The business case for tackling childcare: good for employees and employers, good for Sri Lanka

My friend Kavi, a senior manager with one of Sri Lanka’s top service-industry companies, is going through difficult times. Both of her parents recently passed away – an incredibly sad series of events. If losing one parent after the other was not traumatic enough, she also lost a vital support system. 

Kavi found herself without the support she needed to care for her children while working and so faced a critical decision about her more than 15-year career. Stay in the job or leave? This is a question that’s commonly faced by many families in Sri Lanka, where vital decisions are made around the availability or lack thereof, of quality childcare.

In many parts of the world formal, quality childcare remains scarce. Fewer than one in four children under five in South Asia and most of Africa benefit from preschool provision . Moreover, traditional sources of childcare from close or extended family members are becoming less available as families are becoming more dispersed .

Yet, formal childcare is often unavailable, expensive and outside the reach of employees, not only in developing economies but also in developed ones. For those who can afford it, the available options are often limited and poorly aligned with full-time working hours. 

The business case 

for employer

-supported childcare

Lack of access to quality childcare can affect the choices that employees make about paid employment. The unavailability or affordability of care affects the choices that parents make regarding the type of work that they do, whether they stay at home or how they combine work with care .

While women in Sri Lanka have made significant strides in education, women’s labour force participation remains low at 35.3%, half that of male participation (which stands at 75.9%) .This prevents employers in all industries from accessing Sri Lanka’s entire talent pool.

Improving access to childcare can improve gender equality, and help parents enter and advance in the workforce. The recognition, reduction and reallocation of care responsibilities are vital determinants of women’s and men’s ability to contribute equally to the community, economy and public life. Because women are more likely to carry the responsibility for looking after children, a lack of childcare options presents a major barrier to their full and equal participation in paid work . 

Global research shows how companies that invest in childcare initiatives can experience multiple benefits for their business. Providing childcare support can boost the quality of a company’s labour force by supporting the needs of a diverse workforce, improving recruitment and helping businesses retain talent throughout the employee lifecycle. 

The good news is that the private sector realises that there is a strong business case for employer-supported childcare as an enabler for (female) labour force participation. MAS Holdings, the global Sri Lankan apparel and textile manufacturer - an IFC client and member of IFC’s Tackling Childcare Partnership – recently participated as one of 10 IFC-led case studies on the business case for employer-supported childcare.

Having provided childcare-support for their employees in one of their ILO/IFC Better Work factories in Jordan, MAS Kreeda Al Safi-Madaba, the company quickly reported numerous benefits to having a crèche onsite. These included reduced absenteeism and turnover rates among beneficiaries, and more stabilised production lines. Absences due to sick leave fell by 9% after only eight months. 

MAS Kreeda Al Safi-Madaba also found that the childcare facilities strengthened the company’s relationship with their major international buyer and boosted the company’s reputation as an "employer of choice” for local women. 

“Before the childcare centre, I had to walk to my relative’s house to drop my child there even in winter. I would often have to stay at home when my child was sick or if my relative was unavailable to provide care. But now with the childcare facility and transport, it is so much easier,” said a childcare centre user and team member at MAS Kreeda Al Safi-Madaba.

The case of MAS Kreeda’s childcare facility in Jordan shows that employer-supported childcare can be a win-win for all: employees, companies and ultimately, economies.  

Locally, the Board of Investments has put in place a childcare facility in the Special Economic Zone in Katunayake in response to demand from garment producing companies (including MAS). The SEZ and its companies had identified childcare support as a potential solution to better attract and retain their female workforce and to bring in smaller enterprises to the SEZ. Additionally, the SEZ wanted to support the Government’s mandate to empower and support working women. 

Businesses that invest in childcare can improve employee performance by reducing absenteeism, enhancing worker productivity, and increasing the motivation and commitment of their workforce. Employer-supported childcare may also help the firm access new markets that have high corporate social responsibility benchmarks .

An opportunity for private-public partnership

A study by the McKinsey Global Institute estimates that global GDP will increase by 26% by 2025, adding $ 12 trillion, if the gender gaps in economic participation were closed . Tackling childcare can make a major contribution in closing these gaps. 

Tackling childcare is among one of the priorities in the Sri Lankan Government’s Vision 2025, and builds on the Government’s ongoing efforts to ensure a supply of quality childcare provision. 

This is a commendable and ambitious target. The private sector, which globally creates nine of ten jobs, can play an important role in achieving this vision. 

As part of IFC’s ‘Tackling Childcare’ research, we had the opportunity to examine policies and regulations across 50 economies that can encourage or hinder employer-supported childcare. This was done in partnership with the World Bank Group’s Women, Business and Law team

What did we learn? 

Women's employment is significantly higher in countries that mandate paternity leave ; more women work in the labour force in economies with longer, fully-paid maternity and parental leave ; and more women receive wages where governments support or provide childcare .

As employers increasingly understand and pursue employer-supported childcare in Sri Lanka, the scalability of innovative solutions will largely depend on an enabling regulatory framework, partnering with private sector companies and investing in providers that can deliver quality childcare.  

What about my friend Kavi?

Kavi misses her parents a lot. Her children miss their grandparents. For now, Kavi decided to take a career break to be there for her children. Her employer, who values her contributions to the company immensely, is working with her to explore potential part-time options. At the larger corporate level, her company is also exploring employer-supported childcare for its employees going forward.

Much has been written about the need for investment in childcare, yet there is a dearth of information on what companies can do to address their employees’ childcare needs and how companies might benefit as a result.  IFC’s Tackling Childcare report fills that gap. It discusses how companies can analyse their workforce to identify the type of childcare support they can offer to their employees—from onsite childcare to subsidies—that best suits their needs. The report draws on 10 case studies of companies around the world offering various childcare options, highlighting how investments in employer-supported childcare can strengthen the bottom line. For more information visit www.ifc.org/tacklingchildcare.

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. 

(The writer is the IFC Program Manager of the recently launched Women in Work Program, a partnership with DFAT that aims to promote women’s private sector labour force participation in Sri Lanka. Going forward, the Women in Work program aims inter alia to explore solutions around employer-supported childcare in Sri Lanka).