Childcare subsidies will make Sri Lanka grow faster: IFC

ECONOMYNEXT- The Sri Lankan economy would grow faster with more female participation in the labour force if the government subsidized or incentivized childcare programmes as merit goods and more investors entered the industry, the International Finance Corporation, which is a part of the World Bank Group, said in a new study.

"Childcare and early childhood programs are critical to economic development going forward," the study titled ‘Tackling Childcare: The Business case for Employer-supported Childcare in Sri Lanka’ said.

Research of the International Monetary Fund done in 2015 showed Sri Lanka’s economy could grow by another 20 percent if more women entered the labour force, the IFC pointed out.

"At only 0.0001 percent of GDP (gross domestic product), Sri Lanka lodges one of the world’s lowest rates of public spending on early childhood development," IFC said the study, done under its ‘Women in Work’ programme, which the Australian government funds.

This puts the Sri Lankan government’s annual spending in childcare at just 80,000 dollars.

"Free pre-primary education can foster early cognitive development and help working parents generate increased incomes," the IFC said.

It is estimating returns on early childhood programmes to be around 13.7 percent for the country, while individual adult incomes could increase up to 25 percent.

The 2018 budget included many proposals to increase women participation in the labour force, including higher spending for childcare services in the public sector, flexible working hours and improving the transportation system in the country.

Government research shows that women in Sri Lanka leave employment to take care of children, and employers are also not keen to hire women to minimize turnover.

Australia High Commissioner in Sri Lanka Bryce Hutchesson said that Australia has committed heavily to retain the female workforce in the economy with subsidies offered for childcare.





"Australia has subsidized 37 billion AUS dollars in childcare cost over the next 4 years," he said at the launch of the study.

This is allowing many parents to place their children in childcare facilities at their workplace, Hutchesson said.

"It’s about making your businesses work around childcare, not making childcare work around you," he said.

UNICEF Sri Lanka Representative Tim Sutton, speaking at the launch, said with Sri Lanka’s population dividend coming to an end, more women are needed to take part in work and expand the labour force.

The 8.4 million strong work force had only 34.1 percent of the female population active in the second quarter of 2018.

Sutton said if Sri Lanka’s workforce remains similar in size by 2050, productivity of workers has to double.

Otherwise, a limited number of people will have to support an increasing portion of the population, which is ageing rapidly, he said.

The study said that in addition to finance, the government could contribute by setting benchmarks for quality of childcare practitioners.

The IFC study evaluated some pioneering childcare facilities offered on site by some Sri Lankan employers.

The study found that others who are willing to provide such facilities hold back due to a lack of quality childcare providors.

"Investors may therefore find opportunities on the supply side, furnishing capital for providers and entrepreneurs," it said.

"Investment could support market entry, infrastructure expansion and site rollouts for domestic providers."

"Reputable international providers might also want to explore Sri Lanka’s market." (Colombo/Dec27/2018)

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