'Worst is yet to come for nurseries,' accountants warn
The worst of the recession is yet to come for private nurseries, according to a leading accountancy firm.
Speaking to last week's meeting of the Day Nursery Policy Group, PricewaterhouseCoopers directors Andrew McKechnie and Brendan O'Driscoll said, 'Nurseries are still not at the bottom of the recession.'
In previous recessions, they said, it generally took six to eight quarters to reach the bottom, and another six to eight quarters to return to pre-recession levels. Also, they observed, while unemployment has always lagged any upturn in GDP, the peak in insolvencies has as well.
As a result, said Mr McKechnie, 'there will be considerable pain in the medium term and there won't be a pick-up (from peak levels) for another three to five years.'
In their analysis of the sector, they noted that 'nurseries held up well in the first years but are now being hit, particularly small ones as there is no cushion for providers with fewer than three nurseries'.
Mr McKechnie added, 'The cost balance is becoming more important for parents. Parents are using the free entitlement to place their child in quality settings but are then looking for cheaper, or informal alternatives, outside of those sessions.'
Delegates at the meeting agreed with the Pricewaterhouse conclusion that 'fee increases are hard to achieve', but some disgreed with its findings that staffing remains difficult and with a shift towards parents wanting part-time care.
Some providers reported low staff turnovers and said staff are now 'taking less attractive jobs with greater security'. One nursery owner said lower interest rates and lower mortgage repayments have boosted families' income, maintaining their ability to pay, while, employers were less happy to negotiate part-time work for returning mothers, 'so mothers are going back full-time before they want to'.
Nevertheless, some delegates agreed that 'the bottom of the trough is yet to come'.
As for nursery sales, Mr McKechnie said these were due either to lack of demand for childcare, or to debt levels that had become quickly unsustainable in the downturn.
