Investment in UK childcare should go towards better pay and conditions for workers. This could also help increase availability and affordability for parents.
P ressure on working parents has been building for a long time, with daycare costs increasing as places become more scarce. Two recent reports clearly illustrate the dysfunctional nature of England’s system of Early Childhood Education and Care (ECEC).
The reports from children’s charity Coram and thinktank Nesta highlight the declining availability and affordability of childcare places across England. This creates “poverty traps” for both parents and early years workers who are struggling to get by as the cost of living keeps climbing.
We are conducting ongoing research into what decent work looks like in different parts of the world, and what policy measures make labour markets more inclusive and sustainable. Since 2020 we have spoken with a number of policymakers, early years care providers and working parents. All agree that more sustained investment would support parents who want to work, while also helping create decent jobs within the ECEC industry.
High costs and patchy coverage have created a childcare crisis – and these problems are more acute in deprived areas. The average cost of a full-time place for preschool children across the UK is £14,836, according to Coram’s report. This is more than 80% of the 2022 full-time annual minimum wage of £18,500. Unsurprisingly, the UK often comes near the bottom of international league tables for childcare affordability. And within England, Manchester has some of the least affordable childcare compared to average earnings.
Despite significant financial and social pressures on unemployed and inactive workers to move back into the labour market, evidence gathered by the BBC suggests that parents are effectively being priced out of full-time work by this childcare affordability crisis.
The free 30 hours per week provision for 3- and 4-year-old children (and some 2-year-olds from low-income families) is welcome. But free hours are only available during term time (38 weeks per year) and parents in England (but not Scotland) must both be working at least 16 hours per week to qualify. Our focus groups with working mothers have highlighted that in order to keep a job and build a career, there is also a need for affordable wraparound and holiday care.
Investing in childcare
The perverse outcomes of this expensive model are made worse by the fact that many providers cannot pay their staff enough to live on. Our ongoing research suggests that ECEC workers are often mothers themselves (also in need of affordable childcare), and many earn at or just above the adult minimum wage of £9.50 per hour (due to rise to £10.42 in April 2023) regardless of their experience and skills.
While the overall early years workforce is ageing, new entrants to the sector may be paid at the “youth rates” of £9.18 (21- and 22-year-olds) or £6.83 (18- to 20-year-olds). This meant the average wage within the sector was £7.43 in 2020, well below the adult minimum wage at the time (£8.21).
Many ECEC providers have told us that they cannot compete for staff with other essential services such as schools and the NHS, where starting salaries, career progression and pensions are often better. Since COVID-19, providers also struggle to compete with supermarkets, many of whom pay at least the real living wage and offer part-time, flexible work that has fewer physical and emotional demands. Our research also indicates that some potential early years educators estimate that they would be financially better off staying on Universal Credit.
All of this leaves providers running at less than full capacity, which further reduces the number of places on offer to parents. This only makes it harder for early years providers to keep their heads above water.
But providers are unable to move towards paying staff the real living wage (currently £10.90 per hour outside of London) because the funding they receive from the government for 3- and 4-year-old Nursery Education Fund (NEF) places leaves many struggling to break even. This requires providers to cross-subsidise from other parts of the business or to charge additional ‘top-up’ fees for meals, nappies and activities.
While some local authorities have increased funding and added living wage clauses to contracts for home care, rates for NEF places across local authority areas typically do not cover the costs of higher wages.
Better support for the industry
Research shows that the subsidised model of childcare in Quebec, Canada, has steadily increased the labour market participation of mothers, while also strengthening the professional status of early years educators. Calls are growing for a similar scheme in the UK to expand subsidised childcare beyond the current 3- and 4-year-old offer, while at the same time improving working conditions within the industry.
Roles in ECEC can be highly rewarding and socially valuable but making the sector more attractive as an industry to work in is crucial if the UK is to better support working parents. For women in particular, this could help address the gender pay gap and the motherhood pay and career penalty.
While some additional support is expected to be announced in the Spring budget, the key role of childcare in tackling gender equality has also been set out in policy proposals by the Labour party.
Until ECEC is seen as an essential public good in the UK, and is properly funded and adapted to parent’s needs, the unequal burden of high costs and low wages is likely to continue. A revaluation of jobs within ECEC would benefit both the hard-pressed parents and the low-paid workers who have a mutual interest in high-quality and sustainable childcare provision.
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