In November 2008, ABC Learning, the world’s largest listed childcare provider, went into voluntary administration.
Founded by entrepreneur Eddy Groves and his wife Le Neve, ABC was part of a tide of corporate investment in childcare during the 1990s and 2000s. Deregulation allowed private companies to profit from government subsidised childcare places, and the soaring real estate value of licensed nursery premises made childcare a profitable prospect for private enterprise. By 2006 Groves was the richest man under 40 in Australia, and the financial press were full of admiring commentary.
And yet ABC’s business model was rotten from the start. It was the classic financialized firm: relying on heavy indebtedness, asset-price inflation and worker exploitation. When it finally crashed, the government bailed it out with AUD 56 million to protect tens of thousands of nursery places and 16,000 Australian jobs.
As we watch the UK’s heavily financialised social care sector suffer near collapse under the COVID-19 pandemic, all the same warning signs are there. Intentional indebtedness, financial speculation, private equity ownership and even rent seeking from property make care homes highly profitable endeavours today. But these factors are also what make them vulnerable. It’s not just social care that’s struggling. Even before the pandemic, the UK’s childcare sector was heading towards its own ABC-style collapse. COVID-19 has aggravated these vulnerabilities.
If every crisis is an opportunity, then this should be our opportunity to de-financialise and democratise care. At the point when the UK government is forced to bail out private care providers, what would it take to democratise the sector more permanently with a mixture of public and cooperative ownership, and active unions? Such interventions could shift power away from profiteering, absent owners and towards local government, care users and workers.
Unionised worker coops in care can work. Cooperative Home Care Associates is a social care agency based in the South Bronx, 90% owned by women of colour and employing almost 2,000 home care workers. It isn’t perfect, but the fact that they have managed to be profitable for over thirty years, and to deliver substantially better pay than the sector average is testament to the potential of worker-owned care services.
There have been recent calls for laws to support worker buyouts in order to save businesses facing bankruptcy. While any legislation to support employee ownership is welcome, localised care home buyouts would be no panacea and would come with risks. Turning around a failing business in the middle of a pandemic is not an easy task. In the case of the UK care sector, the challenges are even greater, with a massive shortfall in public investment to reckon with.
Democratising the care sector won't happen overnight and ultimately requires state involvement. But with an unwilling government, it is those who work and use care services that are tasked with leading the change. Unions are the obvious vehicle for this, but they are in a bind: union membership amongst care workers remains low, and even if built up, leveraging their collective power isn’t easy. The financialisation of firms inhibits traditional collective bargaining because care managers don't wield much power. It's the owners – private equity firms and distant investors – that hold the purse strings. But with their investments effectively underwritten by a government who can’t afford to let care services collapse, they are cushioned from any industrial disputes that do arise.
And yet, even if it’s difficult for care workers to leverage power against an individual firm, they do have substantial structural power at a societal level. As we’ve been reminded so clearly during the pandemic, care underpins everything. Our entire economy relies on an army of overworked, underpaid, insecure care workers – the vast majority female and many migrants or people of colour. Care work can’t be offshored, is unlikely to be automated, and without it the rest of the country can’t go to work. That’s why the Australian government had to step in and save ABC, and it’s why there are now calls for bailouts of private care homes in the UK.
Furthermore, when it comes to building organising power into the community, care workers have a distinct advantage over other sectors because, as union organiser Jane MacAlevey points out, their site of production is the community. When thousands of Chicago parents and students came out onto the streets to help their teachers win their contract fight in 2019, they demonstrated the power of mobilising the whole community. For care workers interested in democratising their sector, building relationships with parents, patients, and local authorities may be crucial in creating a democratic model that extends beyond workers into the community itself.
In our forthcoming book ‘Unions Renewed: Building Power in an Age of Finance’, we argue that unions could be the crucial agent in de-financialising care and the economy at large. Examples like ABC should be a clarion call for more unions to investigate the types of financial engineering that belie so many workplaces, and identify pressure points so that moments of crisis become moments of opportunity.
In January, childcare experts Lucie Stephens and Miranda Hall called for a new approach to childcare, including state partnerships with worker co-ops. While at the time, such ventures might have seemed unlikely from a Conservative government, the pandemic is forcing economic interventions that no-one expected. Massive public investment will be needed sooner or later into both social and childcare services, and the question is whether it’s used to prop up ailing private agencies, or to transition towards a more democratic, sustainable model.
The answer depends in part on the extent to which care workers are organised, and ready to take the lead in this transition.
‘Unions Renewed: Building Power in an Age of Finance’ will be published in September 2020 by Polity.