EMCC European Monitoring Centre on Change

The childcare services sector - visions of the future

The absence of a common vision and policy for childcare services makes it difficult to assess the sector’s future in Europe, since every Member State has its own childcare agenda. This article, the second in the Sector Future series on childcare services, highlights the broad areas for debate that are likely to be high on the childcare agenda in the future throughout the EU. In addition, it outlines two future scenarios: one in which the EU embraces a vision for childcare and early years services, and another which lacks this vision.

A common vision for childcare services is currently lacking in Europe, largely because childcare markets in the EU25 are at different stages of their development. Thus, one country’s aspirations for childcare services may already be another country’s reality. Sweden and Denmark are considered to be the childcare leaders in Europe offering universal, or close to universal, high-quality and publicly-funded childcare to its citizens. This is reflected in the fact that there is virtually no child poverty in these countries. In contrast, the United Kingdom (UK) and Italy spend far less on early years childcare and have relatively high rates of child poverty. However, some Member States, including the UK, have sought to learn from the Nordic childcare model and have begun to move towards a model of universal childcare. Some of those aspiring to universal childcare while focusing on a more educational approach for the early-years services have a vision that is already a reality in Sweden and Denmark.

Decisions about childcare

For the first time, the consumer is boss, which is fascinatingly frightening, scary and terrifying, because everything we used to do, everything we used to know, will no longer work.(Roberts, Saatchi and Saatchi 2005)

In the past, decisions about childcare seemed relatively straightforward for parents as childcare provided a service that looked after the child when the parent returned to work. Choosing a certain type of childcare involved making a decision to either pay for a formal childcare provider or to use the help of relatives or other informal arrangements. From a parent’s perspective, this position is changing, however, due to an emerging ‘customer’ trend - i.e. the demand for information. Whereas before, a parent purchasing childcare services might only have considered the cost and convenience of care, today’s consumer of childcare services may want to know a range of additional information about the provider and the service they offer, for example:

  • Does this type of care meet the parent’s needs and their child’s needs?
  • Is this service of high quality?
  • Does the parent completely trust the provider?
  • How will this type of care benefit their child’s development?
  • What additional services (added value) is the provider offering?
  • What influence does the parent have on the way the provider cares for their child?

More than ever before, customers have a growing appetite for gathering information before making a decision to use a service or to purchase goods. Information is now more widely available, the internet being one of the main sources. In its survey on parents in 2004, the Daycare Trust (a UK-based childcare charity) reported that parents would like more information about the type of childcare available to them. A major issue for parents was trusting the service, particularly parents using childcare for the first time or communities where formal childcare is not a culturally accepted practice. In the future, consumers of childcare (parents) are likely to become better informed about childcare and about its impact on all aspects of child development. The informed consumer is taking control of the way he/she learns and hears about products and services; with better information come higher expectations. In Sweden, for example, parents of young children now expect a holistic pedagogy that includes health care, nurturing and education.

A key trend in the last 10 to 15 years throughout Europe has been the shift from parental care or informal childcare arrangements to formal childcare of young children aged 0-3 years. This has been largely driven by the growing demand for women in the labour force and by delayed family formation, in addition to a shift in childcare preferences. On the supply-side, policy throughout Europe has facilitated this shift by focusing on expanding the workforce. Although this policy is set to continue in the future, other factors are likely to counter-balance this shift. Chief among them are moves to extend parental leave throughout Europe and to potentially introduce home care allowances in more Member States, including the UK. Both of these factors are likely to encourage parents to care for children themselves for longer periods, before considering formal or informal childcare.

Making choices about parental, informal (relatives and friends) or formal childcare depends on a whole range of factors, which include employment preferences, income, the cost of formal childcare, trust, flexibility, convenience, and also perceptions about child development (see Figure 1 for outline of costs and benefits of these choices).

Figure 1: Childcare choice variables

Source: Blackburn, 2005

In the future, perceptions about child development are likely to take on greater importance for the informed parent. At the moment, however, research conclusions are mixed about the effects of parental, informal or formal care on child development. Table 1 shows the most recent research conclusions arguing in favour of and against formal care for young children.

Table 1: Summary of latest research on early years child development outcomes in formal childcare
Table Layout
Case in favour of formal childcare
Children of full-time working parents have better cognitive outcomes if they have paid carers, than if they are left with relatives (Avon Longitudinal Study of Parents and Children (ALSPAC), University of Bristol, UK, 2005).
The use of paid childcare seems to protect children from any negative child development effects; attending a nursery may actually lead to better cognitive outcomes than for children at home with a non-working parent. Only those children of full-time working mothers experience significant detrimental child development effects if non-parental care consists solely of unpaid care by a friend, relative (such as a grandparent ) or neighbour (ALSPAC project, University of Bristol, UK, 2003).
Young adults who attended high quality early-education settings are more likely to experience greater academic success and higher lifetime earnings than their peers (Abecedarian Early Childhood Intervention Project, US, 2003).
Pre-school experience, compared to an absence of pre-school experience, enhances children’s development. The quality of pre-schools is directly related to better intellectual/cognitive and social/behavioural development in children (Effective Provision of Pre-School Education Project (EPPE project), UK Department of Education and Skills, 2003).
Case against formal childcare
Children under two years of age who receive full-time care from their mother have better developmental outcomes than peers who have attended any type of formal childcare. The overall quality of group daycare, offered in nurseries, was lower than the quality of care offered by any other type of care, including by informal carers such as grandparents (Families, Children and Childcare Study, UK, 2005).
The short-term effects of increased early maternal employment were slower emotional development and weaker cognitive outcomes; the long-term effects were lower educational attainment for children in their teens and early twenties, along with worse performance in the labour market, higher unemployment and greater risk of child-bearing earlier in life (Institute of Social and Economic Research, UK, 2003).
Children spending more time in childcare in their first five years are likely to be less popular among their peers and more aggressive (The National Children’s Study, US Institute of Child Health and Human Development, 2004).
Children under two years of age who spend a long time in daycare were more likely to show unsociable behaviour when they started school (EPPE project, UK Department of Education and Skills, 2003, 2005).

One development that could maximise customer choice in the future would be introducing financial supplements in place of subsidised childcare places. Such supplements (which, for example, had a short lifespan in the UK under the conservative government in the mid 1990s) can maximise customer choice, stimulate competition between private providers and thus generate greater innovation, in turn reducing costs and improve quality. As consumers become better informed, they are likely to be better equipped to make more efficient choices.

Getting it right

The challenge for government in the 21st century is to find ways to stabilise families in an era of globalisation, and to enhance child-rearing capacity, without imposing unsustainable burdens on tax payers and the state. The time is ripe for a progressive child-centred family policy that acknowledges new realities and affirms enduring values.(Fabian Society, 2005)

Childcare policy debate within Europe in the future will no doubt focus on finding the optimum childcare model to deliver the following main targets:

  • child outcomes;
  • parent choice;
  • equality;
  • efficiency;
  • flexibility.

The policy debate will also consider questions regarding the overall cost burden of childcare and who should pay for these costs.

Moreover, much of the debate is likely to centre around the issue of whether childcare should be viewed as a public or private service. The Nordic countries, Sweden, Denmark and Finland, for example, have always viewed childcare as a public entitlement, which should be provided by the state. Conversely, in the UK, the childcare market for under-five year olds (excluding nursery education) is predominately a private service. There is little doubt that public childcare services, as with healthcare and education services, clearly have some good characteristics. However, private childcare services also appear to have positive characteristics.

The UK think-tank, Politeia, claims that parents should be wary of a single-system (public) childcare provider, arguing that ‘if pre-school compulsory education is to be publicly funded, then public support should follow children to the institution of parental choice’ (Politeia Education Commission, 2002). On the other side, there is the argument that market mechanisms alone cannot deliver to parents the kind of reliable and quality care, at affordable prices, that is needed (Balls, 2005). This argument contends that market failures stop society from gaining the benefits of universally available care, and that government intervention is needed to regulate, subsidise and sometimes enable parents to make real choices about childcare. Balls believes that the private market can never capture the wider potential social benefits of providing better childcare at an early age, in terms of later health improvements, crime reduction and lower remedial education costs, particularly for children from disadvantaged areas.

Pearson and Martin (2005) conclude that consumers will dictate what model is best:

People want childcare: they will devote resources to it, if not through the tax system, then through private sector alternatives. If the government provide too much or too little social protection, or the wrong kinds of it, or provide it inefficiently, or finance it using a tax system which unnecessarily damages the economy, there will be genuine economic gains from moving social provision from the public to the private sector.

Most EU Member States operate mixed - public and private - markets for childcare. These provide some degree of competition, and encourage innovation in childcare markets and responsiveness to the expectations of consumers (parents). However, the public and private balance varies widely between countries. In some Member States, parental choice is severely limited; in others, full choice is limited only by affordability. Many EU national governments face challenges to meet all the targets of the optimum model listed above.

Helen Wilkinson (2002), a UK policy expert in family matters, argues in favour of mixed markets, in her outline of a vision for the UK childcare market. She believes the government should follow three main routes:

  1. to become the ‘chief entrepreneur’ for the childcare market;
  2. to engage employers fully in the drive for creative and sustainable childcare solutions;
  3. to build investment and support structures for childcare entrepreneurs.

Wilkinson highlights that UK employers, like those in most European countries, have been absent from the childcare debate and have not been very prominent providers of childcare solutions. A model with employers as a key source of funding creates greater potential for future growth when corporate investment conditions become more favourable. Wilkinson believes that childcare entrepreneurship is a crucial feature of a mixed market (2002):

[Entrepreneurs] discover and then realise opportunities to create value and improve well-being by meeting unmet needs or finding a better way to deliver a product or service. They are skilled at exploring these opportunities and making good their promise. The most impressive entrepreneurs are rarely driven by the pursuit of profit - more often than not they are motivated by a vision of creating a new product or process, of changing lives and making a difference.

Sustainability of the childcare model is a key issue for ensuring that it reaches its optimum level. A criticism of public funding of childcare services is that public service markets are not always responsive to market conditions. In many Member States, public finances are likely to come under increasing pressure, as future demand for childcare increases. Sweden is a case in point, as its public childcare market accounts for over 2% of GDP. In its review of Swedish childcare, the Organisation for Economic Cooperation and Development (OECD) recommends that Sweden should ensure that it meets its childcare goals at the lowest cost, while still maintaining the quality of service that Swedes expect (OECD, 2005). In the UK, continued commitment to substantial public spending would be necessary to sustain PricewaterhouseCoopers’ 2020 vision for the UK childcare market, in which the costs are estimated at 2.6% of GDP (PricewaterhouseCoopers, 2004). In contrast, Finland is likely to face less pressure on its childcare model, since costs are minimised through the use of home-care payments, instead of more expensive care at childcare facilities.

Table 2: Public versus private - a comparison of benefits
Table Layout
Benefits of a public model Benefits of a private model
Non-profit making Attracts private investment (including employer investment)
Effective regulation Promotes entrepreneurship
Information symmetry Non-political
Universal provision/entitlement Competitive
Fair and socially acceptable Driven by market forces
State burden Encourages innovation

Investing in childcare workforce

Without a high quality workforce to put it into effect, the most carefully formulated childcare model can achieve very little. The workforce is by far the most important determinant of the extent and quality of childcare; therefore, expansion of the EU childcare market will depend on the sector attracting enough high quality workers.

Investing in the workforce - not just in the number of people recruited but also in their pay and training (before and during their employment) - determines the overall performance, output and sustainability of the childcare model. Levels of workforce investment currently vary across the EU. For instance, spending per capita (on staff salaries) in Denmark - where childcare workers have higher education qualifications - is twice that of spending per capita in the UK (on childcare workers) (Moss, 2003, p. 3). When investment in workforce qualifications and staff benefits is taken into account, the gap between Denmark and the UK becomes even wider. As investment varies widely in the EU, so too does the attractiveness of working in the childcare sector. Generally, the lower the level of investment per capita, the harder it is to recruit and retain childcare workers, and therefore the more difficult it is to sustain a good model of childcare.

There are many variables determining the supply of childcare workers, including pay, education, gender mix, and the attractions of competing sectors and industries. In many Member States, low pay remains a serious barrier to workforce growth; a second barrier is the traditional over-reliance on a (young) female workforce. In a substantial number of EU25 countries, less than 10% of the childcare workforce is male. Even in countries with fully developed childcare markets, it is difficult to attract men into childcare. A third barrier is the lack of an integrated role for the childcarer. Most Member States still employ qualified teachers alongside unqualified carers, with clear distinctions in status, qualifications and earnings. To attract more people into the childcare workforce, it is necessary to raise the status and improve the qualifications and training of carers, in order to make childcare a more coherent occupation, embracing all facets of care. Such changes would help to make the childcare role more appealing across genders and age groups. As Coomans (a labour market analyst) argues, ‘wherever the present standard for any category of job is low-qualified women around the age of 30, there will unmistakably be a strong need to improve the quality of a job so it will be acceptable to people with higher education attainments. And if no improved professionalisation of the job is achieved, then it will rapidly end up in a severe labour supply shortage’ (Coomans, 2002). The Thomas Coram Institute argues in favour of an integrated role for carers of children in their early years, highlighting that ‘evolution of occupational models is necessary to resolve the present lack of coherence in early childhood careers. Retaining varying conceptual bases of ‘care’ and ‘education’…works against the integration of care and education at the level of policy and administration’ (see Thomas Coram Insitute publications, October 2003).

Besides restructuring the childcare labour market, Moss suggests that supply can be enhanced by encouraging informal supply in place of formal supply, improving recruitment and retention, and facilitating international mobility in the childcare labour market (2003, p. 5). International mobility is something that the EU is in a position to facilitate. Along with the economic benefits of increased labour mobility, there are likely to be sociological and educational benefits to be gained from the sharing of best practice and expertise between different countries and traditions. Migration of childcare workers within the EU will also encourage convergence of labour market conditions. Such convergence is likely to be a desirable goal in implementing a vision, when it emerges, of childcare across the EU.

Care and education

Despite the general acceptance that there is little distinction nowadays between care and education for children in their early years, responsibility for early years childcare and education is still divided between two separate departments, i.e. welfare and education, in most EU governments. In the same way, the workforce and the regulations for care and education remain separate and distinctive. Only Sweden, Denmark, Finland, England and Scotland have merged the responsibility for early years childcare and education into one department, although in the latter two countries, distinctions between care and education remain, as reflected by its separate care and education workforces. In Sweden, however, no such distinction is made, as, since 1998, it has had a statutory national curriculum covering the period from birth to five years, based on the idea that welfare, play and education are linked.

Countries with social-democratic principles and ideologies, such as the Nordic countries, generally support a collective welfare solution for children in their early years, without a need to separate care and education. Conversely, market-orientated countries tend to shy away from collective public responsibility for early years, and historically have tended to keep welfare (care) issues and education separate.

The EU has yet to tackle the issue of care and education convergence. In contrast, the OECD has adopted the expression ‘early childhood education and care’. In its five-year strategy for children, the UK government outlined plans to integrate nursery education and childcare into a single service known as ‘educare’, although it has yet to follow this through (Department for Education and Skills, July 2004 ico_pdf 4.3Mb).

Perhaps the most visionary future scenarios are Haddad’s 2002 ‘child socialisation’ and Moss’s 2004 ‘children’s space’ concepts. Haddad’s idea of ‘out-of-home child socialisation’ integrates care and education by suggesting that the care and education of a child should no longer be the exclusive responsibility of a family but of society in general. Haddad argues that teaching and care from a wider society perspective would significantly improve child outcomes and satisfy human rights. Moss’s concept of ‘children’s space’ combines a myriad of spaces for children - physical space, social space, cultural space and discursive space. Within this space, social practices and relationships are formed, values, rights and cultures are transmitted and produced, and differing perspectives and forms of expression are seen and heard. Children’s space implies possibilities for children and adults to contest understandings, values, practices and knowledge, related, for example, to the question of how best to serve the interests of children. It articulates the underlying tension between what we want for our children and what children want for themselves.

The integration of childcare and education has considerable practical implications as well as theoretical. Integration has the potential to harmonise the status, expertise and earnings of childcare workers and also to bring about, over the longer term, greater harmonisation of regulations and standards for the early years sector. In the UK, the difference in staffing requirements and regulations between care and education has for some time been seen as unfair, and as benefiting the less stringent, better-paid education sector. The Daycare Trust believes that the UK’s vision for children’s centres requires a new set of skills for the workforce (Daycare Trust, 2004b ico_pdf 981Kb). In its 2004 Universal early education and care in 2020 report (ico_pdf 952Kb), PricewaterhouseCoopers recognises that the UK workforce would require a major ‘upskilling’ to reach the high quality levels of Sweden in terms of the development of cognitive, social and emotional skills. In response, the UK government has announced plans to introduce a new qualification and status of the ‘educare’ worker. In one of the Daycare Trust policy papers on The case for reforming the childcare and early years workforce (ico_pdf 112Kb), Moss draws attention to a similar approach in other EU Member States, by citing the example of an ‘early years teacher’ who can work across many care and education settings, bringing a more holistic or pedagogical (education/teaching) approach to childcare (2003, p. 4).

The European Enhancement of Early Years Management Skills (EEEYMS) project team announced plans to establish an EU-wide network association to coordinate childcare education development. This ‘EuroChild Network’ will encourage networking and a transfer of skills between organisations within Europe that are concerned with the provision and promotion of high-quality early years education and care.

Future scenarios

Scenario 1: Europe has a vision

In this scenario, the European Commission (EC) formulates its first long-term vision for childcare in Europe. The vision sets out:

  • common coherent objectives for the economic and social development of childcare within the EU;
  • minimum standards of high quality, which apply to premises, staff and activities;
  • the EC’s new role as advisor on childcare policy for Member States;
  • uniform definitions related to the early years;
  • proposals to harmonise childcare incentives throughout Europe;
  • proposals to review and rationalise all childcare models and types of provision;
  • a strategy to ensure that the childcare workforce expands and develops to achieve overall economic and social goals;
  • a mandate to gather and effectively compare standardised childcare statistics across Member States;
  • recommendations for achieving the most desirable child development outcomes following assessment of all available research;
  • proposals to establish transnational working parties to advise on future policy direction, share best practice, and work towards common European goals.

Underlying this new vision remains the Commission’s core objectives of increasing the EU’s workforce and economic output, along with improving the social conditions of its citizens and including targets to eliminate poverty. The Commission initially advocates a clear policy of expansion across the board for childcare, but more particularly in areas where childcare is insufficient or inadequate. Its economic targets for childcare aims at encouraging Member States with under-developed childcare markets to bring their markets closer to the more mature childcare markets of the EU, particularly in terms of proportion of GDP. The EU also sets aside childcare investment funds for needy cases.

The initial objectives set out in the vision are quantitative - setting out minimum penetration rates for the early years childcare sector. To help the childcare workforce expand in order to meet demand, it will be necessary to ensure that childcare work is an attractive occupation for a wider range of people, including men and older workers.

In this scenario, although Member States remain fully responsible for national childcare policy, the Commission will work closely with Member States in an advisory capacity to meet common European and national goals. In the long term, goals will firmly shift towards quality of care and achieving optimum childcare solutions for all Member States through convergence and harmonisation.

Scenario 2: No long-term vision

In this scenario, the European Commission fails to formulate a long-term vision. Its strategy for childcare is only an indirect effect of its core strategy to increase the EU’s labour force. As a result, there is continuing diversity of childcare in the EU. As time passes, Member States follow the Commission’s target for penetration of the childcare market, which is revised upwards to encourage higher labour force participation.

A lack of harmonisation within the EU25 leads to some marked differences in the quality of care, and large variations in childcare subsidies and incentives. In the majority of Member States, childcare and education remain separate with different policy agendas, regulatory structures, and disparate quality indicators. Policy in individual Member States focuses primarily on national targets and goals. Transnational practice sharing and learning from inside and outside the EU continues to feed into national policy.

Evaluation of the scenarios

There are clear benefits to Scenario 1, the underlying one being clarity of vision. In this scenario, Member States have a clear vision of childcare provision in Europe, understanding what works well and what does not. Thus, governments are better able to understand change from a wider European perspective. However, some Member States will gain more than others. Those that have already successfully developed mature childcare markets may have less scope than others to benefit from a new vision. Nevertheless, these countries will be in a prime position to shape the vision and to pioneer future change. For countries with under-developed childcare markets, Scenario 1 will ‘raise the bar’ and stimulate change. Greater convergence and harmonisation, particularly of childcare quality, are likely to lead to far-reaching changes in many Member States, aimed at improving under-developed childcare markets. Although there are likely to be more winners than losers in this scenario, there may also be some negative consequences, arising from an EU vision that is prescriptive, directional, and focused on convergence.

Scenario 2 essentially describes where Europe is at now. Without a European vision, there are limited prospects for convergence and, therefore, limited benefits arising from convergence. Member States with successful childcare models will continue to flourish but will remain insular, failing to benefit from sharing their success with others. Countries with under-developed childcare markets will not reach their full potential and are likely to lack guidance from other countries. Quality is likely to remain diverse throughout Europe, thus raising serious issues in relation to equality and fairness. However, on the more positive side, what may be viewed as prescriptive, directional and focused on convergence in Scenario 1 will remain flexible, floating and independent in Scenario 2.


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