Nursery staff - feel the pinch

Car sharing, avoiding luxury purchases and making appointments with bank managers are all actions that childcare practitioners are taking to stave off financial hardship during the current economic downturn.

'We know that the credit crunch is already having an effect on our staff. Despite being on low wages many have mortgages with their partners and it is getting difficult for them,' says Linda Findon, chair of Cygnets Education and Childcare Trust in Stratford-upon-Avon. 'In response, we had quite a debate at our last trustees' meeting about the potential effect of the credit crunch, what we will need to pay our staff and what parents can afford to pay.'

Rising domestic bills are also taking their toll. 'I used to go out a lot, but I have cut back on that and also on buying luxuries. I'm also conscious of the utility bills so I make sure that I switch lights off and that the hot water is turned off once we've used it,' says Mina Smith, deputy manager of Carlton Hill Community Nursery in London.

Manager Marion Breslin has started riding her bicycle to work instead of paying for four buses each day. She says the cost of travel is a big issue for many colleagues working for Westminster Children's Society. Some have been looking for job transfers nearer to home to reduce the expense.

Staff at Dizzy Ducks Day Nurseries in Billericay, Essex, are sharing lifts to work to cut down on escalating petrol costs. One staff member has put off plans to buy a property with her boyfriend because they are unsure whether they would be able to get a mortgage as banks tighten up on giving credit. They are also wary of joining the housing market as property prices decline.

But not everyone is busy tightening their belts - apparently, some are continuing to spend, spend, spend. 'I think many of my staff do not realise the credit crunch is happening,' says Julie Addyman, owner of Nippers Nursery in Knaresborough. 'They are not interested in politics and finance, and we are only starting to see the ripples of it around Harrogate because there is low unemployment.'

She says she often advises staff to cut up their credit cards. 'Our girls have never got any money. They're taking out top-up loans and new credit cards. Some of my staff still manage to get ridiculous loans. They say it's for a car and then use the money to go on holiday or pay off credit cards. They don't have the priority to save for anything. We have a work pension scheme, but none of them want to join it. There is no planning for the future.'

Pay rises

Staff at Eden Garden Nursery in County Durham have recently asked for a pay rise to counteract rising living costs. Deputy manager Alison Scott warns, 'A lot of the staff feel that instead of doing childcare they might as well work at Asda for a better wage and with no hassle and responsibilities. If the wages do not get better a lot, of staff will have to leave. There will also be less qualified staff coming through, because it will not be worth doing the training for the low wage.'

This concern is shared by Purnima Tanuku, chief executive of the National Day Nurseries Association. She says, 'Rising living expenses and interest rates mean that more than ever, nursery staff are feeling the pinch of lower wages. NDNA is concerned that many will be forced to look for better paid careers in other sectors.'

Many nursery owners have taken the rising cost of living into consideration when calculating pay rises and have given larger increases than usual. 'I was aware of how everyone was feeling, so staff received a hefty annual increment in April and we also introduced a bonus scheme,' says Julie Addyman. 'We wanted to tackle the salaries before they became an issue - whether it'll be enough for them but too much for the business, we remain to see.'

Marcella Cunningham, owner of Clifton Tots Day Nursery in Bristol, is keen to retain good staff, so she has reduced spending on toys and equipment to focus on wages. At Cygnets in Stratford, the pay rise has been balanced by a 4 per cent rise in nursery fees (see box). Linda Findon says, 'We did this despite the Chancellor saying we should keep costs down. It is a low-paid sector and we felt our staff would feel the credit crunch more than people who are better off. Eighty per cent of our costs are staff wages, so we had to raise the fees to cover the pay rise.'

This is a tricky juggling act when families are also struggling to cope financially. 'NDNA believes that more than ever, direct investment needs to be made into salaries across the board in the early years sector so that nurseries can retain and pay their staff a living wage, without making childcare out of the reach of the parents it is benefiting the most,' says Purnima Tanuku.

In the red

Linda Findon is aware of staff members who are already in financial trouble and others who are concerned and making appointments to consult their bank managers. In response, the setting's trustees have allocated money to a contingency fund in order to help some staff with small interest-free loans if necessary. Money has also been allocated to cover parents defaulting on fee payments.

'We also considered giving a lower percentage increase for the pay rise and holding some money back to subsidise rising travel costs, but we felt our staff would prefer the money directly in their pockets rather than lots of little schemes to help out,' explains Ms Findon.

'If staff have problems in their private life because they have been hit by the credit crunch, then it will have an effect on staff morale. It is possible that staff may get down and depressed, and that's why it is important to have a caring environment and human resources department that can support people during this time. We want to help staff stay on track as professionals and ensure that financial problems do not affect their work with the children.'

BUSINESS FORECAST

Nursery owners give a mixed forecast as inflation and the credit crunch takes grip.

'As a business we haven't been too affected by it,' says Sian Nisbett, owner of Dizzy Ducks in Essex. 'I am concerned that if the credit crunch leads to a recession, this will hit our target market first - high earners in City-based jobs. If they can't find work, they would take their children out of nursery and if we have no children here, staff will start to lose their jobs too.

'The credit crunch is hitting nursery prices in the market,' she adds. 'I am looking to buy another setting and a particular one that was valued at £1.1m 18 months ago is now on the market for £850k. I think banks are hugely scared of giving credit to nurseries.'

But she notes that occupancy is currently unaffected, despite increasing fees by 10 per cent. In fact, the nursery has more babies registered than usual.

The outlook is gloomier further north for Jackie Bell, manager of Sparklers Private Nursery in Gretna. She thinks the Government should help. 'The childcare industry could be in crisis. Heating costs, food, everything is going up in price. We will have to put the fees up, but we do not want to outprice ourselves. A few parents have already removed their children because they can't afford the childcare costs, one because she has lost her job.'

More parents are in arrears than ever before at Nippers Nursery, Knaresborough, and one family has 'disappeared without paying'. Owner Julie Addyman says they have been unable to raise fees in line with growing outgoings. 'We're OK at the moment but wouldn't want it to get much worse. There are definitely fewer families using childcare in the area, and also fewer families. We are going to have to change tack and reduce numbers and reduce staff over the coming months by not replacing the ones who leave.'

Share: