Early learning and childcare service model for 2020: consultation paper

Section 3: Implementing the Early Learning and Childcare Living Wage Commitment

ELC Living Wage Commitment

There are few more important jobs than caring for, and educating, our youngest children.

Scotland already has a dedicated and highly qualified early learning and childcare workforce, but we know that we can do more to change perceptions about a career in ELC and to ensure it's an attractive and long-term career choice.

The Scottish Government believes that employers whose staff are treated fairly, who are well-rewarded, well-motivated, well-led, have access to appropriate opportunities for training and skills development, and who are a diverse workforce are likely to deliver a higher quality of service. This can be supported by the adoption of fair work practices across the sector, which includes ensuring that staff are fairly remunerated.

Public sector staff working in ELC settings already receive at least the 'real' Living Wage. However, the Financial Review of Early Learning and Childcare in Scotland, published in September 2016, found that around 80% of practitioners and 50% of supervisors in private and third sector settings delivering the funded entitlement were being paid an hourly rate below the 'real' living wage.

Relatively low levels of pay can present a barrier to some people entering the sector, resulting in recruitment challenges (in particular in private and third sector providers), and can also higher levels of staff turnover. This could have potential implications for continuity of care.

It is therefore important that the gap between average earnings in local authorities and funded provider settings is narrowed.

As part of the expansion to 1140 hours the Scottish Government is committed to promoting and encouraging fair work practices, including enabling payment of at least the 'real' living wage to all childcare workers delivering the funded early learning and childcare entitlement.

To enable this the new Funding Follows the Child approach will ensure financially sustainable provision across the ELC sector.

The Scottish Government is committed to providing local authorities with additional funding to allow them to set rates with providers in the private and third sectors that enables them to pay all childcare workers delivering the funded early learning and childcare entitlement the 'real' living wage from August 2020.

Box 2 provides an overview of the ELC Living Wage commitment.

Box 2: Overview of ELC Living Wage Commitment

• The commitment will be introduced from August 2020 as part of the national statutory roll-out of 1140 hours and the introduction of the Funding Follows the Child approach.
• The National Standard which will underpin the Funding Follows the Child approach includes criteria on fair work – with payment of the ‘real’ living wage a key determining factor of providers ability to demonstrate that they are meeting this criteria.
• The commitment covers all early learning and childcare workers, i.e. those staff providing direct care to children receiving funded early learning and childcare, regardless of age, qualification and of the setting in which they are employed.
• The Scottish Government will provide sufficient additional revenue funding to allow local authorities to set rates for funded providers in the private and third sectors that enables them to pay the ‘real’ living wage to childcare workers providing the funded entitlement.
• The funding does not cover the hours that staff spend delivering non-funded ELC in these settings, either as wraparound care or to children who are not eligible for the funded entitlement.
• The funding to pay the ‘real’ living wage will be reflected in the sustainable hourly rate paid to funded providers to deliver the funded entitlement.
• It is estimated that up to 8,000 staff currently working in around 960 partner provider settings could benefit from this commitment if the living wage was paid to all workers in these settings.

The Living Wage

The 'real' living wage should not be confused with the National Minimum Wage (including the "national living wage" for those aged 25 and over) which is the legal minimum an employer must pay an employee and is set by the UK Government.

The Scottish Government considers the payment of at least the 'real' living wage to be a significant indicator of an employer's commitment to delivering security of employment and income. Payment of the 'real' living wage, particularly when adopted as part of a wider package of fair work measures is one of the clearest ways that an employer can demonstrate that it takes a positive approach to its workforce.

The real living wage is a voluntary wage rate of pay which is calculated by the Resolution Foundation and overseen by the Independent Living Wage Commission. These figures are calculated annually and announced in October/November.

The 'real' living wage calculation takes into account the Joseph Rowntree Foundation Minimum Income Standard ( MIS) research in which members of the public identify what is needed for a minimum income standard of living. This is then combined with an analysis of the actual cost of living, including essentials like rent, council tax, childcare and transport costs for different family types to produce the hourly Living Wage figure, sufficient to ensure that the recipient may enjoy an acceptable standard of living.

The 'real' living wage applies to all employees aged 18 and over in recognition that young people face the same living costs as everyone else. However real Living Wage accreditation does not require employers to pay the 'real' living wage to volunteers, apprentices or interns.

Supporting Delivery of the ELC Living Wage Commitment

The Scottish Government is committed to supporting local authorities and funded providers implement the Living Wage commitment as part of a positive approach to fair work practices.

We acknowledge that implementing this commitment may present a number of challenges for both providers and for local authorities.

However, these need not be prohibitive and there are a number of options which should be considered to enable implementation of the Living Wage commitment. The purpose of this commitment is to recognise the contribution workers in early learning and childcare make to improving the quality of the experience for children. It is an opportunity to invest in early learning and childcare as a career of choice by addressing one aspect of the recruitment and retention challenge in the sector.

The implementation of fair work practices across the sector, including fair and equal pay, training, development, and broader terms and conditions etc. will influence and underpin early learning and childcare as a quality career option.

A workforce paid the 'real' living wage, could increase staff retention rates at funded providers, contribute to higher productivity and reduce the number of sick days. ^{[16] .}An increase in retention rates would also strengthen the benefits for the child by allowing practitioners to build up strong relationships with children through consistent contact time.

Providing a sustainable funding rate, through the Funding Follows the Child approach, for the funded hours should ensure that delivery of the funded entitlement does not put pressures on a provider's business model.

Within a private or third sector setting childcare workers are likely to split their time between delivering funded and non-funded hours. The sustainable rate is to ensure that the provider receives a rate that is more closely aligned with their delivery costs (and includes funding for payment of the 'real' living wage). It is therefore a business decision for providers as to whether they provide the additional resource to uplift the salaries for all childcare workers, including those not engaged in delivery of the funded ELC provision, to the 'real' living wage.

A sub-group of the Service Models Working Group has been established to look specifically at implementation of this commitment, and they are drawing on lessons from the Adult Social Care sector where a Living Wage commitment has been delivered since October 2016.

We are currently working closely with delivery partners to prepare technical guidance to support this. This will form part of the suite of operating guidance and information documents to be published alongside the final version of the National Standard in Autumn 2018.

Next Steps:

The Scottish Government will work with delivery partners to produce technical guidance to support local authorities and providers in the private and third sectors and relevant childminding organisations to implement the 'real' living wage commitment, across all of the ELC sector in Scotland.

Question 6: What areas would you look to be addressed in the technical guidance note for supporting implementation of the ELC Living Wage commitment?