergarten tuition. The free childcare program has been in place for many years and perhaps it is time for the central government to consider taking it to the next level by extending it to younger children.
The central government should also consider taking steps to regulate the childcare service market by strictly controlling prices of private daycare. As it stands, widening the age range of children who qualify for the program would cost NT$8 billion (US$263.5 million) for each year added.
However, the government must understand that the NT$8 billion will not be just another expense, but a worthy investment.
The government must provide an environment where young people can afford to have children and raise them.
Moreover, it must provide the support and opportunities they need to pursue their goals.
Lin Chia-lung is mayor of Taichung. Lue Jen-der is director of the Taichung City Government’s Social Affairs Bureau.
Translated by Edward Jones and Tu Yu-an
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