Do we really want childcare to be the latest investment fund wheeze?

Why is talk about early childhood education more focused on mergers and takeovers than it is on child wellbeing?

Although this is a recent phenomenon in Ireland, the financialisation of early education has taken hold in the USA, Canada, the UK, and Australia. File picture

A worring trend has emerged in recent years in relation to childcare settings — that is, the focus has shifted to business viability, mergers and takeovers, and private equity backing, and away from child wellbeing and pedagogy.

These are businesses, there is no disputing that, and of course, they need to be viable. But while all the focus is on this, who is thinking about the care and emerging best practice for the children who spend substantial time in these settings?

When I studied early childhood education and care many decades ago, the focus was on child development, pedagogical practice, and building strong relationships with families. In 21st century Ireland, perhaps the subjects of corporate mergers and acquisitions, shareholder dividends and director remuneration should be included in the curriculum, so graduates better understand the emerging economic context of early childhood education and care (ECEC) — both globally and locally.

In the past month, Irish media reported that a large Irish chain of creches was acquired by an international private equity firm. That an industry purported to be financially unsustainable is being courted by investment funds seems counterintuitive.

Private equity firms’ interest in ECEC mirrors their interest in other “care” industries: providing capital to facilitate growth and expansion, increasing profitability by reducing costs and driving up income, and preparing for a future sale to the next hedge fund.

Although this is a recent phenomenon in Ireland, the financialisation of early education has taken hold in
the USA, Canada, the UK, and, with devastating results, in Australia. If left unchecked, Ireland’s private equity playground will only become more crowded.

Increasing state investment in ECEC in Ireland reflects the research evidence: High-quality early years experiences offer short- and long-term benefits for children, for families, for communities, as well as the wider economy.

The field has been studied for decades, with the consensus that, while high-quality is costly, there are well-documented returns to a state and society on this investment.

Private equity firms are attracted by this investment; however, their motives may not always align.

More recent research, from countries already grappling with the private equity reach, reveals the impact of corporatisation on ECEC, particularly on the area of quality and availability of provision. Corporate ECEC focuses on mergers/acquisitions of existing settings, rather than creating new services. Investor-backed ECEC is more likely to buy-out services in communities that serve middle to higher income families, where fee increases may be tolerated; however, in less affluent communities, a new phenomenon has emerged: Childcare deserts.

Other international research reveals the impact of financialisation of ECEC on the workforce: Corporate childcare tends to have lower-paid, lower-qualified staff with higher staff turnover.

We know that optimum child development occurs within trusting, durable relationships between a child and their caregiver; parents, too, depend on a consistent and knowledgeable partner in their child’s daily care. Staff turnover negatively impacts the quality of care that is at the core of this deeply relationship-oriented profession.

Current care in Ireland

We are seeing this challenge play out in real time in the corporatised ECEC space here in Ireland. Regulated staff-to-child ratios in registered early years services provide for the minimum standards of care. The reported closure of “rooms” across several settings indicates an inability to meet these ratios due to staff availability on a given day. The annual Early Years Survey by Pobal and the similar survey of Early Childhood Educators by SIPTU remind us that recruitment and retention are ongoing challenges in ECEC; however, room closures have tended to be a rarity until now.

In recent research from the DCU Institute of Education, the structure, governance and sustainability of two non-profit providers in Ireland were examined. Both companies, which operate a number of settings, have focused on the retention element of the workforce challenge. 

Strategies include improving terms and conditions, enhancing career pathways and professional development, and providing pay increments as resources allow. These groups benefit from the same ‘economies of scale’ as corporate childcare, except that any excess is reinvested in the organisation. This is how the return on investment is meant to work: not by padding out profits to attract the next hedge fund, but by benefitting our children and their families.

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Ireland’s current ECEC strategy, Shaping the Future, refers to market failure in our ECEC model at several points. The strategy argues for the State to take a greater role than solely as a funder, towards the establishment of a public model of provision, alongside the current community/non-profit, independent private and corporate for-profit sub-sets. While a first attempt to tender for a non-profit provider of a state-led ECEC setting is currently open, what this public model will look like has not been clearly articulated.

There are many elements of our ECEC system to be proud of: our evidence-based curriculum and quality frameworks, Aistear and Siolta, the critical regulatory framework and inspections systems undertaken by Tusla, the reassuring education-focused inspections, and central to quality ECEC is our well-qualified workforce, who complete professional studies that meet national standards.

Yet, the wicked problems of staffing recruitment and retention, and the supply of adequate spaces to meet
demand, remain. A well-thought-out public model provides the opportunity to address these challenges, once and for all.

We are at a crossroads in terms of the next stage of our early childhood system’s evolution. Calls for a public model run counter to a system that facilitates corporate flourishing. State investment must be accountable and transparent; it must return the investment back to society.

• Sheila Garrity is associate professor in early childhood education at DCU Institute of Education.