Investments in Early Childhood Pay Off

From October 27 till October 28, the Jacobs Foundation hosted the first European Business Leader Forum with 50 selected business leaders from five European countries to discuss ways the private sector can support early childhood education and care for the benefit of the current and future workforce.

This first European Business Leader Forum on early childhood development illustrated the importance of the first five years in a child’s life, when the base for success in school and later in adult life is laid. In these years the infant brain grows at a faster rate than at any other time in life, and by age five a child’s brain has grown to 90 percent of its adult size.  Children learn more rapidly in the first few years than at any other point in life. The brain creates 700 synapses per second in this critical period, neural connections that lay the foundation for cognitive knowledge and executive functioning skills (e.g., persistence, creativity and conflict resolution) that help determine later success. Positive experiences with nurturing and responsive parents and caregivers help promote this development and influence the architecture of the brain. However, children growing up in a disadvantaged environment often fall behind in their development: they start primary school with a learning gap of up to 18 months compared to their peers and often never catch up or even drop out of school.

Multiplying the effect of investment in early childhood

Based on this information, it becomes clear why business leaders should have a vested interest in fostering an environment that helps young children develop to their full potential and later become employees, customers and citizens. “We know that early education and care are essential to supporting our current workforce and developing a productive workforce in the future“, said Milan Prenosil, President of Sprüngli at the Business Forum. As scientific evidence shows, the impact of early childhood programs helps to reduce public expenditure with a return on investment of 7-10%. Furthermore, investing in early childhood programs produces immediate economic benefits, often referred to as the multiplier effect: the investment in early learning programs re-circulate through the local economy by means of investments in childcare centers as well as spending from teachers and caregivers.

Major organizations and small businesses alike need to take action

“Investments in early childhood pay off not only for children, but also for parents, the state and the economy“, stated Sandro Giuliani, Managing Director Jacobs Foundation. It is therefore not surprising that major governmental and supranational organizations such as the World Bank and the OECD have taken a great interest in early childhood development as a tool to strengthen a country’s workforce. The United Nations have included early childhood education in the recently established Sustainable Development Goals; the World Bank stated in 2014 that early childhood development interventions yield higher annual rates of return than those directed towards older children and adults.

As the various business cases presented at the first European Business Leader Forum show, companies are also taking a range of actions to positively affect early childhood development. They can be categorized in:

1. Building public will to influence policies
2. Educating key audiences
3. Contributing to the social good
4. Informing customers
5. Educating employees
6. Benefitting the local community

The Social and Economic Council of the Netherlands for example, presented its report calling for a long-term system of child services for all children, with additional resources for those with disadvantaged backgrounds. Business leaders as skilled communicators could help create a national dialogue around early childhood promoting private sector support, using press conferences, news articles and events. Companies are also active in educating key audiences; informing their customers; educating their employees; or contributing to the social good while still producing profits. Examples presented at the Business Leader Forum were:

• Luxottica, an Italian global leader in the field of eyewear, who donated a childcare center where employees receive enrollment priority. The company also organizes a babysitting on demand service, to ensure employees have childcare at their home whenever needed, particularly for emergencies.
• ABB, a Swiss energy and technology company, created a nonprofit organization that helps 38 member companies provide childcare services to their employees and is supported by its customers.
• Bain & Company is a major supporter of the Early Years Foundation, which consists of 38 community nurseries in the city that reinvest profits directly into the nursery business. This reinvestment includes supporting 48% of subject parents with free nursery services.

The European Business Leader Forum on early childhood development has clearly shown: the private sector with its business leaders and HR departments can facilitate a head start on a child’s path to success. However, while many good initiatives exist, much more needs to be done to support early childhood education and care for the benefit of the current and future workforce.