Childcare as a catalyst—Portugal’s bold step

Portugal’s rolling out of free universal childcare offers a model in social investment and tackling inequality.

Childcare is increasingly recognised as a powerful policy to address inter-generational inequalities and promote productivity and growth. Scientific research has demonstrated the positive impact of high-quality childcare and preschool education on children, parents and society as a whole.

Such programmes play a crucial role in fostering the essential skills and capabilities vital for individuals to thrive in 21st-century economies and societies—those skills begin to take shape during the first years after birth, before children enter primary school. Participation in childcare and preschool education has been associated with less repetition of school grades and early leaving, and greater propensity to enrol in higher education. With the transition into adulthood comes greater access to high-skill, better-paid employment.

Moreover, children from socio-economically disadvantaged backgrounds benefit most from participating in childcare and preschool education, making early intervention key to reducing inherited inequalities. Childcare also plays a fundamental role in expanding employment opportunities for parents—particularly women—favouring the reconciliation of work and family life. In so doing, it reduces socio-economic disparities within households and gender inequalities, and contributes to enhanced productivity and growth.

Still limited

The European Union has acknowledged childcare and preschool education as key to social cohesion and economic development, and a right embedded in the European Pillar of Social Rights. If however preschool education is well established across European countries, participation in childcare is still limited, with children from low socio-economic backgrounds enjoying less access.

As things stand, childcare systems in most EU countries thus reinforce, rather than reduce, inequalities. The primary factor is the prevalence, in many countries, of less-affordable private provision. Yet even public or publicly funded services, in which parental contributions are usually based ‘progressively’ on income, can be beyond the reach of low-income households.

The EU has taken initiatives to address this deficit, including the European Care Strategy published by the European Commission last September. This stimulates member states to expand the participation of children under three in childcare while reducing inequalities in access. Additionally, the European Child Guarantee requires countries to develop plans to ensure equal access to social rights, including childcare, for the most disadvantaged children.

Ambitious Portugal

Among member states, one has emerged as a champion with ambitious reforms to make childcare more accessible and affordable—Portugal. The country has wisely utilised the post-pandemic Recovery and Resilience Facility to enhance the availability of publicly funded childcare.

It might seem that the obvious answer to unequal access to childcare is to exempt the poorest households from childcare fees. Yet in Portugal this was found not to improve accessibility significantly. The service providers are mainly private, non-profit organisations. They receive government funds to cope with overheads but the resources are not sufficient to cover all expenses. So these providers tend to attract higher-income children whose households can pay more, and thus to establish facilities in economically advantaged areas.

To address these challenges, the government of António Costa last year introduced Law no. 2/2022, with the aim of progressively extending free childcare. The legislation mandates that all such services be made free for all children, with the government fully funding the costs.

This move will provide sufficient incentives to encourage providers to operate in the most marginalised areas, thereby reducing inequalities in access. Furthermore, by ensuring universality of access, the policy has gained widespread support, including from the middle class and opposition parties, thus strengthening the long-term sustainability of the investment.

Concerns persist

Despite this positive development, concerns persist. The quality of childcare in Portugal—as measured by staff qualifications, training and the adoption of child-adapted pedagogy—remains low, requiring attention and improvement. Moreover, there is a risk of expanding the childcare offer through extensive use of childminding, which may have lower standards. Prioritising quantity over quality could potentially reduce the effectiveness of the system in enhancing learning opportunities for children.

Yet Portugal’s decision to provide free childcare reflects a visionary approach to constructing a society where every child has equal opportunities to acquire essential life-skills during their formative years. Additionally, this empowers women to work and achieve a better work-life balance, contributing to a fairer society and an inclusive economy. Investments in early-childhood education and care not only yield immediate benefits but also generate substantial long-term returns, by enabling individuals to reach their full potential and contribute meaningfully to society.

Portugal’s bold move highlights the transformative power of accessible and affordable childcare. It should inspire other progressive governments and parties across the EU.