A group representing the early years sector says up to 260 creches and preschools could be forced to close permanently by the autumn.
The Federation of Early Childcare Providers is warning that some providers will walk away from the sector, which will leave parents without childcare and will result in employers facing staffing difficulties.
The Federation says the current funding proposals from the Government are not addressing their concerns.
A recent survey carried out by the group found that a quarter of providers have already had a rent increase on their premise this year, with almost 80% of providers saying their overheads had risen dramatically in the first half of the year.
Speaking to RedFM News, Kelda Browne from Toddle Inn Montessori in Glanmire says staff deserve pay rises, but many providers are struggling to raise that money:
"Our staff are well educated, mostly degree lead staff who work very, very hard but unfortunately, because of the way the core funding is rolled out, my service is actually going to be down in funding. They're also increasing the wages which the staff fully deserve, but because my funding is down, I don't know what if I'd be able to match that or give my my staff the increases that they deserve. So therefore, the funding model that's been introduced will work for some bigger services, but it won't work for services like mine who provide three hours ECCE care to children."
