The Maltese labour market is characterised by low female employment rates (51.1 %) and high male employment rates (75.5 %) (Eurostat, 2015). Malta also has one of the lowest fertility rates in Europe at 1.43 which is below the EU-28 average of 1.58 (Eurostat, 2015). Overall there is an average gender employment gap of 24.4 percentage points (NS0, 2015) between Maltese men and women.

A substantial difference of approximately 18 percentage points can be noted between females with and without children (Mills et al., 2014). This incompatibility can be due to various ideological and structural factors that render family and paid work particularly difficult for mothers.

A number of obstacles may hinder women from participating in the labour market. These include social and cultural norms, flexibility in the labour market and family support structures.

Cultural norms in Malta are still highly gendered and the Maltese are more likely than their European counterparts to believe that women should stay at home to look after children rather than join the labour market, especially when the children are still young (Special Eurobarometer, 2010).

Considering these structural and ideological factors the issue of free childcare addresses one of the most fundamental barriers that hamper mothers from remaining or re-entering the labour market after giving birth.

The free childcare scheme primarily seeks to address the issue of low female employment rates in Malta in a culture where the motherhood mandate is strong and where medium-to-low earning families find it difficult to afford childcare. This typically led many families with young children to opt for the single male earner model and the female-carer model when the children are under-three. Hence the scheme addresses the high number of inactive Maltese women and eases their transition into the labour market in this stage of active parenting.
By removing one of the most important structural hurdles this measure seeks to make work pay especially for mothers with lower levels of education and skills and a lower earning bracket. By providing free childcare for working parents, it ensures the affordability of childcare to all. The measure also strives to provide a better work-life balance for families with young children and seeks to close the gender gaps in employment which were especially high in Malta before the introduction of this scheme.

The free childcare scheme for working parents seeks to:

• Increase the ttrction and retention of low-to-medium skilled females in the Maltese labour market after child-birth
• Incentivise both parents to work whilst their children are under three.
• Increase social cohesion between working parents by making childcare services free for all regardless of the income of the parents.
• Ease the transition of mothers with young children from inactivity to active labour market participation.
• Incentivise mothers with young children to choose paid work in the formal economy rather than in the informal economy.
• Incentivise mothers and especially single mothers to choose paid work over unemployment benefits.
• Close the gender gaps in employment between Maltese women and men thus promoting gender equality.
• Close the economic gender gap and ensure that more women can achieve economic independence.
• Increase the social cohesion of children who may otherwise not be able to attend childcare centres and benefit from quality care.

• Government enters into a Public Private Partnership (PPP) agreement with the childcare providers
• Childcare centres are given a fixed rate of EUR 3.00 (for year 2015) per hour for every enrolled child.
• This rate covers staff-related costs and other consumables including stationery but excludes individual child-related costs such as nappies, food, wipes and travel costs.
• The due costs to the centres are settled by government via a direct debit after the end of the month.
• In order to avoid cash problems, a one-time initial cash injection is made to each centre.
• Government funding comes through the Ministry for Finance and was set at EUR 3.8 million in 2014 (which was exceeded) and EUR 8 million in 2015.
• The scheme is open to children from the age of three months to three years whose parents (single or both parents/guardians in the case of dual earner families) are working and paying social security contributions.
• The scheme is also open to parents in education but only if this leads to a recognised diploma or degree.
• Families are entitled to a number of hours equivalent to the hours worked by the parent with the lower work load, plus one hour extra for commuting.

• With the introduction of the free childcare scheme, the issue of cost and affordable childcare to medium and low earning families was resolved.
• An additional 200 mothers are estimated to have entered the workforce in low-to-medium skill jobs (of these, two-thirds work part-time) during the first eight months from the introduction of the scheme.
• Mothers who benefitted from the free childcare scheme entered the workforce 130 days before mothers who did not make use of it.
• This has led to a 10.7 % aggregate increase in working hours.
• An estimated EUR 1.9 million contribution to the economy was noted from direct and indirect tax contributions made by mothers who joined or re-entered the labour market
• A significant increase in the number of children enrolled in childcare centres was noted. As a result of this scheme between April and December 2014 the number of children attending childcare increased from 1800 to 2917 thus pushing the percentage of children under the age of three attending childcare centres to 21%, which is closer to the EU average of 27 %.
• During the first nine months of the scheme, 50 new child carers were employed in this sector (MEDE, 2015).
• Prior to the launching of the scheme most of the childcare centres had unutilised capacity and some were even considering closing down due to their dire financial situation which was unsustainable.
• Since the scheme was launched, demand has increased and this has helped centres to thrive and flourish.