Employer-supported childcare promotes women’s labour force participation and helps businesses grow

Kristika Nagaraja gets up at 4am on week days to do household chores for her six-member family before getting ready for work. The 23-year-old lives in Iranamadu, Kilinochchi, with her extended family, including her husband, three-year-old son, parents and younger siblings. As her parents are too old to work, she and her husband must support everyone at home.

Before the sun rises enough to light up the village, she is picked up by a bus going to the MAS KREEDA Vaanavil factory, five kilometres away, which employs over 1,810 people from the area, almost 80% of whom are women.

Vaanavil means rainbow. It stands for the colours of ready-made clothes the factory produces and unity in diversity among different communities.

Nagaraja and her family survived the years-long conflict, although the military had occupied their original home and land. She is circumspect suggesting that losing a home is a fact of life for many in the Northern Province. As the 25-year civil war, which ended in 2009, killed more men, many households in the region are headed by women. At MAS KREEDA Vaanavil, 18% of employees are from female-headed households, while another 18% are single mothers.

Tax breaks now encourage private business investment in former war zone areas. However, the early investors were ready-made clothes manufacturers attracted by the abundant workforce. Of nearly 9,000 new jobs created under Board of Investment status projects, up to mid-2018, 90% were at apparel factories.

MAS, a company that predominantly employs women, has unlocked the secret of hiring and retaining talented workers. Owing to this, Nagaraja has the luxury of bringing her son Vino to work.

Kristika Nagaraja has an experience that many in Kilinochchi do not have; a daycare ocated within her workplace

Arriving at the factory compound, she drops Vino off at the on-site crèche in the care of childcare professionals for the day. Whenever she gets a break, Nagaraja visits Vino at the crèche, which takes care of 29 other children as well. She sometimes catches a glimpse of her son playing when she has to leave the production line to use the restroom. She is glad that Vino is educated at the crèche, instead of spending the day idling at home with his grandparents.

Nagaraja is also relieved that her son is just a stride away inside the neighbouring building as she works full-time on the factory floor sewing garments, hoping that one day she can fulfil her dream of building a house for herself.

Sri Lanka is being built on the tireless efforts of women like Nagaraja. A bulk of the $7 billion in worker remittances come from Sri Lankan women working in the Middle East, many in unsafe environments. Women also sew garments, which brings in $5 billion to the economy, and another $1.5 billion comes from tea, which is plucked by women.

Considering Sri Lanka’s import-oriented economy and the deficit in the current account, the foreign exchange earned by women is helping the country barely keep its head above the water.

MAS supports nine crèches in Sri Lanka, as well as in Jordan and India, taking care of a total of around 500 children who otherwise might not be able to access early education benefits.

Chief Executive Officer of MAS Active Trading (Pvt) Ltd, or MAS KREEDA, Sarinda Unamboowe says that the biggest benefit for the apparel employer comes from lower turnover costs due to the MAS-supported crèches.

Generally, staff turnover rates for manufacturing are much higher than for service businesses. At MAS KREEDA Vaanavil, it’s at 49%.

However, among the parents who’ve enrolled their children in the crèche, the annual turnover is just 1.3%. Now, there is a waiting list for enrolling kids at the facility, as 238 women and 64 male factory workers have children under six years old.

MAS estimates the return on investment for the crèche in Vaanavil at around 4 months of operational costs of MAS KREEDA. With around 70,000 women employed across the entire MAS Group, starting childcare facilities has added up benefits like reducing staff turnover and training costs. Children too benefit greatly from employer-provided childcare.

Only 50% of three to five-year old children are enrolled in preschool, which constrains early childhood development, school readiness, and sustainable social and economic development, according to the International Finance Corporation (IFC) and the United Nations International Children’s Emergency Fund (UNICEF) report ‘Tackling Childcare: The Business case for Employer-supported Childcare in Sri Lanka’ published in December 2018.

Childcare also allows women to return to work earlier after childbirth, giving their careers a boost.

“Unavailability of affordable and quality childcare hampers many parents from entering, continuing or returning to paid work,” the report added. A World Bank study found that Sri Lankan women tend to leave employment after marriage, and are 7.4% less likely to re-join until their children are at least over five years old.

A joint study by the Colombo Stock Exchange and the IFC shows women representation in boardrooms at just 8%. This number is comparatively higher than in more advanced economies such as Japan at 3.5% and South Korea at 4.1%, according to Deloitte, although lower than Australia at 20.1%, Norway at 46.7% and India at 11.2%. International Labour Organization statistics show that women held only 27.6% of management positions in Sri Lanka in 2017, although it had increased from 24.8% in 2014. In contrast, 59% of managers in Laos were women in 2017, 51.5% in the Philippines and 40.5% in the United States. In Australia, it was 36.6% in 2016.

Unfortunately, many women, instead of being empowered to take part in the country’s economy, are discouraged. Women are harassed on roads and in public transport. The United Nations Population Fund Survey in 2018 highlighted that 90% of women in Sri Lanka have faced sexual harassment while on public transport.

Women not only face challenges commuting to and from work, but according to the Census and Statistics Department, employers also prefer not to hire females because they think women aren’t as committed to a career due to family responsibilities and because employers have to bear the cost of maternity leave.

The result? Just 34% of women contributed to the country’s labour force in 2018, as opposed to 72% of men. According to the Gender Gap Report 2018, women are paid 64 cents to each rupee a man earns for similar work. After being ranked the 13th best in the world for the gender gap in the report’s inaugural edition in 2006, Sri Lanka has fallen gradually to 100th place by 2018.

In Sri Lanka, female enrolment at secondary and tertiary education is higher than for men, and their lower labour force participation keeps its most educated unutilised for economic advancement. Two actions could be taken to change the situation: improve public transport and provide accessibility to quality childcare.

The government has shown intent to improve transport and childcare facilities. However, implementation lags perhaps due to the lack of resources to fund all intent. The 2018 budget included a Rs50 million proposal to introduce childcare facilities at government offices located near each other with at least 500 employees. However, they have proposed no benefits for private sector childcare. If governments can subsidize childcare for pre-school children, women are more likely to receive wages. Recent World Bank Group research covering more than 100 economies suggest that support for parents—such as tax credits and early childcare—increases women’s labour force participation.

Sri Lanka is one of the world’s lowest spenders on early childhood development, lodging just 0.0001% of GDP (or $80,000 based on 2017 GDP) in expenditure.

cw5Australia, on the other hand, will be subsidizing AUS$37 billion for childcare over the next four years under a policy that makes businesses work around childcare, and not vice-versa. According to the Organisation for Economic Co-operation and Development, Nordic countries such as Iceland and Sweden are some of the best performing, spending 1% of their GDP annually on childcare.

Despite lower government spending in Sri Lanka, some companies have pushed strongly for childcare at work, to keep themselves at the forefront of the competition.

Harshani Rathnayake is lucky to be working at one such firm. A mother of two, Rathnayake is a mat weaver at Selyn exporters handloom weaving village in Kumbukgete, near Kurunegala. Four years earlier, Rathnayake had worked at an incense stick factory, but quit after she delivered her second child. But staying home for long was not an option as finances were tight. She joined Selyn over a year ago, and intends to work for as long as possible to support the education of her two daughters.

Rathnayake often checks up on her four-year-old second child, pre-schooled at the Selyn-supported daycare, while at work. The eldest, now in grade 4, arrives at the daycare after school, and completes her homework and plays with the other children until Rathnayake finishes work. MAS Holdings, Selyn and Standard Chartered Sri Lanka are three companies out of 10 featured in the joint IFC and UNICEF Sri Lanka report. The report was published under IFC’s Women in Work programme, a four-year, $11.5-million initiative funded by the Australian Government to help firms create better jobs for women.

IFC Country Manager for Sri Lanka and the Maldives Amena Arif says that employer-supported childcare is a win-win for children, employers and communities.

“As a parent, you make many choices. Having to balance your professional and personal lives can be challenging. This is where reliable, affordable and quality childcare solutions fit in. When companies support their employees in meeting their childcare needs, they can hire and retain talent, thereby boosting profits and productivity,” she adds.

The business proposition for providing childcare is not only valid for large corporates. For Selyn, which employs around 350, of which over 300 are women, its daycare and flexible working arrangements have been instrumental in bringing younger talent into a traditional industry.

“The average age in the handloom industry is over 45, so we really needed younger people to come and work at our weaving centres,” says Selyna Peiris, business development director at Selyn Exports.

After childcare was introduced, 10 out of 40 weavers in Kumbukgete are now young women. The firm, Sri Lanka’s only fair trade-guaranteed handloom company, is seeing reduced absenteeism, higher staff retention and productivity, and lower turnover costs.

The Tackling Childcare report has found that there is no ‘one-size-fits all’ approach to employer-provided childcare. The companies featured are from a myriad of industries (and diversified holding companies in the case of Fairway and Hemas) located at various locations. The nature of the industries and their locations create different childcare needs for parents. Therefore, some of the firms provide emergency backup care, some daycare in remote locations, and others high-quality on-site programmes.

Research has found that involving parents in creating the childcare programme was crucial for success.

The 10 leading employers featured in IFC and UNICEF’s report do not discriminate between men and women, providing equal opportunity and ensuring that all employees can benefit from access to childcare support.

This is true for Standard Chartered Bank in Sri Lanka as well.

Athula Harishchandra, a senior manager in operational risk at the bank, has been benefiting from employer-provided childcare for nearly eight years.

Initially, Harishchandra tried keeping his son Harindu with his parents in Galle, but this meant seeing his son only during weekends. He was relieved when he learnt that he could enrol his son at the Standard Chartered-supported crèche. He is impressed with the level of care given to each child, including freshly prepared food, safety and education.

“Breaking the cultural barrier was tough as my parents and in-laws were not keen on us enroling my son in a crèche,” Harishchandra says.

Nagaraja at MAS KREEDA experienced the polar opposite, with her friends and family envious of the childcare benefits she receives. They had never witnessed such facilities being offered in Kilinochchi before.

For Athula Harishchandra (right), the Standard Chartered supported daycare meant seeing his son Harindu (left) daily, instead of just during weekends

Harishchandra’s family has come around since, and even his friends who do not work at Standard Chartered are inquiring whether their kids can be enrolled at the crèche.

For the bank, the facility has been a boon, creating high engagement among employees, which has increased focus and productivity.

According to Standard Chartered’s Head of Human Resources Ransi Dharmasiriwardhana, parents don’t have to worry about their child’s homework, safety and having to manage issues around getting reliable domestic aid. As a result, they are able to concentrate on work better.

“This has given us access to a mature likeminded talent pool who wish to excel in both their roles as a responsible parent and a high-performing employee,” she says.

For MAS, Standard Chartered and Selyn, providing childcare translates to further positioning themselves as an ‘Employer of Choice’ and better engagement with their clients, who value suppliers that take care of their employees.

The companies have been fortunate to partner with childcare service providers who employ top-notch professionals. The IFC-UNICEF report suggests that investors could find opportunities to enter the supply side of childcare support. Investments could be made in childcare providers and entrepreneurs, which would help expand the industry and give employers a choice of childcare providers at competitive rates. Even reputed international childcare providers may find opportunities in Sri Lanka.

In addition to funding childcare subsidies, the government could also get involved to a greater degree, setting up and monitoring standards for training childcare professionals.

With Sri Lanka’s population ageing rapidly, the current labour force would have to work twice as much in the coming decades to keep the economy growing, according to UNICEF Sri Lanka Representative Tim Sutton. Therefore, engaging a talent pool that is, on average, more educated than men, and currently limited to the household, would be essential.

According to the International Monetary Fund, Sri Lanka could enjoy up to a 20% increase in gross domestic product if the gender gap is sealed.

For Nagaraja, Rathnayake and Harishchandra, these macroeconomic implications are likely in the farthest reaches of their minds. One thing they all have in common, despite their widely divergent social backgrounds, is their relief and satisfaction that their children are getting the best possible care, early education and community interaction to grow up to become citizens that would bring good to the world