Corporatisation and financialisation of Early Years in the UK

Corporatisation and financialisation of Early Years in the UK

Earlier in 2024, Sara Harris, Amy Horton and Eva Lloyd published their paper Corporatisation and financialisation of social reproduction: Care homes and childcare in the United Kingdom. This paper looks at how financialisation and corporatisation of care homes and Early Years services in the UK has had a negative impact on both capacity and wages in both of these sectors. For the purposes of this Policy in Focus, our interest is drawn to the experiences of the Early Years sector as outlined in the paper.

Financialisation and Corporatisation of Care

The authors outline their definitions and occurrences of financialisation and corporatisation. They note how investors have restructured Early Years companies to maximise financial returns. It is noted that large parts of the Early Years sector in the United Kingdom have undergone financialisation – a series of changes linked to their acquisition by investment funds, especially private equity firms. Under the ownership of investment funds, Early Years services finances have seen both quantitative and qualitative changes. Such funds make heavy use of debt to acquire, expand and finance companies in their portfolios.

Financialisation is closely related to corporatisation, defined as occurring when a public service that had been organised and delivered by the state and/or voluntary sector, is replaced by privatised provision involving large companies. Corporatisation thus introduces for-profit logic, which strengthen incentives to cut expenditure on staff in labour-intensive services like care, going beyond the broader processes of privatisation or marketisation. The presence of large corporations concentrates and centralises ownership and control, shifting power from frontline staff and towards distant senior managers.

Impact on Wages

The report finds that Besides the availability of state subsidies and the gains from financial strategies set out above, investment in care, and as such Early Years, has been attractive because of the returns to be made from reducing staff expenditure; by cutting staffing levels and depressing the pay and benefits of a workforce with relatively little bargaining power. Care work is performed disproportionately by working class and/or racialised and migrant women.

The United Kingdom Early Years workforce, just like the care homes workforce, is proportionally one of the lowest paid among the female workforce, as nursery carers earn less than the average wage across all UK employment sectors. Working with children in private sector group-based settings, Early Years practitioners may be graduates or have a range of childcare qualifications, while some have none or are school leavers. Their pay is less than half that of the qualified graduate teachers staffing state primary nursery classes and nursery schools.

Effect on Capacity

This has also had an effect on capacity in the sector, leading to demand outstripping supply of places. The authors note that one of the most alarming features of the financialised corporatisation of Early Years over the last few years has been the failure to substantially increase the total number of Early Years places. In terms of numbers of settings as well as places, the two market leaders have always outstripped the other top 25. The corporation listed in third place in 2022, Kids Planet, ran 97 settings, 194 fewer than number 2, although it had almost doubled in size since March 2021, purely through mergers and acquisitions. These developments constitute strong evidence for the risks of closure and the creation of ‘childcare deserts’, that is areas not adequately served by Early Years services, that accompany financialisation within the corporate childcare market.

Conclusion

This paper provides an interesting viewpoint of financialisation of care, and the impact that this has on capacity and wages within the Early Years sector in the United Kingdom. This in turn has a negative impact on children and families attempting to access Early Years services. The full paper can be found online.

If you have any questions or would like to know more about Early Childhood Ireland’s policy work, please do not hesitate to contact us at [email protected]

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