Opinion: The childcare crunch
Tuesday, August 26, 2008
The impact of the economic climate on childcare is considered by Alan Bentley.
Many people are asking me about the recession and how I think it will affect the childcare sector. Having lived through three such recessions over the last 20 years, I can only say that predictions from even the finest economists, let alone businessmen, are little more reliable than promises made by snake-oil sellers at a village fair. But this is how I see matters.
Basic reasoning suggests that while the job market remains relatively unaffected, any attack on family income is likely to force more parents back into the workforce. Those currently working part-time may be forced to look to full-time care in the future and those remaining at home with their children until primary school may be forced to take employment. All this will be of benefit to the sector - assuming operators have capacity to meet the demand.
As for fee increases, I believe current market conditions will squeeze margins considerably. Inflation, now running in excess of 5 per cent, will bring a strong demand for salary increases to rise accordingly. For those at the lowest end of the pay scale, such inflation becomes highly worrying. Also, during economic turmoil, parents can hardly afford to meet commensurate fee increases for childcare - usually the most expensive outlay they have, apart from their mortgage.
This points to a fragile neutrality of trading position, assuming unemployment does not rise materially. If it does, then fewer parents will have the opportunity to return to work and will have no option but to care for their children while they are job-hunting.
Finally, the attitude of the high street banks must be considered. I have never before seen the banks behave so deplorably. The previous somewhat laissez-faire attitude is likely to be replaced by a banking system which has swung to the other end of the spectrum. Friends have reported draconian terms being imposed upon the future running of their accounts, often with fees being added, and little or no warning of the change. We have personally experienced such problems with our own bankers recently.
Amid the effects of an international economic problem largely caused by imprudent bankers, some might feel that the wrong party is being penalised.
- Alan Bentley is chairman of the Childcare Corporation.
