Single low income earners to benefit from new daycare fee plan

Government has climbed down on a plan to hike daycare fees and is instead proposing a new fee strcture to ensure that single, low-income earners can benefit from lower daycare costs. If the measure goes through it will take effect from March next year.

Image: Tommi Parkkinen / Yle

Government has tabled a proposal to increase the income threshold for a planned daycare fee increase, so that low income earners single heads of household will not be affected by the fee hike. However municipalities may continue to charge the maximum lower level fee if they choose.

The administration hopes that the measure will make job offers more attractive for parents who are concerned that taking on work will not improve their financial positions if they have to fork out money to pay for daycare.

The plan means that fees for children in full-time care will not rise for any group of parents, but low income parents in particular will see their daycare expenses shrink. The government hopes new legislation to enable the change will take effect from March 2017.

If the reform goes through, it means that from 2018 onwards local governments stand to lose up to nine million euros in income annually because of the lower costs. Next year the financial impact will be in the region of 7.5 million euros.

According to the government's latest proposal the minimum daycare fee for families with children in early childhood education programmes would be as follows:

1 adult, income 2,200 e/mo1 adult, 1 child1 adult, 2 children1 adult, 3 children
Current fee, total92 €/mo88 €/mo0 €/mo
New fee, total33 €/mo27 €/mo0 €/mo
Change-59 €/mo-61 €/mo0 €/mo
1 adult, income 4,400 e/mo1 adult, 1 child1 adult, 2 children1 adult, 3 children
Current fee, total290 €/mo502 €/mo407 €/mo
New fee, total286 €/mo445 €/mo389 €/mo
Change-4 €/mo-57 €/mo-18 €/mo
2 adults, joint income 2,200 e/mo2 adults, 1 child2 adulkts, 2 children2 adults, 3 children
Current fee, total44 €/mo0 €/mo0 €/mo
New fee, total27 €/mo0 €/kmo0 €/mo
Change-17 €/mo0 €/mo0 €/mo
2 adults, joint income 4,400 e/mo2 adults, 1 child2 adults, 2 children2 adults, 3 children
Current fee, total251 €/mo370 €/mo385 €/mo
New fee, total234 €/mo352 €/mo368 €/mo
Change-17 €/mo-18 €/mo-17 €/mo

Source: Government proposal

The incomes shown in the chart represent gross pay. The number of children indicates youngsters in early childhood education programmes.

180-degree turn on daycare fees

The government originally planned to increase daycare fees, but rolled back the decision during budget deliberations. The fee hike was due to take effect from August.

In September Finance Minister Petteri Orpo explained the volte-face by saying that legislative work and parliamentary discussions revealed that the measure was ill-conceived. He said that increasing the fee would not have resulted in the income boost initially anticipated.

The aborted draft bill would have meant lower fees for low income households comprising 2 – 3 people and higher fees for others. The current model opts only for the discount for low-income families.