The recent budget introduced a fiscal incentive aimed at supporting parents, particularly those with two or more children. At its core, this measure seeks to ease the financial burden on families while encouraging greater participation in the labour market. Traditionally, such incentives operate through tax reductions or increases in net income, resulting in higher take-home pay for eligible households.

While an increase in disposable income is undoubtedly beneficial, there is a strong case to be made that this incentive could be used more strategically. Rather than being absorbed into general household spending or childcare costs, it could be leveraged to address one of the most pressing challenges facing modern families: the balance between work and family life.

In practical terms, parents are currently faced with a straightforward choice, benefit from a higher salary or use the financial advantage in ways that indirectly support family life. However, an alternative approach deserves serious consideration. Instead of translating the incentive solely into higher earnings, parents could be given the option to reduce their working hours while maintaining their existing level of income. Such a model would transform the incentive from a purely financial measure into a tool for improving quality of life.

For this to be viable, government intervention is essential. Clear rules, supportive frameworks, and formalised procedures would need to be established to enable employees to reduce their working hours without facing career penalties or income loss. This could include structured reduced-hours schemes, updated labour agreements, and incentives for employers to adopt more flexible working arrangements. Without such institutional backing, the measure risks remaining confined to a simple increase in take-home pay.

A crucial dimension of this proposal is that any reduction in working hours should be shared equally between both parents. This is essential not only for fairness, but also for addressing deeply embedded gender norms that continue to place the bulk of caregiving responsibilities on women. By ensuring that both parents participate, the policy would promote a more balanced division of labour within the household and help mitigate long-term career penalties, particularly for mothers.

To illustrate, consider a dual-income household in which each parent earns €30,000 annually. Under this scheme, the couple could retain their original combined income while collectively reducing their working time by approximately five hours per week. This reduction could be shared equally, amounting to roughly two and a half hours per parent. While modest on paper, such a shift could have a meaningful cumulative impact on family life.

The benefits of reduced working hours are both immediate and far-reaching. Parents would gain more time to spend with their children, time that is critical for emotional development, stability, and overall wellbeing. They would be better positioned to engage in daily routines, such as school pick-ups and extracurricular activities, and to participate more actively in their children’s lives. At the same time, reduced working hours can alleviate stress, improve mental health, and lessen reliance on external childcare, which is often costly and not always accessible.

International evidence suggests that shorter working weeks can be both practical and beneficial. In Iceland, large-scale trials conducted between 2015 and 2019 reduced working hours to 35–36 per week without cutting pay. The results showed that productivity was maintained, or even improved, while worker wellbeing increased significantly. In France, the 35-hour workweek has long been institutionalised, contributing to a more balanced relationship between professional and private life. Meanwhile, in Netherlands, part-time work is widespread, particularly among women, within a system that offers strong institutional support and relatively high levels of life satisfaction.

However, for such a policy to be both effective and equitable, a key condition must apply: reduced working hours should only be granted where both parents participate. This requirement would prevent the reinforcement of traditional gender roles and ensure that the benefits, and responsibilities, are shared.

Ultimately, the parental tax incentive presents an opportunity to rethink how public policy supports families. Rather than focusing solely on income, it could be reimagined as a mechanism for redistributing time, arguably one of the most valuable and scarce resources in modern life. With the right policy design and institutional support, this approach could foster stronger families, greater gender equality, and a healthier balance between work and life.

Author: Vania Agius Tabone