Why are nursery workers so poorly paid, seeing as fees are so extortionate ?

[gluo]

Where does it all go, seriously ?

I've just looked at the companies house accounts for our local large chain (Little Ripleys Day Nurseries Limited) and directors remuneration is £114,000 divided by 4 directors so under £30k each.

Plus another £1m in dividends so maybe £50k total income?

So if I am reading the accounts correctly (and I may not be), it's not a massive salary for the owners. Plus this chain has been built up over many years and has a good reputation locally both for children and staff.

So my point is, fees may be high but certainly in this example, reward is not excessive.

find-and-update.company-information.service.gov.uk/company/05065153/filing-history

£1m in dividends between 4 directors is huge. And if that's the case, then I withdraw my earlier comment and say that fees should be lower and/or staff should be paid much much more.

Yes, I've got my maths totally wrong haven't I 🙈. Haha! Embarrassed.

Ok, so it's a very good income but for the amount of risk involved in that they've opened quite a few new locations over the past few years I suppose it's not ridiculous.

I bet they work pretty hard (and their staff seem to stay long term so they must do something right!)

Yes, but only for the large chains who benefit from economies of scale.

Smaller, privately owned & operated, nurseries won't be big enough to have to file detailed accounts so you won't know how little profit they make.

Like anything else, the bigger firms/chains are the ones who can make the money.

This is outrageous. Gross 🤢

@GerbilsForever24

All childcare should be tax free in my opinion.

It would certainly be a quick and simple change in the law to give basic rate tax relief on childcare costs through the PAYE tax code. That would help the ones most at need, i.e. basic rate taxpayers, and would give a measure of relief to higher rate taxpayers too (i.e. 20% relief against their 40% tax). That's how interest relief is restricted to basic rate for people who rent out residential homes, so there's already the precedent in place as to how it can be made to work through existing systems already in place.

£80K for running a complicated business with lots of responsibilities is pretty reasonable and comparable with lots of other managerial positions in the public and private sector. Doesn't look unreasonable at all really.

@Kazzyhoward There is one complication re how to allocate this relief between parents/ children. For self employed people they could add childcare to their tax return and get the relief that way but I think PAYE could get complicated in the case of two parents. The childcare voucher scheme was an attempt to manage this but it was done so poorly and the relief was so slight it really didn't make enough of a difference.

So there would be an administrative burden in making it happen but I don't think that should stop the government from doing it. Tax relief on childcare would be paid back through increased people in the work force (both parents and childcare providers). I heard someone from the WEP on the radio the other day saying it would be paid back within 5 years.

Agree. £80k doesn't seem unreasonable. What's more relevant is whether the nursery workers at this organization or others are being paid fairly. And often they're not.

According to their website they have 15 sites too, and the books show 260 staff.

That's a pretty big chain.

I live in a country where childcare is heavily subsidized and/or free. There are never enough childcare places so the government will pay parents to open their own nurseries.
DH and I joined one of these parent-ran settings and our two children go there.
We get 250k euros from the government to provide childcare for 16 children.
We have 4 nursery workers, a cook, and a cleaner.
We do all of the business side ourselves, e.g. organizing and paying wages, health insurance, general insurance, admin, rent, bills, etc.
We cook ourselves when the cook is sick. We do repairs ourselves when possible.
We donate old toys, clothes, whatever that might be useful rather than buying it with the funds if possible
We don't make a profit
We don't have much money left at the end of the year
Any rest over money goes into an emergency fund to replace things that break, major work that needs doing, replacing big things like the climbing frame in the garden
We all pay in 110 per child per month of our own money to pay for nappies, materials, extras
The money doesn't go far

sorry that should be specific: 250k per year

£80k doesn't strike me as unreasonable for an owner tbh. Many make lots less, some will make more.

But right now most childcare is private and we have a shortage of it. We need more people setting up nurseries and it's difficult, time consuming and expensive to do.

The dividends are where you need to look. Also paying a family member eg spouse as a director even though they are in name only. Taxed less . The dividends are where they’ll be taking their main income.

Think more like £200 k plus each per annum

It's not cheap to run and staff costs are more than you think. Overheads are big.

For example nursery my kid goes to is £57 per day. Even say it's £9.50 an hour then it's 13% ni and maybe say 3% pension. That makes it about £11 per hour for say 10 hrs per day is £110. That's for the lowest level of staff. In baby room ratio is 3 babies to 1 person so if they are looking after 3 babies each that would bring in £171, which will not be the case every day. Obvs they maybe make more in rooms with lower ratios but again the government funding given to them is tiny. Then there's room supervisors, assistant mgr and manager salaries on top. Also cleaner and cook. As well as cost of breakfast, lunch and snacks. Add on nappies, wipes etc. resources and materials for the kids. Then the big overheads, rent, rates, service charge, utilities, insurance, maintenance and repairs.

By my reckoning at today's rates that's about £1200 a month including your contributions, per child. Obviously difference is the govt funds most of it, but it's kind of in line with UK typical fees

They have 15 sites though - and I think it said their new ones were 80 and 120 spaces. If that's their norm that's a lot of spaces- in the region of 1500 per day.

Even if you assume 1000 per day, 5 days a week, 50 weeks a year you're at 250,000 days of childcare. Which makes their dividend about £4 per child per day

It adds up to a nice income because they've built a big business but if they suddenly ran it as a non profit it wouldn't make fees substantially cheaper. It's the scale that's working for them

Because councils and private nurseries are businesses run for profit, and businesses run for profit will pay their staff as little as they can get away with.

You'll have to pay them well if you want high quality staff but if something's a necessity for customers you don't need to bother with high quality staff because customers have no choice but to carry on giving you business.

Furthermore you would have to account for not getting staff and your business therefore going under but when you have a job you can pretty much walk into, like care also, with no training or even intelligence you know you will always get staff so again no need to entice them.

So in short, because there's simply no incentive to pay staff higher and lose out on profits. So why would they?

varies from £50-£130 a day near me in Kent

If you have a thought in your head that you would assume the government would step in and say 'wait a second, these services are so important and involve society's most precious and vulnerable people that we should enforce high wages to ensure those poeple are safe and well cared for!'

That's because governments are also run for profit and don't give a jot about you or your children or elderly relatives.

When you think about the ratios- 1 per 3 on very young children- it's easy to see why it doesn't go far - even at 1 to 5 - when you factor in salaries, food, rent, business rates etc - it still isn't vast amounts- although it does feel like it when you are paying it!!

Ive always wondered the same about nursing homes op. I've worked in a few private ones and have yet to see the owners struggling for money. In fact them seem to make a very healthy income from it and yet staff are paid peanuts and residents get basic care.

Well legally you have to have a level 3 in each room with half of the other workers at level 2. So not just a job you can 'walk into' . A nursery will need to have that in place to be registered.
Also many nurseries will be spending a lot on agency staff at the moment as they cannot recruit qualified staff. That will also drive up costs massively. One nursery I went to were using about 6 agency workers daily because they couldn't staff it. Also, many of the nurseries I do work at have been on the agency books for over a year. Just goes to show how hard it is to recruit.