IFC report on business case for workplace childcare reinforces maquiladora workers’ campaign in Central America

MSN 2016

MSN 2016

Lack of quality, affordable child care is a significant concern for working parents in every region in the world, regardless of country or socioeconomic status.  According to the 2017 OECD report The Pursuit of Gender Equality An Uphill Battle, single parents – usually working moms – in the U.S. and Ireland pay up to 45% of their disposable income for affordable childcare.  In countries like Honduras, El Salvador and Guatemala, the lack of quality, affordable child care is just one of several challenges to leveraging working people and entire countries out of poverty.  Other challenges include the lack of adequate social security provisions and inadequate or non-existent early childhood education programs.  Authors of the 2016 IADB study Cashing in on Education: Women, Childcare and Prosperity in Latin America and the Caribbean argue that the key to boosting Latin American countries out of poverty is female labor force participation – and that child care and early childhood education are key policy measures to move more women into paid work outside the home.  Social security contributions made by working women and their employers strengthen social security systems in poorer countries.  Reducing pay gaps between women and men would strengthen social security systems even more.

Maquiladora workers, trade unions and women’s rights activists in Honduras and El Salvador made workplace funded child care a key platform in their workplace advocacy campaign in 2014.  With the collaboration of Canada-based Maquiladora Solidarity Network, they have focused their advocacy efforts on international apparel brands, industry associations and governments to develop and implement viable childcare solutions.

As outlined in MSN’s  guide to legal requirements and international conventions Childcare in Central America, labor laws in Honduras, El Salvador and Guatemala require employers to provide child care facilities for their employees.  In 2014, the Government of Honduras, Honduran trade unions and the Honduran Manufacturers Association entered into a tripartite agreement to work on establishing some form of employer-provided child care program for textile manufacturing workers.  Employers have been slow to fund child care centers due to cost and capacity factors as well as lack of clarity in Honduran law – stalling the process.

IFC Tackling Childcare p. 21

IFC 2017, p. 21.

Reinforcement for Central American maquiladora workers’ campaign for employer-provided child care has come from an unexpected source.  The IFC’s new report  Tackling Childcare The Business Case for Employer-Supported Childcare uses case studies to show that not only is sponsoring child care programs the right thing to do, it is the right thing to do to succeed in business.  As expected, the case studies examined include white collar employers in the IT, financial services, and healthcare industries in wealthy countries like the United States, Japan and Germany.  More to the point to maquiladora workers in Central America, the case studies include blue collar employers in garment manufacturing, agriculture and heavy manufacturing industries in low- and middle-income countries like Jordan, South Africa, Turkey and Brazil.  In fact, the IFC report emphasizes the heightened need for high quality employer-sponsored child care in low income countries, where lack of access to quality early education and care programs can have a long-lasting negative impact on the growing minds of children – and where the economic security of families is threatened when parents must choose between working to provide for their families or staying at home to care for their children.

The report shows that investing in child care improves employee performance by reducing absenteeism, enhancing worker productivity, and increasing employee commitment and motivation.  The positive impression and improved  company reputation resulting from providing quality child care can help companies recruit and retain good employees.  In countries like Honduras, El Salvador and Guatemala where employer-sponsored childcare is a legal requirement, companies can attract more international business by showing their compliance with local laws.  Thus, making an investment in child care programs can be an income generator for companies.

From a practical standpoint, many companies and employers do not know where to start even if they want to implement a child care program.  CSR advocates within companies need the data and information to persuade CEOs, CFOs and Boards of Directors that the investment is needed.  Establishing and maintaining a workplace child care program isn’t cheap.  At the launch of Tackling Childcare, Farhan Ifram, the CEO of Jordanian garment manufacturer MAS Kreeda, observed that the initial investment in his company’s child care center was close to $100,000.

This is where the IFC’s report will be truly useful.  Not only does the report contain evidence that can be used to persuade skeptical company boards and officials that sponsoring child care is good for the bottom line – it contains advice on what steps companies must take to develop child care programs that are both high quality and meet the needs of employees.  A key element  to developing a good child care program is working with employees and their representatives to ensure the program meets their needs personally and culturally.  The report pays attention to the needs of child care workers for training, certification and decent pay and working conditions.  Accommodations must be made in situations where workers currently pay family members and neighbors for child care to ensure there are not unintended negative impacts on extended family and neighborhood economies.

Finding the funding to establish high quality child care centers is a significant challenge, but one that can be overcome.  In the Central American case, international brands can be a source of support for suppliers that take the plunge to establish child care programs – both financially (for example, through one-time start-up grants) and through increased business.  International brands do not have to provide all the financing and support, however.  Tackling Childcare points to a reframing of broader existing CSR culture.  In 2013, Fortune 500 companies spent $15.2 billion on CSR initiatives.  Of that, $2.6 billion was spent on education – in both CSR contributions and grants.  If even one tenth of that amount were spent on grants for employer-sponsored child care program start-ups, workers at over 3,000 garment factories would benefit directly – with untold benefits for the education and health of working parents and children.  Working women, their trade unions and women’s rights advocates in Central America have taken the lead in the campaign for employer-sponsored child care in their countries.  It is time for their employers, international brands, and the international community to accept the challenge – and be models for the rest of the world.

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