26 Mar 2019, Katy Morton
Initial findings from the National Day Nurseries Association’s (NDNA) workforce survey, which received responses from more than 450 employers and staff, shows that 58 per cent of nurseries will have to pay out between 5 and 8 percent more in wages and pension contributions from next month.
A further 16 per cent will see their wage bill rise by 9- to 12 per cent, and another 6 per cent believe their figures to be even higher, which the NDNA says reflects the fact that employers want to pay more to keep highly qualified or experienced staff above the minimum wage.
However, it warns that the ‘hikes’ in staff costs amid stagnant Government funding will ‘push up’ the deficit that nurseries have to absorb.
NDNA says that if funding rates fail to keep pace with business costs, the number of ‘nursery casualties will continue to blight the early years landscape’.
As of next week, the National Living Wage and National Minimum Wage is rising by almost 5 per cent. At the same time, employer contributions for workplace pensions are increasing from 2 per cent to 3 percent of an employee’s salary.
The NDNA says the Government has not factored in these rises to the hourly rates it pays to providers for the funded childcare hours.
Across England, 47 local authorities are paid the minimum funding rate of £4.30 per hour, per child, while 110 councils are paid less than £5 per hour. In 135 local authority areas, the rate for 2019/20 remains unchanged, with 13 councils receiving less per hour.
NDNA’s chief executive Purnima Tanuku said, ‘We now see the full impact of one Government policy on another. While the increase to wages and pensions is good news for workers in the childcare sector, the lack of funding means it’s bad news for nurseries and parents.
‘For nurseries, their wage bills make up between 70 and 80 per cent of all their operational and business costs, so this rise will have a significant effect on providers’ overall costs.
‘While staffing budgets rise, the amount the Government pays per child is staying the same or decreasing, which pushes up the deficit that nurseries have to absorb. These kinds of hikes at a time when funding is stagnating can be the difference between a nursery staying open or folding.
‘This situation has to stop. The Government has been warned by providers, by sector bodies and by MPs in Parliament. Ministers need to appreciate that their childcare and early years policies need sufficient investment to allow providers to remain sustainable.’
She added, ‘Nurseries would reward their qualified and experienced staff with higher wages but are unable to do so due to the constraints of underpayment from its biggest customer, the Government.'