Creches – Is the business model bad for kids?

Harvard

The employees, some of whom have already lost their jobs, are most immediately to blame for the treatment of the children featured. But what role might the business model of these crèches play in what happened? Poorly paid staff in some instances supervising too many children on behalf of employers earning several multiples more than them.

The frontline staff were the people who must take the most immediate responsibility for what we saw on our screens – but you can’t divorce their actions from the conditions of their employment.

15% turnover of staff every month across the industry should tell you all you need to know about the terms and conditions of employment in creches, as well as the experience and qualifications of those applying for jobs in the sector. 25% have no qualification or prior experience for what is a skilled job.

Links

But even when job applicants have a qualification (Fetac level 5 or better) two of the creches in the Prime Time programme – Links and Giraffe – were only offering minimum wage. Less that €9 an hour when according to the companies office accounts for 2010 the directors of Giraffe awarded themselves an average €110,000. That’s six times what they paid their staff.

One of the revealing things about the business model is the way the directors of one of the companies – Giraffe – went about pitching for venture capital. I discussed this in some detail in my Drivetime report here. In trying to convince investors that labour costs and regulation wouldn’t subtract from the bottom line they likened the childcare business to the burgeoning gym and leisure centre sector. Increased economies of scale would said one of the directors to the Sunday Business Post would make Giraffe’s facilities “more financially rewarding”.

In other words “big is beautiful”. Clearly it wasn’t in the cases of Little Harvard, Links or Giraffe. That is not to say that what Prime Time and reporter Oonagh Smyth uncovered in these three big chains isn’t also happening in smaller creches and pre-schools too. However, one of the fundamental principles of early childhood care is “small is best”. Small groups, that allow for a lot of one on one attention. A small number of facilities in any business presumably makes more direct proprietor management possible too. Hopefully the directors of big chains of can put this small prnciple at the heart of their business models from now on.

Giraffe

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