The Need for Childcare Services: Are Co-ops the Solution?

Yawen Luo

The co-operative model has long been used to provide childcare services in Canada and other countries and may offer a solution to the long waiting lists and the high cost of childcare that have frustrated parents with young children and deterred them from returning to work.

In a childcare co-operative, the users of the services (the parents) are also the owners of the business. This characteristic provides a unique set of incentives. Since parents are both the users and the owners, it is expected that high quality services will be provided at the lowest cost. In the UK, childcare co-operatives cost up to 50 percent less than commercial nurseries, according to a childcare advocacy organization. Being the owner of the business also allows parents to have control over and participate in their children’s care; parents commonly volunteer or serve on the board of directors.

Co-operatives often arise to address unmet needs. In Australia, for example, the Community Child Care Co-operatives developed to meet the needs of working women in the 1970s in the absence of government-supported programs.

In Canada, registered childcare co-operatives are common in Saskatchewan, Manitoba, and Ontario. As of 2015, 102 registered childcare co-operatives in Saskatchewan offer daycare and preschool programs, with another 42 in Manitoba and more than 200 in Ontario.[1] Figure 1 shows that most childcare co-operatives in Saskatchewan and Manitoba were established in the 1970s and 1980s; only one childcare co-op has been registered in these two provinces since 2010.

Click here for a map showing the location of childcare co-operatives in Saskatchewan and Manitoba.

While there have been few new childcare co-ops developed in recent years, this is not because of a lack of need. On the contrary, research estimates that regulated childcare space is available for only 11.5 percent of children under five years old in Saskatchewan and 25.4 percent in Canada, on average.[2] The Co-operative Innovation Project conducted by the Centre for the Study of Co-operatives from 2013 to 2015 also revealed a pressing need for childcare in rural and Indigenous communities, which ranked childcare fourth among fifteen in a list of community needs.[3]

The co-op model offers a good fit in providing childcare services both theoretically and empirically. However, the imbalance between high childcare needs and the low number of new registered childcare co-ops indicates that the co-op model on its own is insufficient to address the shortage in care. One of the key reasons is that it takes a great deal of effort to form a co-op. A simplistic explanation might read as follows: “A group of parents, families, educators and community members will come together to form a co-op. The co-op will then elect a board, hire educators to staff the co-op and buy … space for operating.” But while this captures, in essence, how the process works, it omits a critical step — actually finding the group of parents or other community members willing to devote substantial efforts to build a new co-op.

To take this first step, co-op organizations face at least two key issues: free-rider and horizon problems.[4] The free-rider problem emerges from people’s desires to let others do the work, the result being that nobody ends up doing it. The horizon problem arises because creating a new co-op can take a few years, while the members of the co-op — the parents — require its services for only the short period of time during which they have young children.

Understanding the impact of the two problems provides insights on how to help co-ops to form more easily. The free-rider problem can be at least partially remedied by creating amongst a group of parents a strong sense of loyalty and a common mission to provide high quality and affordable daycare. There are also solutions to the horizon problem. First, find ways to streamline the start-up process, thus giving parents a longer-term benefit from the co-op. Second, form a childcare co-op in conjunction with a seniors’ care co-op or a housing co-op, which would give members the opportunity to make use of other services. Regardless of the technique, support from co-op developers is key to overcoming the free-rider and horizon problems in the early stages of co-operative development.

With its parent-ownership and community orientation, the co-operative model has merits and should play a prominent role in providing childcare services, but interested groups will require assistance to overcome the free-rider and horizon problems. Co-op developers such as provincial co-operative associations, Co-operatives First, and CoopZone can play a critical role in helping groups develop co-ops to meet community needs. Contact them to learn more about the possibilities of the co-operative business model and for assistance in getting your enterprise started.

[1] Data source: provincial co-operative associations and corporate registry.

[2] Kelly E. Pasolli, 2015, “Comparing Child Care Policy in the Canadian Provinces,” Canadian Political Science Review 9 (2): 63–78.

[3] Co-operative Innovation Project, (January 2016), “Telephone Survey,” part of Co-operative Innovation Project, Final Report. Saskatoon: Centre for the Study of Co-operatives, University of Saskatchewan.

[4] E. Ostrom, 2000, “Collective Action and the Evolution of Social Norms,” Journal of Economic Perspectives 14: 137–58. doi: 10.1257/jep.14.3.137. E.G. Furubotn and S. Pejovich, 1970, “Property Rights and the Behavior of the Firm in a Socialist State: The Example of Yugoslavia,” Zeitschrift für Nationalökonomie 30: 431–54. doi: 10.1007/BF01289247.


Yawen Luo

Yawen Luo is research co-ordinator at the Centre for the Study of Co-operatives.

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