The knock-on effect has been a rise in fees for parents, lower profits for nursery owners and a squeeze on staffing.
The report, published last week by IDS, the information and research service on employment issues, found that starting pay for nursery assistants and nursery nurses has risen by around 11 per cent in the past two years.
The UK-wide survey carried out in March 2004 covered 100 nurseries ranging in size from a small provider with four employees to a large chain of 1,600. Around 90 per cent were private sector day nurseries and the remainder were not-for-profit community nurseries.
Providers were asked about the impact of the October 2003 increase in the national minimum wage on staff pay and recruitment and retention.
The national minimum wage is currently 4.50 an hour for people aged 22 and over and is set to rise in October to 4.85.
The survey found that the average starting salary for nursery assistants is 4.50 an hour, and their average top pay rate 4.80 an hour, suggesting that pay is 'strongly influenced' by the minimum wage.
The average starting wage for a nursery nurse is 4.92 an hour with an average top rate of 5.30.
Staff aged under 22 make up 10 to 40 per cent of the workforce in most of the nurseries surveyed. One-third of the nurseries had employees aged under 18.
More than half the nurseries said that the national minimum wage had had a significant impact on their business and three-quarters said the increase in October would affect them.
The National Day Nurseries Association said pay for nursery staff is still 'unacceptably low'.
NDNA chief executive Rosemary Murphy said, 'While parents continue to pay the lion's share of childcare costs, nursery fees are capped by parents'
ability to pay. This in turn forces the sector to pay low wages and nursery workers in effect to subsidise the true cost to parents.'
She added, 'We recognise the need to upskill the workforce and retain the best, but we cannot do this without rewarding staff appropriate wages.'
The full report is available to subscribers of IDS Pay Report at www.incomesdata.co.uk
* The results of the Nursery World pay survey will be published in our 30 September issue.
