Privatization of Early Childhood Education and Care in Nordic Countries (Palgrave Studies in Third Sector Research) 3031373529, 9783031373527

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PALGRAVE STUDIES IN THIRD SECTOR RESEARCH

Privatization of Early Childhood Education and Care in Nordic Countries Håkon Solbu Trætteberg Karl Henrik Sivesind Maiju Paananen Steinunn Hrafnsdóttir

Palgrave Studies in Third Sector Research Series Editors

Bernard Enjolras Institute for Social Research (ISF) Oslo, Norway Håkan Johansson School of Social Work Lund University Lund, Sweden Karl Henrik Sivesind Institute for Social Research Oslo, Norway

This book series focuses on the third sector— the sphere of society that is distinct from the family, the market economy, and political power/the state. The third sector has been historically institutionalized in different ways across countries and is subject to different scholarly traditions. Palgrave Studies in Third Sector Research addresses contemporary themes related to this societal sphere and its components. This series has three main editorial aims; the first is to facilitate the dialogue across institutional contexts and scholarly perspectives, and will therefore publish studies of the third sector, the social and solidary economy, civil society, voluntary sector, non-profit sector, philanthropic sector and other related concepts. The second aim of the series is to publish contributions from all the regions of the world, including the Global South, and to foster comparisons across countries and global regions. The third aim of the series is to stimulate new thematic, theoretical and methodological developments related to both long-standing scholarly and emergent themes.

Håkon Solbu Trætteberg Karl Henrik Sivesind Maiju Paananen  • Steinunn Hrafnsdóttir

Privatization of Early Childhood Education and Care in Nordic Countries

Håkon Solbu Trætteberg Institute for Social Research Oslo, Norway

Karl Henrik Sivesind Institute for Social Research Oslo, Norway

Maiju Paananen Faculty of Education and Culture Tampere University Tampere, Finland

Steinunn Hrafnsdóttir School of Social Sciences University of Iceland Reykjavík, Iceland

ISSN 2662-690X     ISSN 2662-6918 (electronic) Palgrave Studies in Third Sector Research ISBN 978-3-031-37352-7    ISBN 978-3-031-37353-4 (eBook) https://doi.org/10.1007/978-3-031-37353-4 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

The increasing role of private, and particularly for-profit providers, is becoming an ever more salient trend in Nordic welfare. Once a bulwark against for-profit penetration in public welfare, the region is now a testing ground for different approaches to private provisions as some countries embrace the private actors, while others adhere to the more traditional Nordic model. Early Childhood Education and Care (ECEC) has over the last decades moved from the fringes of the welfare model to become a core ingredient. On the way, it has become a key battleground over the role of private providers. Today, it is possibly the service area where this issue is most controversial at the same time as we see remarkable differences in how the five countries approach the role of private providers. In light of the stark contrasts between the countries that still share the same welfare goals, we ask: what can explain the drastically different welfare mix between the countries? This book discusses possible benefits from having different types of providers—public, nonprofit, and for-profit—in the welfare mix, and the drivers for privatization. When a growing role of for-profits in tax-financed welfare spurred debates some 15–20 years ago, there was a dearth of research from the Nordic context. Furthermore, many stakeholders perceived the developments as one directional where only growing privatization was realistic. Nonprofit actors were in many instances absent from the debate, citing public and private provision as the only relevant categories. Over the last decade, much research has been published from the Nordic countries, enabling policy makers to make decision about frame

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conditions for providers on a more secure footing. This has shown that development of the welfare mix is largely a result of political decisions, and the role of the non-profit sector has gained recognition. This has, among other things, led to a law on a register of non-profit providers in Sweden. In Norway, a committee is commissioned the task of making a Norwegian Official Report suggesting ways to implement a register in the Norwegian context. In the context of early childhood education and care (ECEC), the number of studies that address privatization is still limited, even if this development is striking in this field. We do find some studies examining privatization and the roles of for-profit providers in each of the Nordic countries. While these have inspired us in our work, we find a shortage of studies that assume a truly Nordic perspective and use the comparative approach to highlight both the Nordic dimensions and to use the Nordic perspective to highlight key developments in the individual countries. Accordingly, our book is intended not only to fill a gap in research on ECEC privatization in each of the countries, Norway, Denmark, Sweden, Finland, and Iceland, but also to see overall developments in the Nordics as a whole. Moreover, through in-depth analysis of uneven developments over many decades within one policy field in one welfare model, we identify aspects that both inform the research community and give insight to policy makers. Sivesind and Trætteberg have through large projects funded by the Research Council of Norway, like “Outsourcing of Scandinavian welfare societies? Consequences of private and nonprofit service provision for active citizenship” and “Conditions and impacts of welfare mix. Comparative analysis of policy making, public discourse and service quality, ” worked intensively with the issue of comparing development of welfare mix in a Scandinavian context. It was on the back of these projects that these authors were approached by the Union of Education Norway, which commissioned a small project on the privatization of ECEC in the five Nordic countries. To make the team truly Nordic, Paananen and Hrafnsdóttir joined the project group bringing in important expertise. After having completed the project, the four authors identified a gap in the research literature and approached Palgrave about publishing this book. We are accordingly indebted to the Union of Education Norway for making the initiative that we examine the developments we study in this book.

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The Institute for Social Research, Oslo, has facilitated the work and carried some running costs during the project. Key findings from the book were presented at the NERA conference in Reykjavik in June 2022. We are thankful for the constructive comments from conference participants. Oslo, Norway Oslo, Norway  Tampere, Finland  Reykjavík, Iceland 

Håkon Solbu Trætteberg Karl Henrik Sivesind Maiju Paananen Steinunn Hrafnsdóttir

Praise for Privatization of Early Childhood Education and Care in Nordic Countries “This is a much needed and timely book on ECEC governance in the Nordic welfare states. The readers are provided with detailed comparative accounts of diverging and converging Nordic trends in this largely under-researched domain. In addition, the book fruitfully addresses a wider and crucial contemporary issue in the Nordic welfare states—the (contested) role of private providers. Taken together, these features make this book a very important read and contribution.” —Dr. Linda Rönnberg, Professor, Umeå University

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Contents

1 Introduction  1 Introduction   1 The Nordic Welfare Model   4 The Share of Public, Nonprofit, and For-Profit Welfare Providers   7 ECEC in the Nordic Countries  15 Three Sets of Goals for ECEC  15 Challenges Facing ECEC in the Nordic Countries: Demographic Changes, Accessibility, and Educational Approach  16 Explaining Institutional Change  18 Approaches to the Provision of Welfare Services  22 The Three Actors in the Welfare Mix  22 Public Provision or Privatization?  23 The Welfare Sector as a Quasi-Market  24 The Role of Nonprofit Providers as Part of the Welfare Mix  25 The Remainder of This Book: ECEC From a Comparative Nordic Perspective  28 References  29 2 Shared  Roots—Private Initiatives Along Two Trajectories 39 Introduction  39 The Dual Trajectory of the ECEC System  39

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Trajectory 1: Charities Establish Children’s Asylums as Protectors from the Dangers of Streets  40 Trajectory 2: Philanthropic Kindergartens and For-­Profit Child Residential Homes for Wealthy Families  42 The Merging of the Two Trajectories  44 Fostering a Nordic ECEC Model Through Kindergarten Teacher Education  46 Chapter Summary  47 References  49 3 From  the Fringes to the Heart of the Welfare State—Growth in ECEC Coverage 51 Introduction  51 Legislative Foundation  51 Consolidation and Growth  56 Full Coverage  60 Chapter Summary  70 References  71 4 Changes  in the Role of Commercial and Nonprofit ECEC Providers—Deviations from the Nordic Welfare Model? 75 Introduction  75 Private Growth  75 Explaining the Growth of Private Actors: Framework Conditions, Financing, and Public Debates  91 Chapter Summary 107 References 109 5 Reigning  in Provider Diversity? Regulation, Steering, and Supervision115 Introduction 115 Educational Promotion—The Rationale for State Steering 117 National Policies Pursued in Terms of Regulation and Curriculum 120 Securing Compliance—Supervision 125 Soft Steering—Manuals and Evaluations 126 Chapter Summary 130 References 133

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xiii

6 Does  It Matter? Quality Differences Among Public, Nonprofit, and For-Profit Providers139 Introduction 139 Theoretical Underpinnings of Different Ownership and Quality 140 Quality of ECEC 142 International Experiences: Quality Differences Among Public, Nonprofit, and For-Profit ECEC? 143 Research in the Nordic Countries on Quality Differences Among Public, Nonprofit, and For-Profit Providers 145 Chapter Summary 149 References 151 7 Conclusions157 Introduction 157 Why Private Growth in Nordic ECEC? 157 How to Respond to Adverse Effects From Marketization? Nordic Attempts to Reign in Quasi-markets 163 Governance Challenges in the Welfare Mix 167 Why Diversity in Provision? 170 A Nordic Dimension in ECEC Governance? 173 References 174 Index179

About the Authors

Steinunn Hrafnsdóttir  is a professor at the Faculty of Social Work, School of Social Sciences, University of Iceland. She holds a PhD in Social Work from the University of Kent, Canterbury. Her main research interests are civil society organizations, welfare management, and volunteering. She is a co-founder of Vaxandi, center for social innovation at the University of Iceland. Maiju Paananen  is an associate professor at the Faculty of Education and Culture, Tampere University, Finland. Her research has focused on politics and governance of early childhood education. She leads Child Politics— research group that seeks answers to the question of how societal and environmental changes shape childhood(s) and the everyday lives of children. Karl Henrik Sivesind  is a research professor at the Institute for Social Research. Sivesind has led major projects for the Norwegian Research Council and has led WPs in EU projects. He has studied changes affecting civil society by analyzing data from population surveys and local association surveys and developments of welfare mix in Scandinavian welfare. Sivesind was elected to serve on the Board of Directors for International Society for Third Sector Research (ISTR) 2013–2016. Håkon Solbu Trætteberg  is a Senior Research Fellow at the Institute for Social Research in Oslo, Norway. He holds a PhD in political science from the University of Oslo. His main research interests are centered on civil society organization and welfare state organization, and he is particularly interested in the welfare mix—whether it is a public, non-profit, or forprofit entity that provides the service to the citizens. xv

List of Figures

Fig. 3.1

Fig. 3.2

Fig. 3.3

Fig. 3.4

Fig. 3.5

Percentage of children aged three to five years in ECEC for the period 1990–2020. Notes: Denmark: Data after 2015 are not comparable to the previous series. Sweden: From 1999, children in open kindergartens were not included. Finland: Includes Åland. Source: Nordic Statistics CHIL03 61 Children in ECEC by age and time in Denmark (percentage of age groups). Notes: There is a break in the time series in 2017. Therefore, data before and after 2017 cannot be compared. Data before 2014 reveal the number of children, while data from 2017 are converted to those who are enrolled full time. Municipal and self-governing day-care institutions are included, while private day-­care settings are not. Source: Nordic Statistics CHI0362 Children in ECEC by age and time in Iceland (percentage of age groups). Notes: Compulsory school begins at the age of six. Only children in day-­care included, and not children in after-school arrangements. Source: Nordic Statistics CHIL03 63 Children in ECEC by age and time in Sweden (percentage of age groups). Note: From 1999, children in open kindergartens were not included in the total number of children in kindergartens. Source: Nordic Statistics CHIL03 64 Children in Norwegian ECEC by age and time (percentage of age groups). Note: Includes care for all children at different ages, whether full-time or part-time, during day-time hours (6:00 am to 6:00 pm) in all institutions where attendance is checked by a public authority. Source: Nordic Statistics CHIL03 67

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List of Figures

Fig. 3.6 Fig. 4.1 Fig. 4.2 Fig. 4.3 Fig. 4.4 Fig. 4.5 Fig. 4.6 Fig. 4.7

Children in ECEC by age and time in Finland (percentage of age groups). Notes: Includes Åland. Source: Nordic Statistics CHI03 69 Full-time equivalent employment (FTE) in Norwegian kindergartens for the period 2006–2018. Source: Statistics Norway (2020a, 2020b) 78 Shares of children in municipal, private, and self-owning institutions in Denmark from 2007 to 2014. Source: Danmarks Statistik, Statistikbanken, Table PAS22 83 Shares of children in private and other (municipal self-owning) institutions in Denmark from 2017 to 2021. Source: Tables 4.1 and 4.4 in Pade and Glavind (2022) 83 Children aged one to five years enrolled in Swedish ECEC after ownership. Sources: Skolverket (2014, 2015, 2022) 85 Share of Finish children enrolled in ECEC (%). Source: FINEEC (2021); Kela (2019) 87 Employees in Finnish ECEC after ownership. Source: FINEEC (2021)89 Total number of children aged 0–5 years attending ECEC in Iceland. Source: Children in pre-primary institutions by age of children and daily attendance for the period 1998–2020, Statistics Iceland 90

List of Tables

Table 1.1 Paid employment in welfare services in Scandinavia: total and sector shares (%) 9 Table 3.1 Development of ECEC in the Nordic countries in 1976 55 Table 4.1 Number and proportion of children aged 0–6 years enrolled in public and private institutions in Norway for the year 2000–202177 Table 4.2 Changes in the size of Norwegian ECEC institutions for the period 2011–2021 80 Table 4.3 Number of ECEC institutions in Denmark after ownership 82 Table 4.4 Development in the ECEC welfare mix during the last two decades in Nordic countries 109

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CHAPTER 1

Introduction

Introduction Since the 1960s, early childhood education and care (ECEC) has mainly been in the realm of public and nonprofit provision in all five Nordic countries—Norway, Denmark, Sweden, Finland, and Iceland. This has been part of what we call a Nordic model of ECEC governance. Today, this is no longer the case, as for-profit providers play a role in all countries. However, the nature of this role is vastly different among the countries. In this book, we analyze these developments through a historically informed, comparative case study that examines developments within ECEC in the five Nordic countries. Let us begin with a few examples from Norway and Denmark that illustrate the scope of the developments. In 2018, 17 Norwegian ECEC institutions were sold to the dominating for-profit chain. The chain paid approximately $36 million for the transaction, of which $33 million were posted as profit (Bjerknes, 2019; NOU, 2020: 13, p. 405). Additionally, ECEC chains have sold the properties of the ECEC institutions. For example, in 2019, one of the major Norwegian ECEC chains sold 190 properties in Norway, Sweden, and Denmark to an international investment company for approximately $250 million (Lunder & Måøy, 2022, p. 68). These are just a couple of many examples of mergers and acquisitions that

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4_1

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have taken place in the Norwegian ECEC sector. Indeed, a sector that used to have transparent governance and be alien to profit generation, suddenly witnessed major profit generation through the sale of ECEC institutions and properties. However, the public has limited knowledge regarding how much profit is generated in this manner (NOU, 2020: 13, pp. 406–407). As unions, other stakeholders, and the general public grew increasingly skeptical regarding this development, the government commissioned white papers analyzing the expansive growth in for-profit chains in ECEC (NOU, 2020: 13) and how to rein in this development (Storberget et al., 2021). It appears that Denmark has taken a different route. In the fall of 2020, a majority in the Danish parliament announced an agreement that for all practical purposes would have banned for-profit ECEC centers. At the time, the private alternatives consisted of mainly self-owned institutions, merely a few for-profit actors that were operating in a similar manner, and no large chains. The legislative majority for this act evaporated subsequently, but it signals a governance approach that is radically different from that characterized in Norway over the last couple of decades (Trætteberg et al., 2023). However, 20 years earlier, the approach and level of for-profit providers in ECEC was almost the same in the two countries. These contrasting cases raise the question of whether it is meaningful to discuss a Nordic model in the governance of ECEC. Historically, philanthropic institutions ran Nordic ECEC and ECEC services were targeted for the children of working mothers and families that needed a dual income. In addition, part-time care was available for well-off families. ECEC centers in the modern form have roots in the voluntary nonprofit sector and were gradually incorporated in the welfare state. In line with other service areas, ECEC thus became the subject of governance through legislation and the directives of elected and appointed officials during the construction of the welfare state in the second half of the twentieth century (Maroy, 2012). It became a core welfare service through an increase in public provision supplemented by nonprofit actors (Trætteberg et al., 2021). Over the last five decades, ECEC has gone from the fringes of the Nordic welfare states to taking center stage. Governments hail ECEC as part of their social investment strategies, and massive amounts of resources are invested both directly to develop public services and more indirectly in the form of different types of subsidies. Even though welfare services in general face funding limitations, the total public spending in ECEC has

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increased overall (Motiejunaite-Schulmeister et al., 2019), and the Nordic countries are leading the world in terms of spending per child (van Belle, 2016). This is partially a result of policymakers attaching more welfare goals to the ECEC sector—for example, to increase female work participation, integration, and social equality (Van Lancker, 2018). The scholarly attention on the field is, with a few exceptions (for example Brogaard & Petersen, 2020; Jordahl & Blix, 2021; Ruutiainen et al., 2020; Westberg & Larsson, 2020), not centered on the role of private providers and the development of the welfare mix—the composition of public, nonprofit, and forprofit providers. Simultaneously, the public debate is dominated by changes in the governance of ECEC, as the appropriate role of for-profit providers in certain areas has been hotly disputed. When the government invites non-public actors to provide publicly funded services, certain mechanisms need to be in place that enable private providers into the market/service field. This entails coordinating public and private providers for citizens through different policy instruments, such as user choice, public tenders, fees per service, framework contracts, etc. In sum, these policy instruments constitute the governance of the welfare mix, influencing the role and size of public, nonprofit, and for-profit providers (Salamon, 2002). We find that the scholarly attention to Nordic ECEC lacks a comprehensive analysis of governance tools in the field and resulting changes in the welfare mix. Our aim is to narrow this gap in our understanding of Nordic ECEC.  Given how these countries share traditions and welfare goals, we address the following research questions: Why do some Nordic countries create quasi-markets in which for-profits compete with public providers, while others choose a more restrictive policy? What implication does differences in governance tools have for the mix of providers in ECEC? What are the consequences of these changes for the users—that is, children and their parents? Can we still talk of a Nordic model of governance in the ECEC services area? While ECEC is part of the broader welfare model, it is also regarded as constituting a Nordic model in its own right (Einarsdottir & Wagner, 2006; Kragh-Müller, 2017). In the ECEC sector, this model is characterized by public dominance and high subsidies as well as a distinctive approach to the content of the service offered: Nordic ECEC is

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traditionally holistic, centered around children, with play as a key focus. It differs from ECEC in other countries in the sense that it is an independent service and not primarily a preparation for formal education (Garvis et al., 2019; Karila, 2012). However, in this specific field, the Nordic model has been challenged by an international trend that promotes an educational and preparatory function of ECEC (Krejsler, 2012). In the early literature on the welfare mix, care by families was included in the concept in addition to the public, nonprofit, and for-profit sectors (Evers, 1988). In ECEC, this has materialized as both formal and informal family-based care due to the insufficient capacity of center-based ECEC services and/or policies that prioritize the roles and responsibilities of families, particularly that of mothers, in the upbringing of a child. In this book, we focus on formal institutional ECEC arrangements. In addition, informal care, the role of families in childcare, and allowances for parents are discussed in relation to explaining differing approaches to privatization in different Nordic countries. By ECEC, we refer to a broad category of institutional care and educational services for children who are under school age. Certain countries have a different terminology for services for the youngest and oldest children under primary school age. When we specifically refer to local ways of organizing ECEC, we use the local terminology. In this introductory chapter, we situate the case of ECEC within wider developments in the Nordic welfare states and reveal the context in which the ECEC sector ought to be understood. Then, a brief overview of key aspects of Nordic ECEC is presented. In order to understand the changes that have taken place therein, we present theoretical perspectives on change in institutions and policy fields, and discuss extant research literature on the governance of welfare mix.

The Nordic Welfare Model In comparative welfare studies, one typically refers to “the Nordic model.” The idea of the Nordic model was most famously articulated in the groundbreaking work of Esping-Andersen (1990) which outlined liberal, corporatist, and social democratic models. Why different industrialized capitalist market economies developed different welfare systems is one of the major issues in welfare research. One dominant answer to

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this question is the power resource theory, according to which this difference is largely a function of broad working-class political mobilization (Korpi, 2006). The Nordic countries have all had a strong working class that has been well organized through powerful trade unions and dominant social democratic parties. As a means to insulate the working class from social risk, these factions fought for extensive welfare programs that encompassed large parts of the population, thereby eliciting broad electoral support. Thus, in the Nordic countries, the state became the main instrument for financing, regulation, and provision of services. In contrast, countries leaning on a liberal welfare system used markets, needs-tested social care, and private insurances to a larger extent, while countries with a corporatist welfare system used employment-based social insurances (Esping-­Andersen, 1990). One of the main historical explanations for such differences in welfare systems focuses on the strength and struggles of institutional actors and classes such as church, landowners, labor, business, and state in the phase of industrialization (Salamon et al., 2017). Countries that were more diverse than the Nordic countries in terms of religion, language, or ethnicity may find that different groups prefer to organize their own welfare services rather than having one public solution for all, which results in “pillarization” as in the Netherlands and Belgium (Sivesind & Selle, 2009; Weisbrod, 1978). A part of the reason for the choice of public solutions in the Nordic countries may be that they have a history of enjoying more trust from the population compared to Eastern and Southern European countries (Rothstein et al., 2012). Within this extensive welfare system, dominated by the state, governance typically took place through legislation and the directives set by elected representatives and enacted and monitored by appointed officials. Thus, the identities and values in these organizations are embedded in the execution of democratic decisions, with a Weberian approach to steering the welfare field (Larsson et al., 2012). In this book, we identify important changes in governance tools in the Nordic countries. Simultaneously, it is important to note that there are remarkable consistencies across the countries and across time regarding the goals the Nordic countries have set for their welfare arrangements in policy documents (Sivesind et  al., 2017). Such goals include smaller economic differences, gender equality, equal access to education, and high labor market participation. These goals are seldomly challenged by the leading

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parties on either side of the left-right split (Svallfors, 2016). This is also true in explicit policy goals set for the ECEC system. Democracy, building up a sense of belonging to a community, and the social competencies of children are highlighted in ECEC policy documents in all Nordic countries (Einarsdottir et al., 2015). As the population in the region has gradually become richer, better educated, and more culturally and ethnically heterogeneous over time, traditional goals have been supplemented by new ones. Values such as individual empowerment, autonomy, and active citizenship have become more prominent. Thus, we see a more complex set of values, perhaps conflicting ones, that are simultaneously present. The governance tools used to attain these goals have traditionally been at the center of analysis that has enabled the identification of a Nordic model (Greve, 2007, p. 45). Exceptional reliance on the state, public provision of in-kind services, and universalism have traditionally been singled out as such features of Nordic welfare (Anttonen & Karsio, 2017; Anttonen & Sipilä, 2012). Recently, the public sector dominance of the Nordic model has been challenged by for-profit actors to the extent that it is an open question whether it is still reasonable to discuss the state-centered welfare approach as a shared characteristic (Sivesind & Saglie, 2017). Yet, while public provision has played an important role in all Nordic countries, there have always been important discrepancies between the five Nordic countries. In Sweden, the building of the welfare state in the postWorld War II period resulted in an almost complete domination by public provision by the early 1980s, probably more so than in any other Western democratic country at any point in history (Lundström & Wijkström, 1997). The wave of privatization of welfare provision began in the early 1990s with the introduction of vouchers in compulsory education (Vlachos, 2011). In contrast, Denmark, for a long time, has had an important tradition of private, nonprofit provision, often with alternative profiles, supplementing the public services developed in the latter half of the twentieth century (Henriksen & Bundesen, 2004). Finland is closer to the Danish pole, with strong public provision supplemented by nonprofit actors, in particular in health and social services. Norway is situated somewhere between Sweden and Denmark (Sivesind & Selle, 2009). Iceland has had a later development of its welfare state and has constantly wavered between a Scandinavian publicly dominated welfare state and more liberal approaches

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(Jónsson, 2019). The nonprofit sector has always played a significant role in welfare services in Iceland. Even though the government gradually took over some of the services after the establishment of modern welfare state, certain welfare services continued to be the responsibility of the nonprofit sector, but with government funding. In the area of running nursing homes, rehabilitation centers, residential services for disabled people, and alcohol and drug treatment facilities, the nonprofit sector remains large and even dominant (Hrafnsdóttir & Kristmundsson, 2011). In recent years, the for-profit sectors in the Nordic countries have grown due to the introduction of vouchers. In all five Nordic countries, there are differences among the service areas, with some being dominated by the public sector and others having had important non-public contributions. There are variations among the countries in terms of which service areas have non-public contributions, as there are disparate historical explanations in each case. Furthermore, as a post-industrial employment structure prevails and the level of education rises in the Nordic region, the mobilization of the working class may function differently. There are lower degrees of unionization in growing segments of the workforce; i.e. low skilled services and professional services. In addition, other interests are articulated when core socialdemocratic welfare goals are reached and the middle class becomes the dominant political force. A more educated and economically prosperous citizenry demands more plurality in services and a greater ability to choose the content and provider of the service. This may challenge public financing, regulation, and provision of services. While public financing still commands vast support across social classes (Svallfors, 2016; Westberg & Larsson, 2020), there is more variation in opinions regarding who should provide the services (Lindh, 2015). The Share of Public, Nonprofit, and For-Profit Welfare Providers One prominent development over the last 25 years, which we have identified in all five countries, is the growth of provision by for-profit service providers. While financing and regulation have mostly remained public, for-profit provision has increasingly supplemented—or even replaced—the public and nonprofit provision of services. This implies that there is no privatization of public responsibility in any of the Nordic countries. When we talk about privatization in this book, we refer to the private provision of services regulated and funded by the government at local and national levels.

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There are at least two main differences in the general picture of privatization. One is related to the speed of development and the growth rate at which for-profit providers gain market share at the expense of other sectors. The other is related to coordinating mechanisms—how private providers are contracted. We will first focus on three Scandinavian countries— Norway, Sweden, and Denmark—because of the availability of comparable data on changes in the mix of welfare service providers. Thereafter, similar developments will be described based on different kinds of data from the remaining two Nordic countries—Finland and Iceland. Table 1.1 presents employment data from the Scandinavian countries, illustrating the “market shares” of the different sectors involved in welfare services, including education, social services, and health care. Employment in the for-profit sector has grown in the three Scandinavian countries, and there is a remarkable difference between Sweden—which has witnessed rapid for-profit growth—and the other countries, where growth has been more modest. All the Nordic countries have utilized governance tools inspired by new public management (NPM), thereby aligning with the international trend. Public authorities use such tools to outsource services to nonprofit and forprofit providers, but per-service fees are also used for welfare provision within the public sector, such as specialized health care. The outsourcing of services can be coordinated through frame agreements, open tenders, or user choice. Sweden has gone further in implementing user choice in combination with payments that follow the user (vouchers), low thresholds for establishing new service units, and no limitations on the transfer of profits. As a result of this liberalization, international equity funds now are among the owners of welfare service providers (Sivesind, 2017, 2018). Table 1.1 indicates that for-profit welfare in Sweden has increased from 9%–20% of all welfare service employees from 2000 to 2017. Economic incentives are likely an important reason for this strong increase, which on average amounted to 6.6 percentage points in a 10-year period. If this growth rate continues in subsequent decades, it will transform welfare services in Sweden, which were strongly dominated by public sector providers until the 1990s. Nonprofit providers remain small, with a little over 3% of employees in welfare services. In comparison, Norway and Denmark have a much larger share of nonprofit service full-time equivalent employment (FTE), with 8.5% and 15%, respectively. The for-profits have a much larger share in Norway, with 14%, than that in Denmark, which has merely 7%.

7.6 12.3 80.1 514,400

8.5 14.2 77.3 655,200

0.8 1.7 −2.5 24.9

3.5 8.7 87.8 1,033,597

2000

10-year changeb

2006

2017

Swedena

Norway

3.1 19.9 77.0 1,346,880

2017 −0.3 6.6 −6.3 17.8

10-year changeb

15.1 6.5 78.4 590,419

2003

Denmark

13.8 7.2 79.0 615,988

2013

−1.3 0.7 0.6 4.3

10-year changeb

10-year average change in employment share in percentage points

b

a

Numbers for Sweden show employed persons and non-full-time employment as in Norway and Denmark

Sources: Boje (2017, Table  4.10); Danmarks Statistik, 2019; Statistics Norway (2019a, 2019b); Statistiska centralbyrån (2019). See calculations in the appendix of Sivesind (2017, pp. 68–69)

Nonprofit For-profit Public Total

Sector

Table 1.1  Paid employment in welfare services in Scandinavia: total and sector shares (%)

1 INTRODUCTION 

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The public sector share remains large in all Scandinavian countries, with between 77% and 79% in the latest figures, as indicated in Table 1.1. While the other Scandinavian countries have had relatively stable public sector employment shares, Sweden reached the same level after a strong decline from 89% in 2000. In Denmark, the public sector recorded a public sector share of 78% in 2003, while in Norway, the share was 80% in 2006. In addition, reforms implemented in Sweden to increase private sector provision and freedom of choice, first in schools in the early 1990s and later in ECEC and other service areas, have had the intended effects. However, policymakers did not anticipate the weak development of the nonprofit sector (Barth-Kron, 2020; Sivesind, 2018; Trætteberg, 2018). The differences in the rate of change among the Scandinavian countries can be seen in the average change recorded in 10-year periods in Table 1.1. The Swedish data encompass the period from 2000 to 2017, while the Norwegian data cover the period from 2006 to 2017. Unfortunately, it was impossible to obtain newer data from Denmark, with the available data only covering the period from 2003 to 2013 (Boje, 2017, Table  4.10). This has to do with the fact that self-owning institutions are categorized as part of the public sector and not the nonprofit sector in regularly updated data from Statistics Denmark. To compensate for different periods of data, we show the standardized growth in 10-year periods to simplify comparisons among the countries. In Denmark, there was a decline of 1.3 percentage points in the nonprofit sector from 2003 to 2013. This may have to do with major reforms such as mergers of municipalities and the conversion from elderly care in institutions to home-based care. This implies that the decline may not signal a new trend. However, the share of for-profits have increased from 6.5% to 7.2% in 2003 and 2013, respectively. Newer data reveal that this trend continued to 8.9% in 2018 (Danmarks Statistik, 2019), thereby resulting in a 10-year growth of 1.6 percentage points, on average, from 2003 to 2018 (not shown in Table  1.1). Thus, the growth rate increased from a mere 0.7% in the period presented in Table 1.1 from 2003 to 2013. This indicates an increase in outsourcing to for-profits in Denmark, which has opened up a few welfare service areas to new types of private actors. The available data do not reveal whether this recent trend manifests as a decline in the public or nonprofit sectors. In Norway, there was an increase in both nonprofit and for-profit employment. However, the growth rate was higher among for-profits, with

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1.7 percentage points on average in a 10-year period, while nonprofits experienced a growth of 0.8 percentage points. Because of a change in employment data, it is difficult to make comparisons with data from 2016 and later (Statistics Norway, 2019c). However, all indications are that there was an increase in employment in the nonprofit and for-profit sectors, which both rose at a faster rate than that in the public sector. Nevertheless, the most rapid changes took place in Sweden. There, nonprofits remained small, with just above 3% of welfare employees, which is only comparable to European countries that once belonged to the Eastern Bloc (Enjolras et al., 2018). For-profits increased by an average of 6.6 percentage points in a 10-year average, which is almost 10 times faster than that in Denmark and 4 times faster than that in Norway. This growth resulted in a decline of 6.3 percentage points in the public sector. This demonstrates that the manner in which the privatization of welfare services is implemented in Sweden incentivizes the for-profit sector, while there is a lack of tools—and perhaps political will—to promote nonprofit growth. Conversely, in Norway, there has been considerable support for the nonprofit sector in parliament (Haugen, 2020) and in numerous larger municipalities with a red–green majority in recent years. In Denmark, there is a long tradition of free schools and self-owning institutions, which enjoy broad political support. In Sweden, privatization has been promoted by parties on the conservative side, while the red–green governments have typically not reversed the policies even when they had majority; this is because they assumed that the political costs would be too high (Jordahl & Blix, 2021). This comparison reveals that policies that promote the distinctiveness and growth of the nonprofit sector are important for explaining the differences among the Scandinavian countries. In service areas with direct competition between nonprofits and for-profits, and where nonprofits lack institutional footing, nonprofits tend to experience stagnation or decline (Sivesind et al., 2017). Interestingly, as we document in this book, developments in the ECEC sector deviate considerably from the overall pattern we describe here. In ECEC, Norway is where the nonprofit sector retained the largest share through the period of expanding demand and coverage, and Norway is the country where for-profits currently have the most dominant role, thereby making ECEC an outlier in the Norwegian context. Conversely, Sweden has witnessed modest changes in the ECEC area compared to the radical development that characterizes many of the other service areas. In

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addition, Denmark has adopted ECEC regulations that secure the role of nonprofits, which is more in line with its traditions. This emphasizes that the governance of different service areas may be field-specific, as logic identified in one welfare context may not apply to other contexts in the same country (Grønbjerg & Smith, 2021). Unfortunately, we do not have comparable data from Finland and Iceland on changes in the mix of the welfare services providers in general. However, these countries have experienced more moderate developments compared to Denmark and Norway (Dýrfjörð & Magnúsdóttir, 2016; Mathew Puthenparambil et  al., 2017). When it comes to the ECEC sector, subsequent chapters reveal that the proportion of children in public sector institutions have declined in the last 15 years in both Finland and Iceland. They are catching up with Denmark and Sweden, which have approximately 80% public coverage. In Norway, in contrast, the share of children in public ECEC has declined from 60% to 50% in the last 20 years, and the employment in the nonprofit and for-profit sectors is now almost equal. This indicates that ECEC may experience different changes in the welfare provider mix than welfare services in general. In Norway, the for-profit ECEC is growing much faster; in Sweden, there is less growth in for-profit ECEC; while in Denmark there is stability in the provider mix in both ECEC and the welfare service area in general. In Finland and Iceland, ECEC may be among the welfare service areas with the most rapid decline in public sector coverage. Much of this development in the welfare provider mix can be traced to the different governance systems in place (Sivesind et al., 2017). Sweden has had a strong movement toward the increased use of user choice in combination with free rights to establishment or open tenders, with no restrictions on the transfer of profits. When such commercial incentives are implemented and there are no parallel governance systems securing the nonprofit share of services, there will be growth in the for-profit sector coupled with nonprofit stagnation or decline. However, we also observe that in Sweden, there are differences among service areas and that ECEC is a service area in which this development is less pronounced. Denmark has a more complex governance structure. User choice, where users or their guardians can select provider who in turn is paid by the state, is also practiced there—although only in certain service areas such as schools—and governance is characterized by alternative forms of contracting, such as for free schools where a requirement for obtaining public

1 INTRODUCTION 

13

funding is that there can be no transfer of profits to private owners. This promotes nonprofit alternatives for public schools in contrast to developments in Sweden. Another example are Danish municipalities that utilize in-house contracts with self-owning nonprofit institutions in certain welfare areas, such as nursing homes and ECEC. This limits their freedom of operation, as determined by national laws and European Union (EU) directives (Fløistad, 2017; SOU, 2019, p. 56). All users are assigned by the municipality, and the institutions can only to a very limited extent simultaneously operate in a market context (Fløistad, 2017). These additional governance instruments that municipalities may use to regulate the welfare mix have resulted in modest for-profit growth, with nonprofits maintaining an important share of the market. Essentially, this is the result of a parallel governance system that shelters nonprofits from direct competition. Traditionally, Norway has had a smaller nonprofit sector than Denmark, which has a more varied set of governance tools, including in-house contracts. In broad terms, Norway’s school governance model is similar to that of Denmark, while the country has for a long time used framework contracts for nonprofit providers when it comes to specialist health care and a few social services (NOU, 2020: 13). However, the EU-directive on public procurement (2014/24/EU) transposed into national law in 2016 implies more limited legal options to reserve contracts for nonprofits (Fløistad, 2017). In Finland, the governing system varies depending on the welfare service area. The establishment of services here is more regulated compared to that in Sweden. However, as in Sweden, there are no restrictions on the transfer of profit, except for comprehensive education. User choice and vouchers are used to allocate services in certain areas. Alternatively, municipalities can utilize outsourcing or in-house contracts with nonprofit and for-profit institutions in health and social services, including ECEC.  To give “freedom of choice,” home-based care is supported by targeted allowances (Hiilamo & Kangas, 2009). Further, nonprofit services in health and social care have been supported, for many years, by gaming revenue through Finland’s Slot Machine Association, which was founded for this purpose (Helander & Sivesind, 2001, p. 58). The association had a monopoly over gambling and the revenues that came from slot machines, casino games, and digital gaming were used to support nonprofit health and social service providers. In 2017, the duties related to allocation of funding were transferred to the Funding Centre for Social Welfare and Health Organizations (STEA).

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As a result of this support, the share of health and social service employees in the nonprofit sector is relatively large, but decreased from 10.5% in 2000 to 7.3% in 2018, (FINEEC, 2021). This is approximately the same percentage as in Norway but much larger than in Sweden, which has approximately 2%. Denmark is at a similar level as Finland in terms of social services, while nonprofit providers are almost absent in health care (Sivesind, 2017). However, Finland has experienced rather rapid growth in for-profit employment in health and social services—from 7.9% in 2008 to 23.7% in 2018 (FINEEC, 2021). This is a faster growth rate than in Sweden, where the share of for-profit employees grew from 14.8% in 2007 to 23.2% in 2019 (Statistiska centralbyrån, 2009, 2019), while Denmark and Norway have experienced comparatively moderate growth (Sivesind, 2017). Overall, municipalities have governance instruments to regulate the welfare mix in the Nordic countries. Yet, these instruments do not separate for-profit and nonprofit actors and might, to a certain extent, favor for-­ profit actors. The nonprofit sector has only witnessed a moderate decline of its share, partially due to funding instruments targeted for such health and social welfare actors. In the following account, we see that changes in the mix of providers in ECEC occurred at a later stage and at a much slower rate, thereby emphasizing the need to better understand the dynamics in this service area. Iceland has a large nonprofit sector in welfare services. After 1990, contracting out in the spirit of NPM became the norm in certain service areas. With regard to ECEC, private for-profit actors have almost crowded-­out the nonprofits after new legislation was passed in 2008 that led to no restrictions on transfer of profits to the owners. Simultaneously, there were no special measures to shelter the nonprofits in this area from direct competition. However, a large majority of ECECs are still run solely by municipalities. To anticipate the findings from this book, a central puzzle is how ECEC deviate on important aspects from the development of welfare services in general. Norway, a reluctant privatizer, has the largest for-profit sector percentage in ECEC, followed by Finland; Sweden has witnessed for-­profit growth in ECEC, but a less radical development than in other core welfare services (Jordahl & Blix, 2021, pp. 56–57). This underscores the need to examine the development of the welfare mix and the governance of this particular service area in the Nordic countries.

1 INTRODUCTION 

15

ECEC in the Nordic Countries Just as the Nordic countries have witnessed growing divergence in the compositions of welfare mix in general, we also see this in the ECEC sector. Yet, as we document in this book, all Nordic countries followed a similar pattern in the ECEC sector for a long time: nonprofit initiation of services, a public take-over in service provision around the 1970s, and—to varying degrees—a for-profit expansion in the last 25 years. The great variation in this latter feature may challenge conceptions of a shared Nordic model. Moreover, the increased variance in the use of governance tools is taking place despite a similarity in the goals sought to be achieved through ECEC policies. Three Sets of Goals for ECEC In our analysis of these developments, we apply a perspective that—in addition to country comparisons—has a historical and contextual approach. An important aspect of the context is that ECEC has at least three functions in Nordic societies (Alexiadou et al., 2022). First, it is part of the family policy in all the Nordic countries. All five countries stand out with family policies that promote social equality, enable social mobility, balance gender equality, and allow families the freedom to organize their children’s care and early childhood education as they please. A few of the other family policy instruments are free health and dental care for children, cash allowances for parents, free education and subsidized ECEC, generous parental leave arrangements, and a financial allowance to stay at home with young children. Thus, ECEC is only one instrument related to family policies and, interestingly, there are a number of similarities in family policies across the Nordic countries. While ECEC, since its initiation, has been considered a part of the family policies, it has also become an important aspect of other policy fields over the last decade. The second field where Nordic ECEC is a policy instrument is to increase the supply of labor, as it enables parents to participate in the workforce. This effect has led the Nordic countries to be pioneering countries when it comes to the increased work participation rate of women. Third, ECEC has increasingly become a part of the educational system in all five countries. Currently, the educational benefits from enrolling children in ECEC has become the central theme in ECEC debates in all the

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countries (OECD, 2018). The educational benefits contribute also to social equality and social mobility as it supposedly reduces the disadvantages for children from less privileged families. Although these three roles intertwine, the ways in which each role is highlighted in political debate, policymaking, and policy enactment vary across time and among the countries, thereby making it a complex area of governance. Additionally, new goals are also layered upon this core goal structure at different times in the varying countries. Simultaneously, these national ambitious are realized through municipal activities, as in all five countries, ECEC falls under the realm of municipalities, albeit with national policies framing its governance. Challenges Facing ECEC in the Nordic Countries: Demographic Changes, Accessibility, and Educational Approach The gradual movement of ECEC from being strictly related to childcare to also becoming a women’s liberation tool and then a first step in the educational ladder must be considered in connection with the growth of its use. Today, over 90% of five-year-old children attend kindergarten in all the Nordic countries. However, the countries reached this level at different times: Denmark in 1998, Iceland in 1999, Sweden in 2002, Norway in 2004, and Finland as late as 2019 (Nordic Statistics CHIL03). This implies that, currently, practically all children attend ECEC before beginning formal schooling, thereby making the institution more important both as a general welfare institution and as an educational instrument. A societal development that has paralleled the growing use of ECEC is the increasingly multiethnic composition of Nordic societies. In Sweden, over 20% of the children in ECEC settings speak Swedish as their second language, and—albeit at a lower level—the same can be said of the other Nordic countries with respect to their national languages (Garvis et  al., 2019, pp. 7–8). This adds to the diversity of families using the ECEC service. As governments aim to increase the use of the ECEC service to reduce social inequality and spur social mobility, language learning—particularly for children from immigrant families—has become one of the most highlighted functions of ECEC. Furthermore, the Nordic countries have traditionally had a stable fertility rate, but the last 10 years have witnessed a steady decline in fertility in the entire region (Hellstrand et  al., 2021). This has consequences for ECEC, as it changes some of the most important contextual factors. While

1 INTRODUCTION 

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earlier there was a lack of ECEC capacity and stable demand, now there is good coverage, but falling demand is expected as fewer babies are born. Shifting trends of where people live add complexity to this situation. In all Nordic countries, urbanization is taking place, with people moving to big urban centers. Simultaneously, smaller urban centers in the countryside are also growing at the expense of surrounding rural areas. Therefore, there are numerous municipalities with a declining number of citizens, but where the urban center within the municipality is growing (Smas, 2018). These trends make planning and scaling the ECEC sector more challenging. When examining the share of children participating in ECEC, it becomes a question of accessibility and consists of four elements: availability, affordability, amenability, and acceptability (Vandenbroeck & Lazzari, 2014). Even though ECEC is provided as a universal service, distance, lack of transportation, waiting times, fees, inconvenient operating hours, and views regarding socially acceptable ways of arranging child care and education cause local barriers to access (Paananen et al., 2019; Vandenbroeck & Lazzari, 2014)). In addition, access to any type of ECEC service does not guarantee meeting the policy goals related to reducing social inequality or increasing the educational aims of ECEC in case the quality requirements are not met. Quality in the context of ECEC has been topical in both political and academic debate over the last few decades, thereby producing various views regarding defining, assessing, and monitoring it depending on which societal roles related to ECEC are highlighted (Dahlberg et al., 2007). A novelty of Nordic ECEC lies in the role of educational aspects. At a fundamental level, the Nordic approach to the content of ECEC services can be characterized as holistic in nature, with play regarded as crucial to the well-being and development of children. Furthermore, care and learning are interwoven in the daily activities of the institutions involved. Institutionally, ECEC is typically independent of schools. This is a characteristic that is common among all Nordic countries, thereby making it a model that differs from those prevalent elsewhere in Europe (Korsvold, 2005). This varies from the Anglo-Saxon and Benelux countries, among others, that place greater emphasis on schooling. Indeed, in the Nordic setting, replacing play with standardized learning in a paradigm of school-­ preparation is conceived as unnecessary (Jensen, 2009) and developments toward this have faced criticism related to, for example, narrowing curricula, instrumentalism, and increasing inequality (see, e.g., Moss, 2007; Roberts-Holmes, 2021).

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Currently, all the Nordic countries have recognized ECEC as the first step on the educational ladder. This happened at different times. An example of this development is how state responsibility for ECEC has been moved from the ministries of social affairs to those of education in all the Nordic countries: Iceland 1973, Sweden 1998, Norway 2006, Denmark 2011, Finland 2013. In a review of national Norwegian steering documents in the sector, Nygård (2016) found that the premises for the kinds of skills considered important have changed from emphasizing solidarity, well-being, play, and practical work to emphasizing basic competence, language, and more systematic work in preparing children for school. The latter values are in line with the ECEC perspective, which has traditionally dominated numerous non-Nordic countries. Similar trends have been reported in Denmark (Brogaard Clausen, 2015), Sweden (Ackesjö & Persson, 2019), Iceland (Gunnarsdottir, 2014), and Finland (Husa & Kinos, 2005). Furthermore, the growing emphasis on education in the Nordic ECEC sector has led to increased state governance. As ECEC is recognized as an integral part of the educational system, it has become vital for the state to improve and supervise quality. This is an important backdrop against which to understand the increased willingness to regulate service content, and it is important for our understanding of the differing “room to maneuver” of non-public institutions.

Explaining Institutional Change In this book, we document and analyze the process of institutional development within Nordic ECEC polices and governance. To deepen the understanding of this development, we first need to understand the context this happens within, as we have described above. Second, we need to identify the trajectory of change. Third, we need to have a theoretical understanding of how and why institutional change takes place. With regard to the trajectory of change, in an analysis of European educational polices, Maroy (2012) describes the evolution of regulatory modes in educational policies in Europe as a shift from traditional coordination through a public professional-bureaucratic system to two separate postbureaucratic models. In this book, we demonstrate how the model developed by Maroy (2012) is useful for understanding recent developments in Nordic ECEC. We see that the traditional coordination through a public professional-bureaucratic system was replaced by two post-bureaucratic models, albeit to different extents: (1) quasi-market instruments to

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encourage private entrepreneurs (Westberg & Larsson, 2020), and (2) inspection as a government tool to retain balancing elements of “the evaluative state” (Ball, 2003). The different combinations of aspects from the professional-bureaucratic strategy, quasi-market approach, and evaluative state-model give the different countries a varied set of governance approaches. This resulted in five countries with different compositions of public, nonprofit, and for-profit providers, or what we will call welfare mixes. The first is the quasi-market. In the Nordic welfare context in which the government, at a local or national level, guarantees the services, there cannot be a real market. Rather, it is a quasi-market in which the state uses market-emulating instruments as it attempts to reap the benefit from the operation of non-public actors that heed economic incentives. Thus, the state orchestrates the quasi-market by determining prices and standards for structural or process quality. This can be done through some sort of public procurement process where the state tenders out contracts and where nonstate actors can compete for these contracts. In the ECEC sector, the important policy instrument is vouchers. This implies public subsidies for each child in private ECEC institutions, which result in parental fees that are closer or similar to the fees charged in public ECEC institutions. Subsidies may vary according to family income, the number of hours in the ECEC setting, family size, siblings in ECEC, etc. Thus, the price premium for choosing a private ECEC setting is reduced or eliminated. The political intention may be to promote private provision to fill the gaps in supply or create competition among providers based on quality or profile instead of price. Second, and related, we discuss “the evaluative state” (Neave, 2012) in which the institutions, or owners, enjoy considerable autonomy. However, a substantial apparatus is put in place in order to ensure that they live up to pre-established quality criteria. These external evaluations can be local, regional, national, or international, with each level having different benchmarks for good performance. An important aspect of such a model is that the institutions have freedom to develop themselves. The evaluation is necessary for the state, that is ultimately responsible for the outcome, to obtain knowledge regarding the kind of quality users receive. Simultaneously, the idea is that institutions perform better when they enjoy administrative freedom and autonomy. Thus, the two models are interrelated, as institutional autonomy is also a prerequisite for a functioning quasi-market.

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Further, the issue of information asymmetries creates an overlap between the models. The institution that provides ECEC services knows more about the content and quality of the service than the parents that are not present during the day. The asymmetry is even greater with the government that picks up much of the tab, but which has limited capacity to inspect and control. In such a situation, external audits, quality surveys, and evaluation are ways to inform both the state and parents about what happens in ECEC, thereby enabling the state to monitor whether or not providers live up to contractual obligation and order for the state to develop the service area; parents are expected to use the information to make an informed choice. While these models can help us identify the changes that we look for, we need certain tools to understand why changes may be taking place. Institutions are formal or informal regulations that constrain the behavior of individuals and groups. Policy areas, such as ECEC, involve both legally binding and informal constraints on behavior, are powerful in shaping resources and incentives for political actors, and, thus, constitute a durable arrangement (Pierson, 2004). However, changes in institutional arrangement are difficult to accomplish since users and employees may find common objectives of resistance; thus, change is often associated with policy failures (Peters, 2016). Therefore, for analyzing Nordic ECEC, historical institutional and discursive institutionalism may be relevant. Historical institutionalism focuses attention on the historic development of institutions. A key feature is that the timing of events is crucial, as a basic assumption is that historic development unfolds according to a given trajectory and that there are strong mechanisms at play that ensure path dependence. Thus, this approach provides a good explanation, as we seek to understand historic continuity in institutional arrangements. Historic institutionalism can also function as necessary context that complements explanations based on other types of new institutional theory (Schmidt, 2008). The challenge for historic institutionalism is to explain change. There are two main answers to these challenges. First, it is the notion that external shocks may create windows of opportunities where policy entrepreneurs may cast the development unto a new path. Therefore, we may occasionally observe radical changes followed by periods of path dependency. Policy failure may underlie shocks that make changes possible, but also different sorts of exogenous factors can provide the impetus for such a change.

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Second, researchers have developed theories of how incremental change over time can constitute major change in an institution (Mahoney & Thelen, 2010; Streck & Thelen, 2005). They identified four types of more gradual change in policies and institutions: layering, drift, displacement, and conversion. Together or alone, these mechanisms can spur gradual changes that, over time, become influential. In our case, the concept of layering is particularly relevant. Layering involves the placing of new constituents in an established institution’s framework. This implies that new external demands lead to new initiatives that do not replace existing arrangements but are layered upon them. Therefore, as institutions evolve over time, they often develop a complex, layered institutional configuration. Discursive institutionalism is centered on the role of ideas and discourse in politics. This approach enables a more dynamic understanding of institutions. Ideas are considered the substantive content of discourse and exist at different levels of generalizability: as policies, as programs, or as philosophies. Discursive institutionalists regard institutions not only as a body that frames the actions of agents but also as something that is constituted by the actions of agents. This makes institutions more malleable as agents form them through discursive abilities and, thus, create change or continuity (Schmidt, 2008). Indeed, what remains unclear is whether events drive change in policy ideas or whether ideas open windows, thereby creating new opportunities for policy change (Schmidt, 2015). Change can take place abruptly or gradually, but to explain the changes, we need to understand the ideas behind the actions of the people driving the change. Agents create change, but they do this within the context of the institutions and the ideas conveyed in discourse, which serves both as an internal coordination and an external communication. The context frames the discourse, and history remains part of what must be examined as “expectation of consistency and coherence can lead to “rhetorical entrapment”” (Schmidt, 2008, p. 312). Thus, actors can find themselves obliged to adhere to the implications of discourses that they have accepted in the past. For example, a politician defending a coalition compromise, thus, may find himself obliged to support the compromise even after the coalition has collapsed.

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Approaches to the Provision of Welfare Services As ECEC has practically become a universal welfare service in all the Nordic countries, its importance as part of the welfare society has been increasingly acknowledged. In all the Nordic countries, one of the most salient political issues is privatization and the role of private, nonprofit, and for-profit welfare providers (Bjøru et al., 2019; Hartman, 2011; Petersen et al., 2018). As mentioned earlier, in spite of a shared tradition, the Nordic countries have made different choices regarding this issue over the last 30 years. In this section, we present the most central concept for evaluating these developments and elaborate on how to think about these issues in a principled manner. The Three Actors in the Welfare Mix In broad terms, welfare services can be provided by the public sector, the nonprofit sector, and/or the for-profit sector. In the case of the Nordic ECEC sector, the public sector includes the municipalities in practically all cases. The for-profit sector consists of private actors that generally have no limitations on extracting profits by laws or statutes. The sector includes large multinational corporations, small sole proprietorships, and everything in between. In the Nordic countries, we see all these types of actors, but the role they play varies considerably among the countries. The nonprofit sector has, in many cases, been described as the residual portion—the units that are neither public nor for-profit (Lohmann, 1989). However, over the last couple of decades, a consensus has appeared in research on a definition for the nonprofit sector that allows for independent classification. The definition, developed by Enjolras et al. (2018), was the basis of the United Nations Statistics Division (2018) handbook Satellite Account on Nonprofit and Related Institutions and Volunteer Work. The core of this definition is that the organization is (1) private and, thus, not institutionally subordinate to the public sector governance structure; (2) self-governing: the entity must be able to control its own activities and have the authority to dissolve the organization; and (3) totally or significantly limited from distributing any surplus they earn to investors, members, or other stakeholders.

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Public Provision or Privatization? Interestingly, the academic literature on the welfare mix—the combination of public, nonprofit, and for-profit providers—is less explicit regarding the quality of public provision in comparison with that of nonprofit and for-­ profit providers. This may be a result of the public provider being “taken for granted”—it has always been present and will continue to be so (Feltenius & Wide, 2023). In the Nordic countries, the massive expansion of the welfare state in the post-WWII period implied that public provision was at the heart of socioeconomic reforms. The public sector had the responsibility for services that were earlier provided by private (nonprofit) providers, and new services were established by the public sector. To a varying degree, private providers were allowed to develop and remain in the sector. This dominance of the public sector in welfare provision is a core feature of the Nordic welfare model (Sipilä, 1997), although there are significant differences between the countries and service areas (Sivesind et al., 2017). The dominance of the public sector was selected in order to safeguard certain values and achieve important priorities in welfare policy. When debating theoretical arguments, often developed in other contexts, regarding the opening of the welfare field to nonpublic providers, it is important to be precise about these values. For example, historically, public dominance in all aspects of service provision was deemed necessary in order to insulate citizens from the harmful effects of market forces. Thus, the public provision of services became a method for the collective creation of a new democratic welfare society (Blomqvist, 2004; Sejersted, 2011). Indeed, even today, there is ongoing debate regarding whether the welfare system can be truly universal without public provision (Ruutiainen, 2022). The materialization of democratic values is conditioned by the distance between elected officials and the actual service. Responsible policymakers must remain in control of the service they are mandated to produce. In the case of ECEC, if a municipality wishes to make a policy effort within a certain aspect of the ECEC sector for the good of all children, this can be difficult to achieve if only a fraction of the children are in institutions that are under public control. In the scholarly literature, the dominance of public provision has been challenged on various grounds. To name a few, the public choice theory perceives public employees as driven primarily by self-interest, which consists of seeking to increase public budgets and the over-supply of services

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(Domberger & Jensen, 1997). Furthermore, the property rights theory holds that since the public sector cannot go bankrupt, they do not have the same incentives for efficiency as for-profit actors, thereby leading to suboptimal operations. There is also the argument that breaking up public monopolies and spurring provider diversity and competition will lead to increased efficiency, transparency, and cost containment (Savas, 1987). However, empirical work from the Nordic welfare sector has not been able to document such positive general effects of downscaling the level of public provision, even if one cannot dismiss the possibility that certain positive effects may exist (Petersen et al., 2018). The Welfare Sector as a Quasi-Market In practically all the Nordic countries, public, nonprofit, and for-profit providers all contribute to providing citizens with services on behalf of the state (Salamon & Toepler, 2015). This can be done in a number of ways. Traditionally, long-term framework agreements between the state and nonprofit actors were commonplace in the Nordic countries, with nonprofit units acting as quasi-public entities in certain instances and operating more autonomously in others. Over the last few decades, increased private provision has penetrated most Western welfare states, and the most common instruments for delegating authority to non-public providers have been contracting out and voucher markets (Petersen & Hjelmar, 2014). The first instrument consists of public tenders in which private entities compete for the right to provide goods or services for the public sector. Voucher markets consist of competition among various service providers, thereby enabling users to choose their preferred provider, with the costs covered by the public sector. The latter mechanism is most commonly utilized in the Nordic ECEC context. Publicly funded welfare services can never be considered a true market since they are based on the idea of insulating citizens from negative market effects. In the case of Nordic ECEC services, the state decides the level of user payments, not the market. This implies that there is no price competition among providers. Furthermore, the state attempts to secure equal access to services and compensate for social inequality, which involves disrupting the market-based relationship between supply and demand. However, the public sector can introduce market mechanisms and, thus, create a quasi-market. Le Grand (2007) identified four arguments for quasi-markets in public service provision. The first is concerned with

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efficiency gains and costs for the government. The other three involve giving power to citizens. They argued that quasi-markets enhance public sector responsiveness, empower citizens by providing them with choices, and promote equality by giving market powers to all citizens and not only those who are able to pay for services. If market mechanisms can produce these effects, they will give citizens more control over their service situation. These positive effects are not achieved simply by inviting private providers. Le Grand and Bartlett (1993) presented five conditions for a wellfunctioning quasi-market. First, the market must be structured in such a manner that incentivizes competition and price formation, which require various providers and numerous customers. Second, information must flow to users. Welfare services have some inherent information asymmetries that make it difficult to establish efficient markets. Providers are typically far better informed regarding quality issues than consumers are. Third, transaction costs must be limited. Fourth, the motivation of market actors must, to a certain extent, be based on financial considerations. Fifth, cream skimming must be avoided; in other words, providers must not only serve citizens who can generate a profit for them. Even if accepting that quasi-markets is, theoretically, a superior organizational form of welfare, not all these theoretical conditions are present or absent in the realities of the Nordic welfare context. Therefore, the issue is whether they are present at an adequate level. This is difficult to assess in a general sense and must be examined on a case-by-case level (Lloyd & Penn, 2012; Ruutiainen, 2022). What makes such comparisons demanding is that quality in all its aspects is inherently difficult to measure and verify and, thus, compare. Furthermore, as Nordic ECEC has been built on the idea of democracy, ultimately, it is at the local level that the aims of ECEC are decided in a participatory manner with staff members, guardians, children, and other parties involved (Dahlberg et al., 2007). This implies that comparisons between welfare providers or contexts encompass only a fraction of the relevant dimensions regarding the economy, quality, and democracy. The Role of Nonprofit Providers as Part of the Welfare Mix Thus far, we have discussed theoretical approaches to privatization and the possible effects of privatization in the Nordic context. The role of the nonprofit sector is often ignored in such discussions and is generally referred to as an anomaly in the model. Economic theories of nonprofit organizations

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specifically address this topic and attempt, in principle, to answer the question of why we need a third sector when we have a market and a state. In order to do this, these theories identify essential aspects of each of the institutional sectors and explain why and how they differ (Salamon & Toepler, 2015; Steinberg, 2006). A key expectation is related to creating complete services for the population: citizens are an increasingly diverse group with respect to culture, religion, ethnicity, and so forth; thus, it is becoming equally difficult to create services suited to individual citizens (Phillips & Smith, 2011). Governments may lack the knowledge, capacity, and coordinative ability to create a sufficiently diverse system to encompass the entire population. In addition, the public sector has a tendency to center its attention on the median voter and majority groups in society and, thus, overlook the interests of marginal groups. For-profit providers offer services to the largest market segment, which is not entirely different from the public sector’s emphasis on the median citizen. Consequently, there is a gap in services for minority populations—a gap that the nonprofit sector is well suited to fill (Weisbrod, 1978). By directing services toward smaller niches in the population, nonprofits compensate for the lack of breadth in public and for-profit providers’ offerings in terms of quality, special needs, interests, methodology, ideology, or beliefs (Clemens, 2006; Smith & Grønbjerg, 2006). As mentioned earlier, welfare services are activities with information asymmetry between service providers and users. Therefore, the ability of users and society to trust providers is decisive (Hansmann, 1980). When users have less information, it becomes more important for them to be able to trust the service provider. This applies to both users and public regulators, as there are limited opportunities for monitoring the quality of this type of service (Evers et al., 1997). As aforementioned, this is a core challenge for creating functioning quasi-markets. Weisbrod (1988) proposed distinguishing between quality indicators that are easy to observe and assess and those that are difficult to observe. Different market participants have different incentives regarding the prioritization of the two forms of quality. A profit-oriented provider has an incentive to achieve high measurable quality, but if doing so reduces profits, it will have an incentive not to devote resources to having high unobservable quality (Hansmann, 1987, p. 29). Nonprofit providers do not have the same disincentives to allocate resources to improve invisible quality (Salamon & Toepler, 2015, p. 2168).

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Ben-Ner and Van Hoomissen (1991) provided insights into the demand for nonprofits by explaining the supply of nonprofits. To do this, they focused on the entrepreneurs who founded nonprofit providers. These entrepreneurs had no economic incentive to create nonprofit alternatives. Therefore, a different objective must have motivated them, which was often a commitment to improve the quality of the services within the service area. Therefore, their participation in nonprofit activities can be a basis of trust. Stakeholders seek to ensure that the organization remains loyal to its founding values by recruiting people and establishing institutional solutions that promote adherence to their values (James, 1990). This may attract nonprofit providers that are particularly user-­oriented, since users themselves often establish the culture and define the structure of the organization. A special case of such entrepreneurs is cooperatives owned by users themselves. In the Nordic ECEC sector, parents occasionally assume this role, and there are a number of institutions that are run as parental cooperatives. Moreover, there is some evidence that this organizational form may be connected to quality in the ECEC sector (Leviten-Reid, 2012; Trætteberg & Fladmoe, 2020; Vamstad, 2012). Despite the supposed benefits of nonprofit provision, such providers also have certain potential weaknesses that can make them vulnerable to failures. While some of these weaknesses overlap with the for-profit and/or public sector, others are peculiar to the nonprofit sector (Dolšak & Prakash, 2022). An often-cited criticism is that, just like the public sector, the lack of incentives due to owners demanding profit generation make them more inclined to prioritize managerial emoluments (pleasant office colleagues, short working hours, greater output) to the members and managers. Therefore, nonprofits can become less efficient producers of services than for-profit firms (Fama & Jensen, 1983). A further weakness is that nonprofit providers do not have sufficient growth capacity to produce all the services that people want. They lack the ability to raise capital, as they tend to focus on their care mission rather than its expansion (Salamon, 1987). The strength of for-profit providers has been their skill to quickly implement large production volumes to serve large proportions of the population. However, the differences in entrepreneurial motivation and capacity can be reduced by financial and institutional frame-conditions and regulations that are suitable for the nonprofits. In contrast, policies typically used to privatize welfare provision promote market-competition that gives for-profits an advantage. As

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an alternative, interdependence theory points out that the strengths of the nonprofit sector complement the limitations of the public sector and vice versa, and argues for more collaboration in originating and delivering services (Salamon & Toepler, 2015).

The Remainder of This Book: ECEC From a Comparative Nordic Perspective In this book, we use this theoretical backdrop as a lens to understand the change and continuity we see in the welfare mix in Nordic ECEC services. Notably, in the ECEC field, the different countries have occasionally followed paths that are not in line with their overall approach to governing the welfare mix. This implies that Norway, which has been reluctant to privatize, has a commercial ECEC sector that has experienced accelerated growth; in contrast, Sweden, which has most eagerly embraced commercial enterprises in welfare, has witnessed more modest developments in this field. The systematic approach encompassing all five countries in this book can enable us to explain the dynamics involved in the fundamental decisions taken on marketization. The lessons to be learned may be relevant for the wider understanding of these welfare societies. To address this issue, in Chap. 2, we begin by examining the shared roots of Nordic ECEC, as we analyze differences and commonalities across the five countries in the initial phases of what is currently their respective ECEC service. In Chap. 3, we document how the countries moved in tandem as they legislated ECEC as a general welfare service and made plans to expand supply to make it a de facto general welfare service around the 1970s. In Chap. 4, we analyze the role of non-public providers and the deviating developments of the welfare mix. We study why we see the manifested patterns in the different countries and what the policy responses have been. An important determinant for the consequences of increased use of non-public providers is how and the extent to which the service is regulated. In Chap. 5, we address this issue, as we assess both national and local regulation, steering, and supervision. In Chap. 6, we review the studies that compare public, nonprofit, and for-profit provision of ECEC in the five countries. As we document this, the evidence is scarce, which is interesting given the political salience of this issue. Finally, in Chap. 7, the concluding chapter, we take stock of the role of private actors in Nordic ECEC today, provide explanations for how the current situation developed, and ask what the future might hold for the ECEC welfare mix in the Nordic countries.

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Throughout the book, we compare the five Nordic countries on the relevant dimensions to understand the background of their welfare mix, the change that took place, and the possible consequences of these changes. In our comparisons, there is some variation in how much space is devoted to each country. Two factors explain this variation. First, we devote more space to cases that experienced more changes. It is simply more material to convey. For example, this implies that governance changes in Norway take up more space than that in Denmark. Second, we rely on existing data and research; thus, our analysis and inferences depend on existing work. Here, there is some variation, as the Icelandic ECEC service in particular has received less scholarly attention than that in the other countries.

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In K. H. Sivesind & J. Saglie (Eds.), Promoting active citizenship? Markets and choice in Scandinavian welfare (pp. 285–310). Palgrave Macmillan. https:// link.springer.com/content/pdf/10.1007%2F978-3-319-55381-8_8.pdf Smas, L. (2018). Urbanisation. Nordic geographies of urbanisation In J. Grunfelder, L. Rispling, & G. Norlén (Eds.), State of the Nordic Region 2018 (pp. 36–47). Nordic Council of Ministers 2. http://norden.diva-­portal.org/ smash/get/diva2:1180241/FULLTEXT01.pdf Smith, S.  R., & Grønbjerg, K.  A. (2006). Scope and theory of government-­ nonprofit relations. In W. W. Powell & R. Steinberg (Eds.), The nonprofit sector: A research handbook (pp. 221–242). Yale University Press. SOU. (2019:56). Idéburen välfärd. https://www.regeringen.se/4aeada/content assets/978c3f825a704a9696e10dbb5ce40086/idebur en-­v alfar d-­ sou-­201956.pdf Statistics Norway. (2019a). Table 08520: Full-time equivalent persons, by activity (ICNPO). Satellite account for non-profit institutions. https://ssb.no/orgsat Statistics Norway. (2019b). Table 09174: Wages and salaries, employment and productivity, by industry National accounts. https://ssb.no/statbank Statistics Norway. (2019c). Revision of the national accounts time series. https:// www.ssb.no/en/nasjonalregnskap-ogkonjunkturer/artikler-og-publikasjoner/revision-of-the-national-accounts-time-series Statistiska centralbyrån. (2009). Tabell 15. Sysselsatta fördelat på verksamheter och kön år 2007. https://share.scb.se/ov9993/data/publikationer/statistik/oe/ oe0112/2007a01/oe0112_2007a01_sm_oe29sm0901.pdf Statistiska centralbyrån. (2019). Tabell 12: Antal förvärvsarbetande inom vård, skola och omsorg, Finansiärer och utförare inom vård, skola och omsorg. https:// www.scb.se/hitta-­statistik/statistik-­efter-­amne/offentlig-­ekonomi/finanser-­ for-­den-­kommunala-­sektorn/finansiarer-­och-­utforare-­inom-­varden-­skolan­och-­omsorgen/ Steinberg, R. (2006). Economic theories of nonprofit organizations. In W. W. Powell & R. Steinberg (Eds.), The nonprofit sector: A research handbook (pp. 117–139). Yale University Press. Storberget, K., Eriksson, M.  E., Monsbakken, C., Rokkan, E., Schade, S., & Aasen, A.-D.  N. (2021). Du er henta! Finansiering av private barnehager. Oslo: Kunnskapsdepartementet. https://www.regjeringen.no/contentassets/ 237b2557bb51412c9769e6f21026e52b/du_er_henta_web.pdf Streck, W., & Thelen, K. (2005). Introduction: Institutional change in advanced political economies. In W.  Streck & K.  Thelen (Eds.), Beyond continuity. Institutional change in advanced political economies (pp.  3–39). Oxford University Press. Svallfors, S. (2016). Who loves the Swedish welfare state? Attitude trends 1980–2010. In J. Pierre (Ed.), The Oxford handbook of Swedish politics. Oxford University Press.

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Trætteberg, H. (2018). Stability and change in Scandinavian welfare – The nonprofit sector as a buffer against for-profit expansion. In F. Engelstad, C. Holst, & G. Akvaag (Eds.), Democracy and institutional change – A Nordic perspective. De Gruyter Open. Trætteberg, H. S., & Fladmoe, A. (2020). Quality differences of public, for-profit and nonprofit providers in Scandinavian welfare? User satisfaction in kindergartens. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 31(1), 153–167. https://doi.org/10.1007/s11266-­019-­00169-­6 Trætteberg, H. S., Sivesind, K. H., Paananen, M., & Hrafnsdóttir, S. (2021). Private Early Childhood Education and Care (ECEC) in the Nordic countries: Development and governance of the welfare mix. (Rapport 2021:06) Institutt for samfunnsforskning. https://hdl.handle.net/11250/2831519 Trætteberg, H.  S., Sivesind, K.  H., Paananen, M., & Hrafnsdóttir, S. (2023). Quasi-market regulation in Early Childhood Education and Care: Does a Nordic welfare dimension prevail? Nordic Studies in Education, 43(1), 60–77. https://doi.org/10.23865/nse.v43.4006 United Nations Statistics Division. (2018). Satellite account on nonprofit and related institutions and volunteer work. https://unstats.un.org/unsd/nationalaccount/docs/UN_TSE_HB_FNL_web.pdf Vamstad, J. (2012). Co-production and service quality: The case of cooperative childcare in Sweden. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 23(4), 1173–1188. https://doi.org/10.1007/ s11266-­012-­9312-­y van Belle, J. (2016). Early Childhood Education and Care (ECEC) and its long-­ term effects on educational and labour market outcomes. RAND Corporation https://www.rand.org/pubs/research_reports/RR1667.html Van Lancker, W. (2018). Reducing inequality in childcare service use across European countries: What (if any) is the role of social spending? Social Policy & Administration, 52(1), 271–292. https://doi.org/10.1111/spol.12311 Vandenbroeck, M., & Lazzari, A. (2014). Accessibility of early childhood education and care: A state of affairs. European Early Childhood Education Research Journal, 22(3), 327–335. https://doi.org/10.1080/1350293X. 2014.912895 Vlachos, J. (2011). Friskolor i förändring. In L.  Hartman (Ed.), Konkurrensens konsekvenser. Vad händer med svensk välfärd (pp. 66–111). SNS Förlag. Weisbrod, B.  A. (1978). The voluntary nonprofit sector: An economic analysis. Lexington Books. Weisbrod, B. A. (1988). The Nonprofit Economy. Harvard University Press. Westberg, J., & Larsson, E. (2020). Winning the war by losing the battle? The marketization of the expanding preschool sector in Sweden. Journal of Education Policy, 37(5), 705–722. https://doi.org/10.1080/02680939. 2020.1861338

CHAPTER 2

Shared Roots—Private Initiatives Along Two Trajectories

Introduction The Nordic model in ECEC comprises shared features of both content and organization. In this chapter, we trace these features back to the initiation of ECEC in the five countries and examine how they have developed on similar paths from the initiation until the postwar period.

The Dual Trajectory of the ECEC System The tradition of collective childcare in Nordic countries dates back to the nineteenth century and was established outside the realm of the public sector. Early childcare institutions were strongly class-divided in all the Nordic countries. In each of these countries, collective childcare has two developmental trajectories that have become interwoven over time: the trajectory of children’s asylums and crèches, and the trajectory of kindergartens. In each country, the early history of ECEC included crèches for infants and asylums for older children established by charitable organizations to provide shelter from the dangers of the street and to socialize children to a middle-class lifestyle and values. Kindergartens were more learning-oriented and served children from the upper and middle classes. In Sweden, Norway, Denmark, and Iceland, these two trajectories

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4_2

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have proceeded in parallel; in Finland, the trajectories have proceeded in two intertwined phases. Nonprofit actors were the central actors in establishing the service, with only a few private market-based initiatives. In Nordic countries, the ECEC system and pedagogical approaches in ECEC have shared roots. Fundamentally, the pedagogical approach of Nordic ECEC can today be characterized as holistic, where play has a central role. By holistic approach, we imply the interwoven nature of care and learning in daily activities, and setting the objectives of ECEC to foster the overall well-being of children (Karila, 2012). In addition, over time a specific focus on democracy, equality and on the principle of everyone’s right to participate in the society has developed. These shared values have manifested as pedagogical practices that aim to support children in becoming active, reflective, and independent (Einarsdottir et al., 2015). The Nordic perspective was particularly central in this initial phase. The public sector involved itself to a limited extent in the service, and independent childcare institutions were weak and sought strength through cooperation across borders. Therefore, cooperation among the Nordic countries in terms of education and advancing the service was crucial for the development of the service in each country. Sweden was a frontrunner, and the establishment of the Swedish Frobel’s association in 1918 was an important event for childcare development also in the other Nordic countries (Balke, 1995, p. 247).

Trajectory 1: Charities Establish Children’s Asylums as Protectors from the Dangers of Streets Early childcare institutions were mainly established and maintained by charity organizations. In certain cases, local authorities economically supported these early childcare institutions. Small fees covering modest food expenses were often collected; however, in certain cases, childcare was completely free of charge (Leira, 2002; Meretniemi, 2011). Thus, this can be understood as a civic forerunner of the welfare state. In all the Nordic countries, early childcare provision—the establishment of children’s asylums and crèches—were related to urbanizing societies and tackling socioeconomic problems. These childcare institutions were established to care for children of working mothers whose waged work was essential for the family and for children in vulnerable life situations. They aimed at enabling mothers to provide for the family by

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empowering them to participate in the labor force, providing shelter for children, and improving the future labor force through developing useful qualities in the children (Leira, 2002), often through a strong focus on routines and strict discipline (Villadsen & Hviid, 2017). According to Leira (2002), these services often also catered to single parent families. In Sweden, Norway, Denmark, and Finland, children’s asylums and crèches began emerging in the nineteenth century, while in Iceland this development took place after the turn of the century. In Sweden, the first infant-schools, inspired by the examples from England, were established in the 1830s. They had specific pedagogical goals, but were very few in number (Westberg, 2022). The influence from England is a feature of Swedish ECEC history that diverges from other Nordic countries where English influence has not been at least as extensively reported. The number of available places was rather limited for over a century thereafter (Leira, 2002). In Norway, a charity association called “Friends of the Poor” established the first children’s asylum in 1837. In Denmark, similar to Norway and Sweden, the history of ECEC is strongly tied to preventive childcare asylums that date back to the early nineteenth century (Villadsen & Hviid, 2017). In Finland, the first childcare institutions that had sociopolitical aims—sheltering children from the dangers of the urban environment and taking care of their health, hygiene, and nutrition—were established in 1888 (Meretniemi, 2011). In Iceland, “day homes” for poor children were established in the 1920s by charity associations. The mission was to protect children from unhealthy influences and support spiritual and physical well-being and development of children (Broddadóttir et al., 1997). Although the main purpose of these early institutions was to provide care to children from poor families, there were also other aims such as supporting children’s development and learning. For example, in Finland, early childcare institutions followed the principles of Friedrich Froebel’s pedagogy: they highlighted the importance of play, a homelike environment, and learning through small household activities (Meretniemi, 2011). Asylums were an urban phenomenon in mainly rural countries (Leira, 2002; Meretniemi, 2011) and the development of these institutions relates to the urbanization of Nordic countries. To a certain extent, during the early phases of urbanization, urban environments were considered less desirable for children compared to rural environments. A rural family home was set as an ideal for asylums. For example, in Finland, it was

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typical that childcare centers had a small vegetable patch and/or chicken that children helped look after (Ilmolahti, 2007). In all Nordic countries, the children’s asylums were established and run by charitable organizations, occasionally with some support from the public sector. There was no market, private purchasing power, or public financing that made for-profit provision a relevant organizational form at this time. Like most welfare service in the Nordic countries at the time, the nonprofits dominated the scene.

Trajectory 2: Philanthropic Kindergartens and For-­Profit Child Residential Homes for Wealthy Families The other trajectory of early childhood education and care institutions in Nordic countries is related to educational endeavors. In this trajectory, Friedrich Froebel—a nineteenth-century German educator who is considered the creator of kindergarten—and his pedagogical principles played a central part. In Sweden, the first kindergartens started in 1890 (Haug, 2015). They operated part-time and were mostly used by well-off families where mothers did not work outside the home. However, kindergartens did not only cater for children from the upper and middle class families but they also recruited children from socially disadvantaged families (Haug, 2015). In these cases, resembling the first kindergartens in Finland, the aim was to socialize children to adapt to middle-class ways of living (Meretniemi, 2011). In Norway, the first kindergartens inspired by Froebel and his successors were established from the mid-nineteenth century onward, and in Denmark slightly later, in 1871 (Haug & Storø, 2013). In both these countries, similar to Sweden, the first kindergartens catered mainly to children of wealthy families. A home-like environment was seen as an ideal and kindergartens operated for only half a day. Following these institutions, Froebelian kindergartens developed as philanthropically financed institutions targeted at children from vulnerable life situations. In Iceland, part-time playschools that aimed to support children’s upbringing were opened in the 1930s. Most of the children attending these playschools were from upper-class families (Einarsdottir & Wagner, 2006). In Icelandic ECEC, the work of Dewey has been particularly

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influential (Gunnarsdottir, 2014). Dewey believed that each individual constructs new knowledge from his or her previous knowledge and experience in learning. Similarly to Froebel, Dewey highlighted nurturing the natural inclination of a child to explore. Finland has on some aspects had a few deviations from the Nordic pattern. While in other Nordic countries the two trajectories, development on asylums that addressed socio-economic problems related to urbanization and kindergartens that focused more on ECEC as a first step of schooling took place in parallel, in Finland, they appear to exist mainly in separate phases. As in Sweden, Norway, and Denmark, in Finland also the origin of the kindergarten tradition was inspired by the aim of supporting children’s development and learning Froebelian pedagogy. The first kindergarten was established in the context of a teacher training seminar in the late nineteenth century. The aim was to educate children and integrate kindergartens as part of the education system. However, in Finland, the idea of educating young children outside family was strongly objected to and, thus, the first kindergartens that were connected to grammar schools and teacher training seminars were already abolished before the turn of the century (Meretniemi, 2011). However, the kindergarten tradition was prevalent in childcare institutions organized by charity organizations described in the earlier section. In addition to kindergartens, at least in Sweden and Denmark, there were other types of institutions that cared for children for longer periods. These institutions, called barnpensionats in Swedish and børnehotel (in Danish), have been translated as “Children’s boarding houses” or “children’s residential care” (Sjöberg & Sköld, 2021). According to Sjöberg and Sköld (2021), they have functioned as recreational sites for children who were perceived as being in need of a visit to the countryside, as a childcare solution for wealthy parents going on vacation without their children, and as places to which children whose mothers were sick or in a need of rest or children who were perceived as “difficult to handle” could be sent. Unlike other childcare facilities, most barnpensionats offered residential care around the clock and many of the enrolled children were separated from their families for days or weeks (Sjöberg & Sköld, 2021). Barnpensionats were organized by both charitable organizations and by entrepreneurs. The accommodation in barnpensionats was not subsidized by state or municipality (Sjöberg & Sköld, 2021). Therefore, instead of being part of a state-subsidized welfare service, barnpensionats appeared

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to be mainly private, for-profit businesses (Sjöberg & Sköld, 2021). Sjöberg and Sköld (2021) report that barnpensionats vanished at least in Sweden in the 1970s. They suggest that this might relate to the expansion of municipal childcare (day care and leisure-time care) during the 1970s and 1980s and extended paid holidays for adults. The dual socio-economically differentiated trait of the ECEC system is also reflected in the political discussion around the topic of collective childcare in the late nineteenth and early twentieth centuries. The place of childcare institutions in relation to social and education policies was highly debated (Meretniemi, 2011). These divisions in the discussion can still be identified in certain contemporary policy debates (Paananen et al., 2019). While the children’s asylums were purely charitable, nonprofit endeavors, the pedagogical middle-class day care facilities had organizations that were more diverse. While some were nonprofit, these services were used by families with purchasing power, an aspect that created a real market with no or only little public financing. Indeed, demand from wealthy families made this service co-exist with the public sector financed ECEC services until the 1970s.

The Merging of the Two Trajectories In the period after World War II, the public sector increasingly recognized childcare as a public sector domain. This implied that while earlier public sector interventions were mainly municipal initiatives, now also the state took responsibility. Furthermore, by replacing, supporting, and supplementing the weaker non-public structures in childcare, the public sector was able to merge the two trajectories. This sets all the Nordic countries apart from the divide by orientation to care and learning that is still a prominent feature of the early childhood systems in different parts of Europe. While voluntary associations and charitable organizations took the lead in the introducing and developing childcare services, public authorities eventually came to dominate the services through financial support and supervision in all the Nordic countries. However, after World War II, public attitudes toward public childcare were hesitant. Mainly, social reasons such as illness in the family or support for single mothers were accepted as justification for the use of the service. In the 1930s, preschool and early childcare became part of the discussion regarding the modern welfare state in Sweden, and this discussion

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soon spread to Norway. In Sweden, Social Democrats Alva and Gunnar Myrdal voiced concern regarding the fall in the Swedish birthrate and called for stronger political commitment to the population question. Population concerns were less pronounced in Norway and Finland. Attention was directed to the poor quality of life of numerous city children living in overcrowded apartments with dangerous outdoor areas. In addition, health and hygiene standards were considered harmful to children’s well-­being (Leira, 1992). Myrdal advocated state-sponsored collective childcare, a service not only for the poor, and for free access to institutions that facilitated play and development. The Social Democratic Party had ambitions for a welfare state with universal services and entitlements, including child allowance as cash payments for all (Rothstein, 1998). The first public committee investigating the issue was established in 1938 and concluded that ECEC could be regarded as an acceptable solution when female work participation was desired, but that it was not the ideal form of care for children (Korpi, 2015). The policy development in Sweden initiated the wave of transitioning to an integrated system in all Nordic countries. In Sweden, in the 1940s and 1950s, most childcare was still non-profit, but it was supplemented by an increasing number of municipal institutions. In 1944, the term “crèche” was changed to “day care center.” Moreover, the National Boards of Health and Welfare became its supervisory authority. Mainly, day care was organized as a part-time service. These “playschools” were preferred by municipalities because they were less expensive, which also meant low pedagogical ambitions (Korpi, 2015). Full-time childcare for working mothers was still controversial and was mainly considered acceptable as help for single mothers or as part of child protection (Nyberg, 2000). Other Nordic countries followed suit. In Norway, the first steps of state intervention to childcare were taken in 1946. It was placed on the political agenda by the Labor government following the discussion originating in Sweden (Leira, 1992). Contrary to some other Nordic countries, in Norway, the economy did not call for the mobilization of the woman in labor reserves (Leira, 1992). Yet, after World War II, the two separate service types were decidedly mixed. In Denmark and in Finland, the two trajectories of ECEC began merging in the beginning of the twentieth century. In Denmark, the universal approach was stipulated in law in 1964; in Finland, the government established a committee to prepare a suggestion for an integrated childcare

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system in 1970. In the policy discussion in Finland, childcare was still mainly considered a service for families whose parents participated in the labor force or for children from deprived backgrounds (Onnismaa et al., 2014). In Iceland, playschool and day care centers were integrated under the Ministry of Education in 1973. The term “day care” was changed to playschool. Policy debate revolved around whether the main purpose of playschool should be educational and for all children or as a social service for parents who wanted it. According to Einarsdottir and Wagner (2006), this represented an important shift in early childhood education policy. They explain that the education and care of children prior to compulsory school was after the enactment of the new legislation no longer a social policy geared particularly toward poor children, but a part of the nation’s education policy. The growth of the public sector in Sweden, Norway, Denmark, and Finland has been related to the strength of the social democratic parties (Christiansen et al., 2006). However, in Iceland, the social democrats have never been the largest party—center and the right-wing parties have been the most influential during the post-war period. This might explain the lower proportional expenditure to children and families and the fact that in comparison to other Nordic countries, the public sector in Iceland is small (Broddadóttir et al., 1997). After the merging of social policy and more learning-oriented trajectories, the phase of expansion of the welfare state began in each of the countries. We describe this development in Chap. 3.

Fostering a Nordic ECEC Model Through Kindergarten Teacher Education As we have seen, Froebelian pedagogical tradition has been influential in all the Nordic countries. This tradition, originating in nineteenth-century Germany, highlights that in play children construct their understanding of the world through a direct experience with it. Froebelian tradition emphasizes the importance of taking into account the “whole child” in the activities organized in ECEC: health, physical development, emotional well-being, social relationships, and spiritual aspects of development were considered equally important. Moreover, intrinsic motivation, resulting in child-initiated activities, was also highlighted. Further, a home-like

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environment was presented as an ideal for children of a young age, and Christianity played a central part in early childcare institutions. Froebelian ideas were cemented as part of the Nordic ECEC largely via kindergarten teacher education. In the 1920s, Sweden, Denmark, and Finland established formal educational programs for ECEC staff. The first educated staff in Norway and Iceland undertook their studies in Denmark and Sweden. In Finland, the pioneers of ECEC undertook their studies in Germany. Accordingly, the pedagogical principles of the ECEC institutions were similar in each of the Nordic countries, inspired by Froebel’s ideals of free play, creative learning experiences, and participating in practical activities, such as gardening and cleaning. At least in Finland, kindergarten teacher training also required religious commitment (Meretniemi, 2011). These shared roots of kindergarten teacher education provide a historical explanation of the development of a shared understanding of the service content in the Nordic countries (Ekspertgruppen om barnehagelærerrollen, 2018). Further, the training of preschool teachers has been moved to universities in each of the countries, thereby reflecting the development of early childhood education as a profession that is more closely tied to other sectors of education. Some of these principles are still recognizable in Nordic ECEC. Free play and exploration of outdoor environments have high priority in Nordic ECEC (Kragh-Müller, 2017). A large part of the children’s day is typically dedicated to playing both indoors and outdoors (Einarsdottir et al., 2015). Institutionally, the ECEC institutions in Nordic countries are mainly independent of schools. These features are somewhat shared among all Nordic countries. Moreover, certain scholars have argued that it makes it a model that differs from those prevalent elsewhere in Europe (Korsvold, 2005)—for example, from the Anglo-Saxon and Benelux countries, among others, that place more emphasis on formal schooling.

Chapter Summary A core feature of the Nordic development of ECEC is that historically, nonprofit providers established and developed the service. For-profit provision existed, but only in the form of individual institutions catering to a limited group of affluent families. The public sector provided some support at the local level, but only in order to secure assistance to children in need. The role of for-profit providers has gained political attention from

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the 2000s onward, but as we have seen, before this, they were not a relevant part of the sector. The development of ECEC services and their gradual expansion is connected to the urbanization and industrialization (Alila et al., 2014) that took place in different times in each of the Nordic countries. This is an explanation for the differentiated timing of events we see among the Nordic countries. However, because of the commonalities presented above, Nordic ECEC has been characterized as being a separate model compared to ECEC elsewhere (Jensen, 2009). The Universal ECEC system in Nordic countries has developed in the context of the construction of the welfare state when two separate childcare policy trajectories merged. One of the key aims of the Nordic welfare model has been to produce social cohesion and secure prerequisites for a functional democracy. Thus, Nordic ECEC policies have been closely connected to social policy, labor policy, family policy, and—more recently—to education policy. Interestingly, numerous features that were prominent in the initial phases described in this chapter still have relevance for the sector. Organizationally, the dominance of the nonprofit sector follows the pattern from other service areas in the same time. In the next chapter, we discuss how this dominance, to different degrees, resulted in the nonprofits remaining important providers. The local anchoring of the service where municipalities play a central role is something we still see today and this can also explain important geographical differences within countries. Moreover, the weak institutional embedding of the service area contributes to diversity as well as on cooperation. Weak institutional structures gave diversity within each country as no central authority promoted unity. At the same time, collaboration across border, for example in education of staff contributed to some convergence across countries. However, Nordic tradition is not a specific “program” with well-defined goals and pedagogical methods. Rather, it is a varying combination of somewhat shared discourses and traditions gradually developed over time. Nevertheless, major differences exist between the individual centers and municipalities. Due to a large degree of autonomy, educators have always been relatively free to plan everyday practices in their ECEC centers. This, to a certain extent, might challenge the view of a separate and unanimous Nordic ECEC model.

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References Alila, K., Eskelinen, M., Estola, E., Kahiluoto, T., Kinos, J., Pekuri, H.-M., Polvinen, M., Laaksonen, R., & Lamberg, K. (2014). Varhaiskasvatuksen historia, nykytila ja kehittämisen suuntalinjat: Tausta-aineisto varhaiskasvatusta koskevaa lainsäädäntöä valmistelevan työryhmän tueksi (952263266X). Balke, E. (1995). Småbarnspedagogikkens historie. Universitetsforlaget. ̵ Broddadóttir, I., Eydal, G., Hrafnsdóttir, S., & Sigurdardóttir, H. S. (1997). The development of local authority social services in Iceland. In Social care services: The key to the scandinavian welfare model (pp. 51–76). Routledge. Christiansen, N. F., Klaus, P., Edling, N., & Haave, P. (Eds.). (2006). The Nordic model of welfare: a historical reappraisal. Museum Tusculanum Press. Einarsdottir, J., Purola, A.-M., Johansson, E.  M., Broström, S., & Emilson, A. (2015). Democracy, caring and competence: Values perspectives in ECEC curricula in the Nordic countries. International Journal of Early Years Education, 23(1), 97–114. https://doi.org/10.1080/09669760.2014.970521 Einarsdottir, J., & Wagner, J.  T. (2006). Nordic childhoods and early education: Philosophy, research, policy and practice in Denmark, Finland, Iceland, Norway, and Sweden. Information Age Publishing. Ekspertgruppen om barnehagelærerrollen. (2018). Barnehagelærerrollen i et profesjonsperspektiv  – et kunnskapsgrunnlag. Kunnskapsdepartementet. https:// www.regjeringen.no/contentassets/f78959abbdc54b0497a8716ab2cbbb63/ barnehagelarerrollen-­i-­et-­profesjonsperspektiv.pdf Gunnarsdottir, B. (2014). From play to school: Are core values of ECEC in Iceland being undermined by ‘schoolification’? International Journal of Early Years Education, 22(3), 242–250. https://doi.org/10.1080/09669760.2014.960319 Haug, K. H., & Storø, J. (2013). Kindergarten — a universal right for children in Norway. International Journal of Child Care and Education Policy, 7(2), 1–13. https://doi.org/10.1007/2288-­6729-­7-­2-­1 Haug, P. (2015). The long history and continuing development of ECEC provision in Sweden and Norway. In T. G. David, S. Kathy, T. D. Powell, K. Goouch, & P.  Sacha (Eds.), The Routledge international handbook of philosophies and theories of early childhood education and care (pp. 322–329). Routledge. Ilmolahti, O. (2007). Sata vuotta työläislapsuutta: Sörnäisten lapset kohteina ja kokijoina. In M.  Meretniemi (Ed.), Ebeneser: 100 vuotta lasten hyväksi (pp. 31–41). Ebeneser-koulutus. Jensen, B. (2009). A Nordic approach to Early Childhood Education (ECE) and socially endangered children. European Early Childhood Education Research Journal, 17(1), 7–21. https://doi.org/10.1080/13502930802688980 Karila, K. (2012). A Nordic perspective on early childhood education and care policy. European Journal of Education, 47(4), 584–595. https://doi. org/10.1111/ejed.12007

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Korpi, B. M. (2015). Förskolan i Politiken – om intentioner och beslut bakom den svenska förskolans framväxt. Utbildingsdepartementet, Regeringskansliet. https://www.regeringen.se/4acc7c/contentassets/7d83393009994779a34 0d8b839e5e8ae/forskolan-­i-­politiken%2D%2D-­om-­intentioner-­och-­beslut-­ bakom-­den-­svenska-­forskolans-­framvaxt-­u015_007.pdf Korsvold, T. (2005). For alle barn! Barnehagens framvekst i velferdsstaten. Abstrakt forlag. Kragh-Müller, G. (2017). The key characteristics of Danish/Nordic child care culture. In C. Ringsmose & G. Kragh-Müller (Eds.), Nordic social pedagogical approach to early years (pp. 3–23). Springer International Publishing. https:// doi.org/10.1007/978-­3-­319-­42557-­3_1 Leira, A. (1992). Welfare states and working mothers: The Scandinavian experience. Cambridge University Press. Leira, A. (2002). Working parents and the welfare state: Family change and policy reform in Scandinavia. Cambridge University Press. Meretniemi, M. (2011). Kutsumustehtävästä lastentarhanopettajan ammattiin. In A. Heikkinen & P. Leino-Kaukiainen (Eds.), Valistus ja koulunpenkki. Kasvatus ja koulutus Suomessa (pp. 253–265). Nyberg, A. (2000). From foster mothers to child care centers: A history of working mothers and child care in Sweden. Feminist Economics, 6(1), 5–20. https:// doi.org/10.1080/135457000337642 Onnismaa, E.-L., Paananen, M., & Lipponen, L. (2014). Varhaiskasvatusjä rjestelmän polkuriippuvuuksien jäljillä: Exploring the path-dependency of finnish early childhood education and care system. Kasvatus & aika. Paananen, M., Repo, K., Eerola, P., & Alasuutari, M. (2019). Unravelling conceptualizations of (in)equality in early childhood education and care system. Nordic Journal of Studies in Educational Policy, 5(1), 54–64. https://doi. org/10.1080/20020317.2018.1485423 Rothstein, B. (1998). Just institutions matter: the moral and political logic of the universal welfare state. Cambridge University Press. Sjöberg, J., & Sköld, J. (2021). Childcare for sale: Mapping private institutions in Sweden 1900–1975. The Journal of the History of Childhood and Youth, 14(1), 113–132. Villadsen, J.  W., & Hviid, P. (2017). The history of children’s engagements in Danish child care. In C. Ringsmose & G. Kragh-Müller (Eds.), Nordic social pedagogical approach to early years (pp.  43–62). Springer International Publishing. https://doi.org/10.1007/978-­3-­319-­42557-­3_3 Westberg, J. (2022). The transnational dissemination of the infant school to the periphery of Europe: The role of primary schools, religion, travels, and handbooks in the case of nineteenth-century Sweden. Paedagogica Historica, 58(1), 99–119. https://doi.org/10.1080/00309230.2020.1803936

CHAPTER 3

From the Fringes to the Heart of the Welfare State—Growth in ECEC Coverage

Introduction This chapter addresses the birth of the modern ECEC service in the Nordic countries, from its legislative foundation around 1970 to achieving full coverage approximately 30–40 years later. We trace the governance tools used to achieve the growth in coverage and the different strategies the countries used to include public, nonprofit, and for-profit providers in the provision.

Legislative Foundation From around the 1970s, new legislation that aimed to make ECEC a universal service was enacted in all Nordic countries. These new legislations were instrumental in setting the goals of increasing public responsibility, thereby making ECEC a service for the entire range of the population and, in most cases, make provision a predominantly public sector task. Taken together, these developments moved ECEC from being a service area in which the institutionalization of childhood was challenged to a core ingredient of the Nordic welfare state. The new legislation was introduced first in Denmark in 1964, then in Finland and Iceland in 1973 and in Sweden and Norway in 1975. Although there were certain differences between the countries, a number of © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4_3

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similarities dominate. The after-war years were in all countries characterized by urbanization and industrialization, making the case for increased capacity for childcare in order to allow for increased labor market participation. Additionally, the pedagogical aspects of this child protection received increased attention as part of the social developments in all five countries. A contemporary research report comparing the five Nordic countries found these aspects to be prominent explanation for the development towards an increased role of ECEC in all countries (Nordisk ministerråd, 1978). In Denmark, the new legislation advanced ECEC as a universal service by abolishing uptake based on parental income and changed the name from welfare institution to “day institution,” thereby indicating a heightened pedagogical focus. The reform was passed unanimously in parliament, and while some based their support on the educational effects on children, others stressed that it enabled women to participate in work life (Gulløv, 2012). The changes were not noncontroversial, as they represented an end point for major debates that circled around distributional issues of who receives and who pays for public goods and also included more ideological subjects like the autonomy of families, gender roles, and what are in the best interest of children (Petersen, 2019). The reform prompted major increases in state funding from the late 1960s, starting a process that resulted in ECEC becoming an individual right in 2006 (Jensen, 2017, p. 72). Major growth in ECEC use began with the legislative change in 1964 and increased most rapidly for children between three and six years old, and also today usage remains higher for this age group. In 1973, 34% of this older age group used ECEC, full time or part time (Rostgaard, 2010, p. 18). The next country out was Finland, where the drafting of the Act on Children’s Day Care (36/1973) implied that the regulation of different types of childcare and early childhood education arrangements was more unified. The Act on Children’s Day Care subsumed the different kinds of ECEC services under the conceptual umbrella of “day care” and these services became part of social services. The societal role of these services was considered, in political debates, as a service enabling both parental labor force participation and child welfare, despite its ideological roots as part of the educational system. Since the establishment of the act, both center-based ECEC and family day care—which is typically provided in the home of the care providers or another home-like environment—have been considered formal ECEC services, including being governed by the

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same legislation. The establishment of the legislation was part of an initiative aimed at building the welfare state (Alila et al., 2014). Iceland also passed the first act on ECEC in 1973. At this point, the day care system was characterized by nonprofit organizations operating the majority of day care institutions and staff training, with relatively little state support (Broddadóttir et  al., 1997). In many ways, the modern ECEC in Iceland was established in 1973, when this first act was passed. From then on, municipalities gradually took control of the provision as the coverage expanded. Although the first act was not passed until 1973, bills had been proposed in parliament in the 1940s and 1960s on the operation of day care. The first such bill, in 1946, emphasized that because of urbanization and industrialization, childcare was becoming a social problem and that it was the responsibility of the state to provide day care as a solution. Therefore, the safety and well-being of children was the main ideology behind this bill, not as a means for mothers to be able to work outside the home. Subsequently, two bills were presented in 1963 and 1965 that emphasized the operation of day care centers for the public and for the establishment of a school to train ECEC teachers. In these bills, the emphasis had shifted from the interest of the child to labor market policies and the need for women to participate in the labor market (Eydal, 2005). In the legislative act that was actually passed, several reasons were put forward regarding children’s need for day care, such as the child’s development and safety and enabling both parents to participate in the labor market. These arguments were rather similar to those from 1946. There was a political consensus on the legislation, and there were several reasons for its timing, such as changing living conditions, public acceptance of the importance of day care for the well-being and development of the child, the need for women to participate in the labor market, and the demand by women for gender equality (Broddadóttir et al., 1997). In this legislation, the term “day care” (i. dagvist) was used, and the services were divided into day care nurseries, kindergartens, and school day care centers. In the legislation, special emphasis was placed on the pedagogical value of day care institutions and the education of qualified pedagogues. At the time, the government also accepted responsibility for providing training and funding for ECEC and took over most of the ECEC institutions owned by nonprofit organizations (Gunnarsdottir, 2014). This legislative development implied that day care institutions were recognized as a public sector responsibility (Eydal, 2005a). This is reflected

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in statistics on the expansion of day care between 1973 and 1984, although the volumes were low and only part-time care for children three years and older was usually available. In 1984, 34% of three- to six-year-olds were enrolled in part-time day care (Broddadóttir et al., 1997; Eydal, 2005). There were no controversies regarding who should provide the services. In Sweden, debates regarding ECEC took place since the 1930s, with the issue of women’s participation in the labor market and divergent views on what is best for the children as the main topics of discussion. With the economic boom of the 1960s, the need for labor increased, with women as an available, largely untapped reserve. Simultaneously, progressive ideas had fertile ground in Sweden, thereby making the country a world leader in developing new family policies regarding parental leave, parental benefits, and ECEC. The ECEC policy was driven forward by large public investigations (barnstugeutredningen). A public committee was established in 1968 and delivered its proposal of over 1000 pages in 1972 (Korpi, 2015). This report outlined an ambitious childcare policy to promote progressive pedagogies and equal childhood conditions. One of the main outcomes of the report was the Law on Childcare in 1975, which—although mainly addressing five- to six-year-olds—defined ECECs as a municipal responsibility (Westberg & Larsson, 2020). Children from five years old gained the right to 525 hours of ECEC per year. The law covered day care centers, part-time groups, and even family day care as part of the ECEC concept, which caused some confusion. The responsibility for expanding the supply of places was duly placed on the municipalities, and the National Board of Health and Welfare was tasked with educating the staff and promoting content that would help educate the children as part the service. Norwegian ECEC has its roots in the pre-war era and was gradually expanded, until the 1970s. Indeed, economic incentives from the state led to more than a doubling of usage from 7565 children in 1960 to 17,470 in 1972 (NOU 1972: 39, p.  15). Yet, this was still far behind the other Nordic countries. Of these ECEC places, approximately half were in the capital, Oslo, while 350 municipalities had no ECEC to offer the families. In 1971, approximately 45% of children attended public ECEC, 53% attended nonprofit ECEC, while the remainder attended for-profit ECEC mostly owned by one person who also worked in the institution herself. Approximately 100 children attended ECEC in the latter group (NOU 1972:39, pp. 22–23).

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The modern Norwegian ECEC was founded in 1975 when parliament passed the first kindergarten act, and the field became a part of the social policy and was no longer subject to childcare legislation. Moreover, the new legislation was part of a reform involving increased public responsibility for the expansion of supply. Before the 1970s, the establishment of ECEC was directed toward specific groups of children, and local, private initiatives were normally responsible for the setting up of new institutions (Korsvold, 2005, p. 134). From 1975 onward, the state assigned municipalities the task of identifying local needs for increased supply, but they were not obliged to provide sufficient supply. At this point, only 30,000 children attended ECEC—that is, approximately 7% of children aged one to five years. Most of the offers were located in cities (Gunnesdal, 2010, p. 7). Increased state funding was part of the reform, which led to the first phase of major expansion of supply. Unlike today, when all political parties embrace ECEC, this was a controversial issue both among and within parties. The controversies surrounded the role of ECEC in society— gender roles and family life—more than the question of who should provide this service (Ellingsæter & Gulbrandsen, 2003, p. 54). The legislative advances around 1970 pushed all the Nordic countries in the same direction: ECEC was to become a general welfare good. All five countries had witnessed debates on the role of ECEC in the family policies and in the upbringing of children. Although this remained a controversial topic, these legislations signified an acceptance of ECEC as a natural part of the emerging welfare states. In terms of coverage, the laws in all countries led to expansion, but at varying speeds and from different points of departure. At this point, the development had reached different levels, with Norway as a laggard, as illustrated in Table 3.1. At this point, ECEC was predominantly a city phenomenon, and the rate of urbanization can, thus, partially explain the different trajectories of expansion of ECEC services. Table 3.1  Development of ECEC in the Nordic countries in 1976 Denmark Finland Iceland Number of children aged 0–6 years Places in ECEC Places in ECEC as a percentage of the total number of children Source: Nordisk ministerråd (1978, p. 13)

503,000 188,755 37.5%

Norway

Sweden

430,000 29,500 423,000 92,300 5190 39,500 21.5% 17.6% 9.3%

766,000 270,000 35.2%

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Consolidation and Growth The decades following the legislative foundation of Nordic ECEC was characterized by the gradual expansion of supply and a process in which ECEC increasingly became a natural part of childhood in a Nordic country. This happened gradually and from a low level of coverage, and it was still a couple of decades before ECEC became a truly universal service. Discussions regarding the role of ECEC in society continued, even if the new legislations represented a final victory for the ones arguing for ECEC to have a positive impact on children, families, and society. In Norway, the next major step in the development of ECEC governance was the publication of a white paper (St.meld. nr.8 (1987–1988)) that stipulated that quality improvements should be accompanied by achieving the goal of full coverage before the year 2000. The main tool was increased state funding, and the goal was to move from an increase of 4000 to 10,000 additional places each year. The financing and establishment of ECEC were to remain municipal responsibilities, although with increased state financing. Further, ECEC that did not receive municipal funding would still be eligible for state funding (but parents would have to pay more). In addition, municipalities were still not required to build ECEC, but it was explicitly stated that this would be introduced if the economic incentives did not have the desired effects. The program for ECEC expansion rested on public initiatives. The white paper recognized that even if the program achieved its goals, it would take a long time to attain full coverage. This was a problem because “children, families, businesses and society need kindergartens now” (our translation, 14). Therefore, it was emphasized that private institutions would continue to get access to the same financing as earlier. The result was a considerable growth in ECEC supply, but without reaching the goal of full coverage. Notably, the private sector grew faster than the public sector. Throughout the 1980s and up to 1990, 40% of all ECEC (used by 40% of children) was private; in 1996, 53% was private (used by 42% of children). In 1997, the legal age for starting school was lowered and six-year-olds began attending school. The following year, a cash-for-care benefits scheme was introduced in which parents received a modest economic benefit if they did not use ECEC.  Combined, these reforms reduced the demand for ECEC, even if demand still surpassed supply. Interestingly, in the aftermath of the reforms, there was a growth in the public sector share of ECEC (Risberg, 2000). No apparent shifts in

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governance explain this development. We do not have detailed data on the development of nonprofit versus for-profit providers in this period. However, an official Norwegian report from 1988 stated that at that time, from among 3487 institutions, 59% were public, 40% were nonprofit, and only 1% was for-profit (NOU 1988:17, p. 144). Thus, up until 2003, Norway had a continuous history of the public and nonprofit sectors sharing the ECEC “market,” with the for-profit sector playing a negligible role. At the same time, the acceptance of ECEC as a universal service had been established for almost two decades by this time. Nevertheless, polices had been inadequate to reach the goal to provide ECEC to all families that wanted it. In Denmark, the 1970s was a period of political turmoil with new parties entering parliament and many policy areas experiencing a recast of priorities. To some extent, this also included the ECEC sector, but the development and expansion of the sector continued, and from 1974 to 1980, coverage increased from 20 to 44% for one- and two-year-olds and from 38% to 59% for three- to five-year-olds (Togeby, 1987, as cited in Borchorst, 2000, p. 63). In the 1980s, there was an increased emphasis on the well-being of children, including in ECEC institutions. This resulted in public commissions and heated public debates regarding developing good institutional frames for children in ECEC.  Interestingly, this decade witnessed growth in unemployment, but while parents were home, the demand for ECEC increased, thereby suggesting that the service had become an integral part of upbringing in Denmark and was not merely an instrument to increase labor supply (Gulløv, 2012, p. 95). Thus, waiting lines and limited supply were still a problem and, in 1990, the state began allowing parents to establish their own ECEC institutions as cooperatives (puljeordningen). Over the next few years, over 200 such institutions were established. However, from 2007 onward, it has not been possible to establish such ECEC services, even if the existing ones may continue operating (Thøgersen, 2013). In Sweden, the 1960s and 1970s saw higher female labor force participation increased the demand for full-time childcare centers, and municipalities were increasingly responsible for building ECEC, with supplementary funding from the state. In the 1960s, Sweden was at the forefront in Europe with new family policies, an expanding ECEC sector, and paid maternity leave of six months with income-related payment similar to sick leave.

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In the 1970s and 1980s, municipalities—supported by earmarked state funding—built ECEC institutions at a considerable pace. However, this was not enough, and numerous parent cooperatives were established to fill the gaps. In addition, desperate parents had to use family, neighbors, and informal day care (Korpi, 2015, p.  33). Pushed forward by the Social Democratic Party in a uniquely dominant position in the post-war period (Rothstein, 1998), ECEC became a central part of the modern welfare state in Sweden. The financing system was reformed in order to cover unsatisfied and growing demand for ECEC and attain the distant goal of “Preschool for all children” set in a government white paper in 1985. Since the 1970s, the state and municipalities had covered 45% of operating costs each, while parents covered 10%. In the 1980s, this was changed to block grants to adapt to local circumstances (Korpi, 2015, p. 54). The state funding was no longer given according to the number of places in ECEC institutions. Furthermore, many detailed state-norms were abolished, which implied that municipalities were responsible for covering the need for resources and personnel in ECECs. From 1989 to 1991, a closer integration between ECEC institutions and schools was achieved by ascribing municipalities more decentralized responsibility. In the first half of the 1990s, the number of children in ECEC institutions increased from 571,000 to 753,000. This was due to high birth rates and female labor force participation reaching 86%. To cope with the pressure, the number of children per employee increased, which constituted a decline in structural quality (korpi, 2015, p. 62). In 1992, the state contribution was changed radically with the purpose of leveling out differences in income and expenses among the municipalities. Simultaneously, the rules and controls were reduced to provide municipalities more autonomy to develop the rapidly expanding ECEC service. Nevertheless, certain earmarked contributions were used, such as for children with a different first language, for institutions open at night and on the weekend, and for quality assurance and personnel education (Korpi, 2015, pp. 35–36). Finland witnessed only a modest increase in the use of ECEC after the legislative breakthrough in 1973. Even if this placed ECEC as a mainstream public welfare service, the strong familyism, the lack of ECEC places, combined with means testing and, in particular, an urbanization that took place after that in Sweden and Denmark, resulted in a slower expansion of public ECEC.

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In Finland, the expansion of the ECEC took place in the 1990s, as children under three years of age enjoyed the entitlement to full-day ECEC provided by local authorities. The passing of the law was made possible by a political compromise. In this compromise, the agrarian Centre Party won the backing to a system of state subsidies for the home care of children (Sipilä & Korpinen, 1998). Parents were given the option of receiving a child homecare allowance that they could use either for caring for their child themselves at home or for paying for a private childcare place. The homecare allowance served as an alternative to a day care. The child homecare allowance was a hugely successful measure in terms of the number of users. However, the generous home care allowance resulted in more modest growth of ECEC participation in comparison with that in other Nordic countries (Mahon et al., 2012). Since 1996, the entitlement has covered all children under primary school age. The rationality for this change was related to female labor force participation, and it was strongly supported by the feminist movement (Alila et al., 2014). After the 1990s, municipalities were required to provide an ECEC place for each child whose parents so wish within four months of application. If the need is based on parents’ studies or work, the municipality needs to provide a place within two weeks of application. In Iceland, after the first act on day care in 1973 was passed, there was a slow but steady expansion of ECEC services. At a similar time, the first act on maternity leave was enforced. Female participation in the labor market had increased, there was a demand for equality from women, and living conditions had changed in Iceland. Various women’s associations had also pushed for the establishment of increased ECEC supply. There was a political consensus on this legislation. At this time, both childcare centers and playschools were moved from the Ministry of Social Affairs to the Ministry of Education, which implied admittance that childcare services were not mainly considered a social policy issue, but a part of the educational system and policies. Through these legislations, there was a shift in ideology from childcare not only being the private matter of parents, to that it was the role of the public authorities to support parents and their children. It was also evident that more emphasis was placed on the well-being of children and the rights of all children to attend play schools. In this period, there was a shift in the governance of ECECs—Sumargjöf, a nonprofit organization, had run all Reykjavík’s day care institutions, but

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the city of Reykjavík formally took over the operations in the year 1978. Unfortunately, there is no information on that period of the division between public, for-profit, and nonprofit ECEC (Broddadóttir et  al., 1997; Eydal, 2006). Nevertheless, the coverage of ECEC services during the 1980s and 1990s was characterized by relatively low volumes of care for children under the age of two years (Broddadóttir et al., 1997). There were higher volumes for children aged between three and six years, but this was usually only for part-time care. This implied that family day care played a very large role in the care for children in the age group of 0–2 years. This was despite the fact that women’s participation in the labor market was amongst the highest in Europe (Eydal, 2006). Further, research from this period revealed that Icelandic parents were unsatisfied with the service, experienced a lot of pressure in this regard, and attempted a variety of solutions, such as family day care, to meet this lack of full-time day care (Júlíusdóttir, 1993; Kristjánsson, 1989). The consolidation phase had numerous similarities across the countries. As demand grew across the board, they all expanded supply and in all countries supply primarily expanded through public provision. An exception is Norway, where nonprofit providers grew considerably in absolute terms and retained an important part of the market although they lost market shares. Moreover, also in Sweden and Denmark, there was the establishment of nonprofit provision of the service in the form of parental co-operatives. In both cases, these were established in response to insufficient supply from the public sector. It is also interesting to note that Norway and Finland, the laggards in expanding supply, both introduced homecare allowance schemes that suppressed demand. In any case, the responsibility for all aspects of the service now belonged to the public sector in the eyes of both citizens and policymakers.

Full Coverage With the legislative foundation around 1970s and the gradual expansion of the service, ECEC did become a general welfare service in the sense that it was accepted as a natural part of children’s upbringing across all social classes and family types in the Nordic countries. However, there was still a shortage in supply. Thus, it can be argued that the service were not universal as long as a large number of families who wanted the service could not obtain it.

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100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Denmark

Finland

Iceland

Norway

Sweden

Fig. 3.1  Percentage of children aged three to five years in ECEC for the period 1990–2020. Notes: Denmark: Data after 2015 are not comparable to the previous series. Sweden: From 1999, children in open kindergartens were not included. Finland: Includes Åland. Source: Nordic Statistics CHIL03

The final stretch toward full coverage witnessed important deviations among the countries in terms of strategy and timing. Figure 3.1 depicts the development from 1990 to 2020 in terms of the proportion of those attending ECEC in the age group from three to five years in the five Nordic countries. It is evident from the figure that Denmark and Iceland in particular, as well as Sweden, were early movers in expanding the service. Denmark and Iceland were the first countries to achieve full coverage. This had been a political goal in these countries and they had experimented with different measures to increase coverage, like the parental cooperative in Denmark (Puljeordningen), as mentioned earlier. Nevertheless, the increase in supply was predominantly the result of the public sector developing new institutions through municipalities. Already in 1993, the idea to make ECEC an individual right for parents was introduced in Denmark, but it was not enacted because of opposition from municipalities that did not want such a state-mandated change in their local governance of the sector (Borchorst, 2000). However, a right to a place in ECEC was gradually implemented in and by the municipalities;

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from 2000 onward, almost 90% of municipalities had such local guarantees. At this point, it can be said that full coverage was achieved, even if an ECEC place was not legislated as an individual right before 2006. Figure 3.2 depicts the coverage of children in different age groups of ECEC in Denmark. The proportion of three- to five-year-old children reached 95% in 2005 and that of two-year-olds reached 90% in 2007. For the one-year-olds, the coverage reached 88% in 2007. Even the children below one year have a coverage fluctuating between 10% and 20% from 1990 to 2014. This implies that the present pattern of high coverage was established approximately 10–15 years ago. The higher use of ECEC for older children is a recurring pattern in all countries. Whereas earlier debates on whether it is good for children to attend ECEC is all but over, there are still numerous families that want the children to spend more time at home. Simultaneously, an important issue in Nordic family policies is

100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 0 years

1 year

2 years

3-5 years

Fig. 3.2  Children in ECEC by age and time in Denmark (percentage of age groups). Notes: There is a break in the time series in 2017. Therefore, data before and after 2017 cannot be compared. Data before 2014 reveal the number of children, while data from 2017 are converted to those who are enrolled full time. Municipal and self-governing day-care institutions are included, while private day-­ care settings are not. Source: Nordic Statistics CHI03

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the duration of parental leave and how to deal with a gap between the end of the paid parental leave and the child beginning ECEC. In Iceland, the parliament passed an act in 1991 that recognized that all children should have the right to attend ECEC. However, there is no state guarantee or universal right to attend ECEC according to the legislation, as is the case in the other Nordic countries. Subsequently, in an act passed in 1994, municipalities were obliged to take the initiative in ensuring places for children. The results of these legislative changes are depicted in Fig.  3.3, which presents a historic perspective on the share of children attending ECEC. The figure demonstrates the development in this regard for the period 1990–2018. It shows that full coverage was reached just after 2007. The older the children got, the more common it was for parents to use ECEC services. Interestingly, the gap between the different age groups diminishes, as two-year-olds use ECEC to the same extent as older groups from 2005. Nevertheless, it was not until the period 1990–2005 that the steady increase in the coverage of public day care as well as full-time placements took place. From 1998 to 2005, the coverage

100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 1 year

2 years

3-5 years

Fig. 3.3  Children in ECEC by age and time in Iceland (percentage of age groups). Notes: Compulsory school begins at the age of six. Only children in day-­ care included, and not children in after-school arrangements. Source: Nordic Statistics CHIL03

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was almost 90% for children aged three to five years. The total enrolment rates in day care for children aged one to five years went from 69% in 1998 to 80% in 2005 (Eydal, 2006). However, in 2014, 41% of one-year-old children attended playschool compared to 95% of two-year-olds (Statistics Iceland e.d.). Today, there is still more demand than supply for preschool places for one year olds. There is a gap between the end of paid parental leave in Iceland (9–12 months after birth) and before children are offered a place in ECEC. Almost all parents in Iceland attend the labor market after paid parental leave. Parents use a variety of solutions to bridge this gap, such as family day care that is subsidized by the municipalities; however, this is more expensive than ECEC and there is a lack of supply of services (Arnalds et al., 2013; Eydal & Gíslason, 2014). In Sweden, in 1985, the mentioned new policies included that the right to ECEC should be expanded to all parents, thereby no longer differentiating based on the parents being employed/being students or not; by 1991, all children were to have an individual right to ECEC from 18 months of age. The municipalities were the main vehicle for pursuing these policies, but as is evident from Fig. 3.4, these goals were not achieved

100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 0.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

10.0

1 year

2 years

3-5 years

Fig. 3.4  Children in ECEC by age and time in Sweden (percentage of age groups). Note: From 1999, children in open kindergartens were not included in the total number of children in kindergartens. Source: Nordic Statistics CHIL03

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by 1991, as most of the municipalities were not able to reach the goal of ECEC for all, as there was an increase in the number of childbirths and more women got paid work. A rights-based solution appeared on the political agenda; in 1995, a law was passed that guaranteed children from the age of one place in some kind of childcare with a delay of no more than three or four months. The municipalities had to be flexible and prepare for changes in birth rates and people moving into central areas. In the coming years, the percentage of municipalities that were able to fulfill the ECEC guarantee increased from 80% to 99%. The law was extended to give the right to a place in ECEC, not only for working parents and students but also unemployed parents and those on parental leave. Despite the 1990s being a difficult period for the Swedish economy, the goal of full coverage was attained in the early 2000s. In 1997, a socalled preschool class (förskoleklass) was created for six-year-olds. It has been a consistent challenge in Swedish ECEC to increase demand without lowering staff levels. In 1999, the ECEC fee was set at 3% of family income, up to a maximum of SEK 1140 (“maxtax”); 2% for the second child; 1% for the third child; and no fees for additional children. This implied much lower fees for most parents, thereby leading to even more parents seeking a place in an ECEC center for their children. To compensate for strongly reduced income from fees for the municipalities, the state offered a contribution per child (Garvis & Lunneblad, 2018). However, the “maxtax” and the state contribution was not index regulated between 2004 and 2015. This implied that the municipalities had to deal with increasing costs by cutting costs in ECECs or in other service areas. Numerous municipalities solved the problem by not increasing ECEC spending in accordance with the number of children or attendance hours. There was a reduction in the number of low or unskilled workers, which increased the share of ECEC teachers up to 58% by the mid-1990s (Enfeldt, 2022). Lowering the “maxtax” and the childcare guarantee implied that by the end of the 1990s, differences in access to ECEC were minimized, but the differences in quality of ECECs were large (Korpi, 2015, pp. 63–64). Figure 3.4 depicts the coverage of children in different kinds of day-­ care institutions from 1990 to 2017. The percentage of children aged three to five years reached 95% in 2003, and the percentage of those aged two years reached 90% in 2005; for children aged one year, the coverage

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reached 50% in 2007. In 2008, a full voucher system with free right to establish for private actors was completed. At this point, full supply was attained, and this governance change did not influence the share of age groups enrolled in ECEC.  The present level of ECEC coverage was attained mainly through the expansion of the public sector before that time. However, there are a few small changes in the forms of ownership. Usage in Norway grew steadily since the 1990s (and even before that), but reforms in the 2000s spurred this development further. The proportion of three- to five-year-olds reached 95% in 2007, and that of two-year-olds reached 90% in 2012. This means that the high levels of coverage were reached later in Norway than in Iceland, Sweden, and Denmark. The last push that enabled Norway to attain full coverage was an agreement in parliament forged in 2003 where the left and right parties came together with the aim to secure full coverage (Barnehageavtalen, 2002). At this point, approximately two-thirds of Norwegian children attended ECEC. The goal was to make the service available and accessible to all. The original agreement made it clear that municipalities were obliged to ensure that all families had access to ECEC, and that once there was sufficient capacity, a place in ECEC should become an individual right of the child. The main features of the new regulation was a maximum fee and massive public investments. Regulation and funding for private and public institutions had to be at the same level, including beneficial loans from the Norwegian State Housing Bank and a right for private providers to establish new institutions. Numerous private actors received free or subsidized land from municipalities in order to build new institutions (NOU 2020:13, p. 226). The 2003 reforms contributed to increased ECEC use in two ways. First, the introduction of a maximum price (this was lowered even more in 2008) led to lower prices and, thus, an increase in demand. This increase in demand was met with an expansion of supply, which was partially achieved through the establishment of new public ECEC.  For-profit providers predominated the establishment of new ECEC, as the new governance tools provided strong economic incentives to establish and run private ECECs. The result was an increase in supply to the extent that, in 2009, the state was able to grant access to a place in ECEC as a child’s individual right from one year of age. In 2011, the coverage of ECEC reached such a level that there were less need to build new institutions. Therefore, the state abolished the right that private ECEC had to establish and access

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public funding. For existing private kindergartens, there was no time limit for funding: the municipality was to continue funding them per child in attendance. In certain instances, municipalities challenged the extent of this obligation, mostly without success. The increase in ECEC use resulting from the reforms is evident. Figure 3.5 depicts the development of kindergarten use from a historical perspective. Usage has been growing steadily since the 1990s (and even before that), but we can trace the effects of the 2003 reform, which is when usage increased further. Finland has a low attendance rate of children in ECEC as compared to that in other Nordic countries. This is at least partially related to Finland’s home care policies (Duvander & Ellingsæter, 2016; Hiilamo & Kangas, 2009; Mahon et al., 2012). The Finnish ECEC model consists of a twofold system in which parents can opt for a cash-for-care allowance for caring for their children themselves, or their child can participate in ECEC provided by the municipality or a private ECEC provider. The Child Home Care Allowance (CHCA) has been available since the 1980s. It is intended for

100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 1 year

2 years

3-5 years

0 years

Fig. 3.5  Children in Norwegian ECEC by age and time (percentage of age groups). Note: Includes care for all children at different ages, whether full-time or part-time, during day-time hours (6:00 am to 6:00 pm) in all institutions where attendance is checked by a public authority. Source: Nordic Statistics CHIL03

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parents of children under three years of age who do not attend publicly subsidized ECEC—that is, parents who prefer to care for their children’s upbringing at home. The cash-for-care allowances for children’s home care were introduced to increase parents’ freedom to choose the form of childcare from between ECEC services and home care (Hiilamo & Kangas, 2009). The CHCA consists of a fixed subsidy and an additional sum that is dependent on the income and size of the family. In addition, certain municipalities top up the CHCA with a municipal supplement, and this amount varies among municipalities. In addition, municipal supplements may include certain conditions, such as requiring that all children of the family who are below school age be cared for at home (Lahtinen & Svartsjö, 2020). There is also a sibling allowance that is paid for any siblings of the child eligible for CHCA and who are below school age and cared for at home (Sipilä et al., 2010). In 2019, 21% of the children whose home care was subsidized with the home care allowance were over three years of age (Kela, 2019). In 2015, the legislation on childcare was updated (Laki lasten päivähoidosta annetun lain muuttamisesta 580/2015). The term ECEC (varhaiskasvatus) was introduced into the legislation and the change was rationalized with arguments related to strengthening the idea of early learning and investments in children’s well-being (see HE 341/2014 vp). Also, pre-primary education for six-year-olds became compulsory in 2015. Shortly thereafter, in 2016, the right to ECEC for children whose parents were not in full-time work or education was restricted to 20 hours per week (Laki varhaiskasvatuslain muuttamisesta 108/2016). According to Lundkvist et al. (2017, p. 1553), the tension between these two changes reflected, on one hand, “the long-standing ambition to reform the Finnish ECEC system largely built on ideas on the need to foster lifelong learning and social mobility, but it also emphasized rationales relating to children’s rights, social equality as well as safeguarding the ‘best interest of the child’.” On the other hand, these rationales reflected an emphasis on the economic rationale of ECEC provision and the shift toward the parental employment rationale related to an austerity discourse following global economic crises. The restriction that limiting children’s right to ECEC to 20 hours a week and granting full-time ECEC mainly to children of working parents or full-time students generated active political discussion and a complaint to the European Committee on Social Rights. The committee ruled that limiting children’s right to ECEC to 20 hours a week and granting

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full-­time ECEC mainly to children of full-time students or working parents was contrary to the European Social Charter. Thus, the limitation was abolished in 2020. In 2016, the Act on Client Fees in Early Childhood Education and Care (1503/2016) came into effect. The legislation defined the maximum clientele fees for municipal ECEC.  Fees were income-tested and based on the number of children in the family attending the ECEC setting. Moreover, part-time and full-time ECEC attracted separate fees. However, the regulation concerning the service fees did not regulate clientele fees in the private sector. A result of these policies pulling in different directions regarding the use of ECEC, we see from (Fig. 3.6) that for three- to five-year-olds, a rate of 90% of ECEC coverage was reached in 2019, almost 20 years later than that in Iceland, Denmark, and Sweden. The coverage for two- and one-year-olds remained lower, even if there was an increase from 2014 to 2019. Today, ECEC remains on the political agenda with new initiatives possibly influencing the use of ECEC services. Finland is rolling out a pilot scheme that extends pre-primary education to five-year-olds in 2021–2023. Approximately 10,000 children born in 2016 or 2017 participated in the 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0

1 year

2 years

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

0.0

1997

10.0

3-5 years

Fig. 3.6  Children in ECEC by age and time in Finland (percentage of age groups). Notes: Includes Åland. Source: Nordic Statistics CHI03

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policy pilot. Furthermore, Sanna Marin’s Government Program (2019) set the objective of conducting a study on how the right to ECEC is realized for undocumented children and those seeking asylum. In summary, it appears that even though the policies related to the coverage of ECEC have been somewhat contradictory, the aim of increasing the participation rate has had a high priority on policy agenda in recent years.

Chapter Summary The period from around 1970 until full coverage of ECEC was attained after the year 2000 is characterized by certain important developments. The aim of the legislation was primarily to make ECEC a general welfare good that covers the entire population. This was achieved, but it took decades to attain the goal. Interestingly, the notion of ECEC as a universal good was established before the supply was extended to cover the entire population. Already in the 1980s, policy papers from the different countries describe ECEC as a natural part of the upbringing of children. Throughout the period and until full coverage was met, there was always a demand surpassing the supply. One aspect of ECEC becoming a general welfare good was that it was also duly placed within the public sector scope of responsibility. While nonprofit actors had been the driving force in ECEC developments earlier, from the 1970s, the public sector took the lead in legislating, funding, and providing the services. Achieving full coverage was thus done primarily by public provision in Sweden, Denmark, and Iceland. In many ways, the five Nordic countries for a long time followed parallel paths towards full ECEC coverage. However, as we shall see in the following chapters, the different timing in achieving full supply had important consequences for governance. A core issue is if full coverage was achieved before or after NPM thinking and role of private providers had become mainstream in the Nordic countries. As ECEC was recognized as a general welfare good, the debates regarding the service changed. When this was first legislated as a general service, this was met in all countries with considerable opposition. Widespread use of ECEC challenged gender roles, the organization of families, and ideas regarding what represent a good childhood (Borchorst, 2000; Ellingsæter, 2018). In this period, ECEC debates changed character. Organization of the service, increasing the supply, and improving the pedagogical content of service became the central debates. This implies that the content of the

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service became the topic of debate, not the justification of the service itself—for example, different forms of “framework plans” regulating the content of service appeared in all countries. Furthermore, this is also the story about an expanding welfare state taking a wider responsibility for citizens and the ability of parents to organize as they wish. This is an expansion in terms of the money spent on provision of service, but also in the form of including new age groups in the services for citizens. Indeed, ECEC is currently one of the core services in the Nordic welfare states, an aspect that is reflected in the attention the service receives in public debates. Arguably, the different traction in expanding ECEC reflects the overall expansion of public services in these countries. In this regard, Finland and Norway can be seen as “little brothers” to Sweden and Denmark, who led the line. The possible exception is Iceland, which in many respects had a different type of approach to the welfare state compared to other Nordic countries, but was still an early mover in the ECEC field.

References Alila, K., Eskelinen, M., Estola, E., Kahiluoto, T., Kinos, J., Pekuri, H.-M., Polvinen, M., Laaksonen, R., & Lamberg, K. (2014). Varhaiskasvatuksen historia, nykytila ja kehittämisen suuntalinjat: Tausta-aineisto varhaiskasvatusta koskevaa lainsäädäntöä valmistelevan työryhmän tueksi (952263266X). Arnalds, Á. A., Eydal, G. B., & Gíslason, I. V. (2013). Equal rights to paid parental leave and caring fathers-the case of Iceland. Stjórnmál og stjórnsýsla, 9(2), 323. Barnehageavtalen. (2002). Barnehageavtalen. SV, FrP, AP, Senterpartiet. https:// www.regjeringen.no/contentassets/76dbf420abbb4ad7a8b93b224e1e2f82/ no/pdfs/stm200220030024000dddpdfs.pdf Borchorst, A. (2000). Den danske børnepasningsmodel–kontinuitet og forandring. Arbejderhistorie, 4, 55–69. ̵ Broddadóttir, I., Eydal, G., Hrafnsdóttir, S., & Sigurdardóttir, H. S. (1997). The development of local authority social services in Iceland. In Social care services: The key to the scandinavian welfare model (pp. 51–76). Routledge. Duvander, A.-Z., & Ellingsæter, A. L. (2016). Cash for childcare schemes in the Nordic welfare states: Diverse paths, diverse outcomes. European Societies, 18(1), 70–90. https://doi.org/10.1080/14616696.2015.1124903 Ellingsæter, A.  L. (2018). Familiepolitikkens kjønnsforståelser. Nytt Norsk Tidsskrift, 35(3–04), 246–255. https://doi.org/10.18261/issn.1504-­3054­2018-­03-­04-­05ER

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Ellingsæter, A.  L., & Gulbrandsen, L. (2003). Barnehagen–fra selektivt til universelt velferdsgode. NOVA. Enfeldt, J. (2022). Vem bestämmer över förskolan? En rapport om förskolemarknadens effekter. https://webbfiler.kommunal.se/sites/default/ f i l e s / 2 0 2 2 -­0 3 / F % C 3 % B6rskolerapport_033022_0.pdf Eydal, G. (2005). Family Policy in Iceland 1944–1984. Sociologiska Institutionen, Gøteborg University. Eydal, G. (2006). Þróun og einkenni íslenskrar umönnunarstefnu 1994-2004. Uppeldi og menntun, 5(2), 9–29. Eydal, G. B., & Gíslason, I. V. (2014). Family policies: The case of Iceland. In M.  Robila (Ed.), Handbook of family policies across the globe (pp.  109–124). Springer. https://doi.org/10.1007/978-­1-­4614-­6771-­7_8 Garvis, S., & Lunneblad, J. (2018). Inequalities in access to early childhood education and care in Sweden. The Equal Access Study (ICEC Working Paper Series, Issue. D.  Jugendinstitut. https://www.dji.de/fileadmin/user_upload/ bibs2018/27136_WEB_DJI_Report_Sweden.pdf Gulløv, E. (2012). Kindergartens in Denmark  – Reflections on continuity and change. In A.  T. Kjørholt & J.  Qvortrup (Eds.), The modern child and the flexible labour market: Early childhood education and care (pp.  90–107). Palgrave Macmillan UK. https://doi.org/10.1057/9780230314054_6 Gunnarsdottir, B. (2014). From play to school: are core values of ECEC in Iceland being undermined by ‘schoolification’? International Journal of Early Years Education, 22(3), 242–250. https://doi.org/10.1080/09669760. 2014.960319 Gunnesdal, L. (2010). Eierskap i barnehagesektoren. Statistisk sentralbyrå. Hiilamo, H., & Kangas, O. (2009). Trap for women or freedom to choose? The struggle over cash for child care schemes in Finland and Sweden. Journal of Social Policy, 38(3), 457–475. https://doi.org/10.1017/S0047279409003067 Jensen, J. J. (2017). A Danish perspective on issues in early childhood education and care policy. In L. Miller, C. Cameron, C. Dalli, & N. Barbour (Eds.), The SAGE handbook of early childhood research (pp. 71–86). SAGE Publications Ltd. Júlíusdóttir, S. (1993). Den kapabla familjen i det islandska samhallet: En studie om lojalitet, áktenskapsdynamik och psykosocial anpassning. Institutionen for Socialt Arbete, Göteborgs Universitet. Kela. (2019). Kelan tilastollinen vuosikirja [Statistical yearbook of the social insurance institution]. Korpi, B. M. (2015). Förskolan i Politiken – om intentioner och beslut bakom den svenska förskolans framväxt. Utbildingsdepartementet, Regeringskansliet. https://www.regeringen.se/4acc7c/contentassets/7d83393009994779a34 0d8b839e5e8ae/forskolan-­i-­politiken%2D%2D-­om-­intentioner-­och-­beslut-­ bakom-­den-­svenska-­forskolans-­framvaxt-­u015_007.pdf

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Korsvold, T. (2005). For alle barn! Barnehagens framvekst i velferdsstaten. Abstrakt forlag. Kristjánsson, B.  R. F.  H. Í. (1989). Dagvistun barna á forskólaaldri og lífskjör foreldra. Félagsvísindastofnun Háskóla Íslands. Lahtinen, J., & Svartsjö, M. (2020). Kotihoidontuen ja yksityisen hoidon tuen kuntalisät ja palveluseteli. Selvitys kotihoidontuen ja yksityisen hoidon tuen kuntalisistä ja niiden maksatusperusteista sekä palvelusetelistä. Kuntaliitto. https:// www.kuntaliitto.fi/sites/default/files/media/file/Kotihoidontuen-­ kuntalisat-­2020.pdf Lundkvist, M., Nyby, J., Autto, J., & Nygård, M. (2017). From universalism to selectivity? The background, discourses and ideas of recent early childhood education and care reforms in Finland. Early Child Development and Care, 187(10), 1543–1556. https://doi.org/10.1080/03004430.2017.1295041 Mahon, R., Anttonen, A., Bergqvist, C., Brennan, D., & Hobson, B. (2012). Convergent care regimes? Childcare arrangements in Australia, Canada, Finland and Sweden. Journal of European Social Policy, 22(4), 419–431. https://doi. org/10.1177/0958928712449776 Nordisk ministerråd. (1978). Barnehage - hjem - nærmiljø i samspill. Rapport fra et Nordisk seminar i Oslo, juni 1978. Nordisk ministerråds sekretæriat. https:// www.nb.no/items/00ba3adc6e4641a1f8002c145ef3b06b?page=0&searchTe xt=oaiid:%22oai:nb.bibsys.no:999223606424702202%22 NOU (1972:39). Førskoler. Universitetsforlaget. NOU (1988:17). Frivillige organisasjoner. Forvaltningstjenestene. Statens Trykningskontor. https://www.regjeringen.no/contentassets/51844a1052 7c41c9abfc31f48f94c30a/no/pdfs/nou198819880017000dddpdfs.pdf NOU (2020: 13). Private aktører i velferdsstaten Velferdstjenesteutvalgets delutredning I og II om offentlig finansierte velferdstjenester Departementenes sikkerhets- og serviceorganisasjon. Teknisk redaksjon. Petersen, K. (2019). Conflicting ideas on Danish day care during the golden age of the Danish welfare state. In S.  Kuhnle, P.  Selle, & S.  E. O.  Hort (Eds.), Globalizing welfare: An evolving Asian-European dialogue (pp.  199–215). Edward Elgar Publishing. https://doi.org/10.4337/9781788975841.00021 Risberg, T. (2000). Barnehagesektoren: Fortsatt vekst, tross kontantstøtten. Samfunnspeilet, 5, 60–63. Rostgaard, T. (2010). Nordisk børnepasningspolitik – en eller mange modeller? Samfundsøkonomen, 6, 17–21. Rothstein, B. (1998). Just institutions matter: The moral and political logic of the universal welfare state. Cambridge University Press. Sipilä, J., & Korpinen, J. (1998). Cash versus child care services in Finland. Social Policy & Administration, 32(3), 263–277. https://doi.org/10.1111/1467­9515.00102

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Sipilä, J., Repo, K., Rissanen, T., Viitasalo, N., Sipilä, J., Repo, K., & Rissanen, T. (2010). Cash-for-childcare: The consequences for caring mothers. In Cash-­ for-­childcare: Unnecessary traditionalism or a contemporary necessity? Chapter 3. Edward Elgar Publishing. https://doi.org/10.4337/9781849804615.00008 St.meld. nr.8. (1987–1988). Barnehager mot år 2000. Forbruker- og administrasjonsdepartementet. Thøgersen, M. (2013). Selvejende institutioner i Danmark. Institutionernes udvikling, udbredelse og karakter på udvalgte samfundsområder. Togeby, L. (1987). Notat om børnepasningsdækningen i de nordiske lande. Institut for Statskundskab, Aarhus Universitet. Westberg, J., & Larsson, E. (2020). Winning the war by losing the battle? The marketization of the expanding preschool sector in Sweden. Journal of Education Policy, 1–18. https://doi.org/10.1080/02680939.2020.1861338

CHAPTER 4

Changes in the Role of Commercial and Nonprofit ECEC Providers—Deviations from the Nordic Welfare Model?

Introduction This chapter examines the different paths the Nordic countries have selected with regard to the role and size of commercial and nonprofit ECEC providers. First, the pattern of private growth in each country is described. Subsequently, explanations are provided in understanding the underlying differences in governance, financing, and political debates. The timing of ECEC reforms in relation to the expansion of the sector to cover potential demand are important for understanding the resulting differences in the mix of commercial, nonprofit, and public providers that are out of step with other welfare areas.

Private Growth All the Nordic countries have seen for-profit growth over the last couple of decades. At the same time, there is an uneven development of nonprofits across the Nordic countries. In most Nordic countries, for-profit growth has resulted in a decline in the market share of the public sector, while in Denmark the public sector has a stable share of the market. The municipalities have been a dominant provider in all countries.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4_4

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In Norway, a set of reforms in 2003 signaled a watershed moment for kindergarten governance, and the country departed from the other Nordic countries in terms of the role of private providers. Table 4.1 presents the development of the number of children in public and private kindergartens, respectively. In absolute numbers of all children enrolled aged from 0 to 6 years, we see that increased subsidies, maximum fees, and a legal right to kindergarten place from 2009 spurred growth in both public and private kindergartens. The number of children in private kindergartens increased from 76,838 in the year 2000 to 133,391 in the year 2021, an increase of 74%. Simultaneously, the number of children in the public sector increased from 112,999 to 135,074 and increased by just 20%. Consequently, the private growth rate outpaced that of the public sector by far, thereby creating a shift in the private “market share” from 40% in 2000 to 50% of a much larger market in 2021. The developments documented in Table 4.1 are in themselves interesting, but the change within the “private” category is what is striking in this development. As mentioned earlier, private ECEC were traditionally run on a nonprofit basis, but this reform created a market for for-­profit actors. After 2003, Norway witnessed the establishment of a large number of private, for-profit kindergartens. A challenge regarding the statistics is that there is no legal definition of nonprofits in Norway. A group of experts commissioned by the government to examine private actors in welfare used types of ownership to differentiate the sectors in which the actors belonged. They defined a joint-stock company and sole proprietorship as for-profits, while foundations and cooperatives were defined as nonprofit. Using this measurement, the Official Norwegian Report found that from 2010 to 2018, the number of for-profit kindergartens had grown by 34%, while the number of nonprofit kindergartens had declined by 71% (NOU, 2020: 13, p. 228). This underestimates the share of nonprofits, since joint-stock companies may have nonprofit owners, such as voluntary associations and foundations. In addition, the number of kindergartens also changed because of the restructuring in the sector, such as mergers and termination of smaller units; therefore, it is an unreliable measure of change in sector coverage of the service area. An alternative data source is the Satellite Account for Nonprofit Institutions implemented by Statistics Norway. These data are based on the definitions in the UN Statistics Division’s handbook, and “nonprofit organizations” include organizations that do not distribute profits to owners and that are not subject to government control (United Nations Statistics

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Table 4.1  Number and proportion of children aged 0–6 years enrolled in public and private institutions in Norway for the year 2000–2021 Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Private

Public

Children

%

Children

%

76,838 77,222 82,033 86,530 92,696 101,046 107,696 115,439 120,384 125,128 129,959 133,915 135,376 137,307 138,688 139,039 139,553 139,871 138,668 136,982 135,277 133,391

40 40 41 42 43 45 46 46 46 46 47 47 47 48 48 49 49 50 50 50 50 50

112,999 115,427 116,229 118,642 120,401 122,455 127,252 134,376 141,502 145,046 147,180 148,822 150,777 149,870 147,726 144,569 143,096 141,751 139,910 138,822 136,987 135,074

60 60 59 58 57 55 54 54 54 54 53 53 53 52 52 51 51 50 50 50 50 50

Source: Statistics Norway, Table 09169: Children in kindergartens by type of kindergarten and year

Division, 2018). The statistics cover Full-time equivalent employment (FTE) in the sector, which is a more reliable measure of size and coverage than number of kindergartens. Using this data source, Fig.  4.1 demonstrates real employment growth for nonprofit kindergartens from 12,161 to 15,467 between 2006 and 2015. A technical change in 2016 using better data-sources on employment resulted in a break in the time series (Statistics Norway, 2019, 2020a). Therefore, direct comparisons before and after this year are not possible. From 2016 to 2018, FTE increased from 17,201 to 17,637, thereby indicating that modest growth continued. The data from Fig. 4.1 tell a different story than the strong decline presented in the Official Norwegian Report (NOU, 2020: 13, p. 228), thereby revealing a continuous growth of nonprofit employment.

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100000 80000 60000 40000

Public

For-profit

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

0

2006

20000

Nonprofit

Fig. 4.1  Full-time equivalent employment (FTE) in Norwegian kindergartens for the period 2006–2018. Source: Statistics Norway (2020a, 2020b)

However, irrespective of how we measure it, it is evident that the for-­ profit sector mostly benefited from the changed frame conditions for the Norwegian kindergarten sector. Figure 4.1 is based on employment data from the nonprofit satellite account combined with data on all employment in kindergartens of Statistics Norway (Statistics Norway, 2020b). Figure 4.1 illustrates the development in fulltime equivalent employment when differentiating among public, nonprofit, and for-profit providers. From 2006 to 2015, FTE in the public sector increased from approximately 30,500 to 38,500, that in the for-profit sector increased from approximately 12,250 to 20,650, while that in the nonprofit sector increased from approximately 12,150 to 15,500; this is in contrast to the NOU data on number of kindergartens (NOU, 2020: 13, p.  228). All sectors continued growing slightly from 2016 to 2018 according to the new data-series on employment. Employment in all three sectors is growing in absolute terms; however, when measured in percentages, the for-profit sector is growing at the expense of other sectors. The nonprofit sector has a relatively stable level of employment, declining from 22% to 21% from 2006 to 2015, while the for-profit sector has an increasing level of employment from 22% to 28%. In contrast, the public sector is decreasing from 56% to 52% of the fulltime employment. According to the new data series, from 2016 to 2018, the employment shares have been stable. This faster increase in employment in the for-profit sector at the expense of the public sector’s share of

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employment is similar to what we see in other Scandinavian welfare service areas where there are commercial incentives that encourage for-profit growth (see Table 1.1 and Sivesind, 2017). Structural changes in the field, including mergers and acquisitions of kindergartens and major for-profit chains seeking to also buy nonprofit actors, make it difficult to make accurate comparisons of the number of institutional units. Hence, the number of children and full-time employment in kindergartens may be the best available measures (see Table 4.2 and Fig. 4.1). Since public and non-public ECEC have different levels of staff per child, this may create inaccuracies in comparisons of employment statistics as measures of relative size. The public sector had approximately 50% of the number of children and approximately 52% of the FTE from the most recent years, as presented in Table  4.2 and Fig.  4.1, which implies that there is a higher employee-to-child ratio. However, these differences may recently have been limited due to legislative changes in 2018 regarding child per person ratios, but this effect would not yet have appeared in the data presented here. Table 4.2 illustrates some of the structural changes that took place in the ECEC area. It is evident that, as small kindergartens were closed or merged into bigger units, there was a growth in the number of large kindergartens. The increasing size of units explains why the fall in the number of nonprofit kindergartens in the Norwegian Official Report (NOU, 2020: 13, p. 228) does not correspond with the number of children or FTE (Table 4.2 and Fig. 4.1). Assuming that many of the small kindergartens were nonprofits, this may be part of the explanation regarding why we see a reducing number of kindergartens alongside a small increase in full-time employment in nonprofit kindergartens (Fig. 4.1). In addition to the relationship between nonprofit and for-profit providers, a striking development in the wake of the 2003 reforms was the establishment of for-profit ECEC chains and a strong concentration of ownership in the for-profit sector. This development has become increasingly important in the development of kindergarten services. In 2007, the six largest chains accounted for approximately 5% of all private kindergartens, while in 2016, they amounted to just over 17%. The market share of the six largest chains measured in the number of children increased from approximately 11% of the private kindergarten market in 2007 to almost 32% in 2016. In 2016, the six largest actors accounted for approximately 60% of the overall economic results of private Norwegian kindergartens (BDO Norge, 2018).

2007 1826 1571 936 6340

1–25 26–50 51–75 >76 Total

1938 1756 1593 986 6273

2012 1835 1762 1569 1008 6174

2013 1756 1700 1630 998 6084

2014 1688 1682 1609 991 5970

2015

Source: Norwegian Directorate for Education and Training (2022)

Notes: Open kindergartens are not included

2011

Number of children 1602 1673 1578 1013 5866

2016 1504 1680 1568 1011 5763

2017 1427 1696 1539 1009 5671

2018 1402 1692 1539 981 5614

2019

Table 4.2  Changes in the size of Norwegian ECEC institutions for the period 2011–2021

1358 1666 1518 968 5510

2020

1313 1641 1496 971 5421

2021

−694 −185 −75 35 −919

Change 2011–2021

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In the initial phases of the private expansion in 2003, the private chains grew organically through the establishment of new institutions. Over the last years, the growth has taken place mainly in the form of the big chains buying smaller chains and independent ECEC units. In a state-­commissioned report, Lunder (2019) concluded that if this development continues at the current speed, five actors will own half of the private Norwegian kindergartens by 2029. In Denmark, the law differentiates among public, self-owning, and private ECEC institutions. The latter category has its basis in legislation enacted in 2005. Self-owning institutions are nonprofit entities that for the most part have a formal agreement with municipalities and where children are assigned by the municipality. This type of public procurement through “in-house” arrangements legally limits the independence of the self-owning institutions from the municipality and their possibility to obtain income from market-oriented operations (Fløistad, 2017). They operate on an equal economic footing with municipal units, which implies that they get 75% funding from the municipality and can only charge parents 25%. In contrast, the new type of private institutions must be approved by the municipality in accordance with predefined criteria, but when these criteria are fulfilled, they have a right to establish centers. They get funding per child in attendance at the institutions, and municipalities do not assign children, which means a type of vouchers that allow parents to apply directly for places. These institutions are free to determine the fees and they are more independent from municipal governance than if they were in-house (Thøgersen, 2017). Private institutions can be both nonprofit and for-profit. Therefore, in Denmark, it is common to differentiate among public, self-owning, and private providers, where the latter category can include both for-profit and nonprofit institutions, although they operate under the same, but more autonomous, regulatory regime. Today, self-owning ECEC predominantly operate in close cooperation with municipalities and receive funding on equal terms as their municipal counterparts. The municipality is free to choose whether it wants to engage in partnership with self-owning institutions in order to cover the needs of the population. This sets this service area apart from other service areas in Denmark, such as schools, where nonprofit free-schools have more autonomy from the public sector with regard to the uptake of children and the profile of the free school (Thøgersen, 2017). Data on the number of ECEC institutions do not tell the whole story about provider mix, since there may be restructuring from smaller to larger units going on, and differences in size between the three sectors.

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Table 4.3  Number of ECEC institutions in Denmark after ownership

Public Self-owning Private

2017

2018

2019

2020

2021

2872 569 505

2798 535 548

2791 520 553

2781 500 568

2803 490 568

Source: Danmarks Statistik (2022)

However, in 2021, 73 % of the ECEC institutions were public, 13 % were self-owning, while 15 % were private, in Danish terminology (Table 4.3). From 2017 to 2021, there was a small decrease in the number of public institutions (–69), a somewhat larger decrease in the number of self-owning institutions (–79), while the private had an increase (+63). In terms of the development of the three sectors there are no newer data sources documenting the development in terms of the number of children attending the different institutions. This is because, at various times since 2005, Statistics Denmark has changed how they count attendance (Brogaard & Petersen, 2020, p.  7). For the period 2007 to 2014, we illustrate the development in the share of children attending each of the three sectors in Fig.  4.2. From 2015 onward, data from Statistics Denmark do not differentiate between sectors in the same manner. Overall, Fig. 4.2 represents a picture of stability. The public sector witnessed a decline of one percentage point, the self-owning sector witnessed a decline of 2.5 percentage points, and the small private sector witnessed a growth from two to six percentage points. Nevertheless, when interpreting these numbers, we must remember that some previous self-­owning institutions opted for the new private organizational form due to the increased autonomy allowed (Lærke Larsen, 2014). Therefore, the numbers do not necessarily reflect changes between the for-profit and nonprofit sectors but, rather, a small variation in how private entities are governed by the funding municipalities. The most important conclusion is the stability of municipal provision covering almost 80% of this service area (Reiermann & Andersen, 2019; Thøgersen, 2013). A different source of data is from a survey on municipalities conducted by a consultancy firm called Bureau 2000 (Pade & Glavind, 2022). The data only differentiates between ECEC institutions that are private and municipal, with the latter including self-owning institutions (Fig. 4.3).

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100.0 % 90.0 % 80.0 % 70.0 % 60.0 % 50.0 % 40.0 % 30.0 % 20.0 % 10.0 % 0.0 %

2007

2008

2009 Public

2010

2011

Private

2012

2013

2014

Self-owning

Fig. 4.2  Shares of children in municipal, private, and self-owning institutions in Denmark from 2007 to 2014. Source: Danmarks Statistik, Statistikbanken, Table PAS22 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

2017

2018

2019 Other

2020

2021

Private

Fig. 4.3  Shares of children in private and other (municipal self-owning) institutions in Denmark from 2017 to 2021. Source: Tables 4.1 and 4.4 in Pade and Glavind (2022)

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There has been an increase in private ECEC from 19,315 to 25,247 enrolled children from 2017 to 2021. This implies an increase from 7% to 9% of all enrolled children. The municipal and self-owning ECEC together increased from 249,909 to 254,209 children and the percentage of all enrolled children decreased from 93% to 91%. This confirms the image of relative stability, and the small increase in children can—at least partially— be a result of conversion of self-owning institutions to private institutions (Lærke Larsen, 2014; Reiermann & Andersen, 2019). The Danish for-­ profit institutions are mostly small local entities that tend to operate in a manner similar to the nonprofits, and the big chains are absent (Henriksen et al., 2016, p. 227). A number of pedagogical, religious, or other philosophies and profiles motivate self-owning kindergartens in ways that set them apart from public institutions. A primary concern of their most central interest organization, Frie Børnehaver og Fritidshjem, is the autonomy and freedom to pursue different values. In Sweden, there were 9450 ECEC units in 2021, of which 70% were operated by municipalities. In addition, there were almost 2000 independent operators of 2790 private ECEC units located in 247 of 290 municipalities. The units they operate are, for the most part, small; 80% had less than 50 children, and 94% of the independent operators had only one or two units. The owners of independent ECEC are private companies (45%), parent or personnel cooperatives (35%), and the remaining (20%) are owned by voluntary associations, religious societies, or foundations (Skolverket, 2022). However, investors of for-profit kindergartens may control broader parts of the sector. As an example, we look at the company Atvexa, which mainly owns ECECs (85% of its facilities) and is active in Sweden and Norway, but it is also establishing itself in Germany. The company has a 15% annual growth ambition, but as organic growth in the sector is low (3%–5%), this can mainly be achieved through acquisitions, which add units to Atvexa’s decentralized structure. In the third quarter of 2020, it owned 159 units with approximately 13,500 children (ABG Sundal Collier, 2020). In Sweden, Atvexa owns seven companies that only operate ECECs and eight companies that operate both schools and ECECs. Among the private ECEC owners and chains, there is continuous restructuration underway through mergers and acquisitions. The top five acquisition players control approximately 17% of the ECEC market in Sweden and Norway, according to ABG Sundal Collier (2020).

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600000 500000 400000 300000 200000 100000 0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Municipal

Corporation

Other

Fig. 4.4  Children aged one to five years enrolled in Swedish ECEC after ownership. Sources: Skolverket (2014, 2015, 2022)

Figure 4.4 presents the number of children aged one to five years enrolled in ECECs operated by municipalities, private corporations, and others from 2008 to 2021. The latter category includes parent and employee cooperatives, foundations, associations, and a few other forms of ownership, which are mainly nonprofits. In 2021, the number of children in municipal ECECs was 404,918, that in corporation-operated ECECs was 63,689, and that in others were 44,836. From 2008 to 2021, there was an increase in municipal providers by 50,302 children and corporations by 31,097 children, while the “other” category decreased by 577 children. The latter category with nonprofits increased until 2019, when it reached the peak at 46,622 children. The recent decline may have resulted from the termination of ECECs or from conversion of nonprofits to for-profits to enable acquisitions by large chains. For example, “Montessori Förskolor och Skolor i Sverige AB” has become a daughter company of Atvexa with 14 ECECs (Atvexa, 2022; Enfeldt, 2022, p. 32). Overall, corporations had the fastest growth and increased their share from 8% to 12% of one- to five-year-olds in ECECs between 2008 and 2021; the share of municipalities decreased from 82% to 79%; while that of nonprofits decreased almost two percentage points from 10.5% to 8.7%.

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These data reveal that after the voucher system was fully implemented in 2008, there was faster growth for the for-profits. The municipalities could no longer regulate market access by private providers that fulfilled national legal criteria for approval. However, these changes in the welfare mix of providers are small compared to other social service areas in Sweden, which have been subject to a similar governance model with user choice, the right to establish relatively freely, and no limitations on profits (Jordahl & Blix, 2021, pp. 56–57; Sivesind, 2017, p. 47). In Finland, there are 3617 ECEC centers (FINEEC, 2019). Approximately 72% of center-based ECEC institutions are organized by municipalities and 28% by private providers. Private providers have traditionally been nonprofit actors such as parental cooperatives, churches, etc. The centers constitute the largest portion of Finish ECEC, but there is a steady history of having family day care providers as an important supplement. Approximately 6%–7% of children are enrolled in publicly run family day care. Family day care is often organized at the care provider’s home or another home-like environment and is meant for children under school age. It is often considered as a form of ECEC focused on basic care and play activities and meant for the youngest children. Both center-based ECEC and family day-care services are expected to follow the national curriculum guidelines. However, these service types differ in terms of staff qualification requirements, child–staff ratios, and group size regulations (Act on Early Childhood Education and Care 540/2018). Moreover, the share of family day care has been steadily decreasing over the last 20 years all over the country, while the share of center-based ECEC has been increasing. Among family day-care providers, 74% are public and 26% private (FINEEC, 2020). Two instruments are central for understanding the role of private ECEC. Over time, they have been funded through private day care allowance (PDA), which is provided by municipalities to reduce or cover the cost of private ECEC services or vouchers that was introduced in 2009 and, as we see below, has been a driver for private growth. We expand on these instruments in the next section. The historical development of the share of private ECEC services in Finland is challenging to examine, as the earliest statistics concerning ECE vouchers began in 2015, even though they have been in use for a longer period. Figure 4.5 depicts the development of the participation rate and shares of municipal and private ECEC. The figure includes both full-time and part-time places, center-based ECEC, and family day care. It also

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90 80 70 60 50 40 30 20

Municipal ECE (1-5 year olds)

PDA

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

0

1997

10

Vouchers

Fig. 4.5  Share of Finish children enrolled in ECEC (%). Source: FINEEC (2021); Kela (2019)

indicates shows that the participation rate was rather steady in the late 1990s and early 2000s. Moreover, the share of PDA users has been stable in documented history from 2007–2019. The most important growth began when documentation of the use of vouchers began in 2015. The number of voucher users increased steadily each year. Between 2018 and 2019, the increase was 14% (FINEEC, 2020). In 2017, 23% of municipalities used service vouchers. In merely two years, there was a remarkable increase, as 31% of municipalities used service vouchers in 2019 (FINEEC, 2017, 2019). Figure 4.5 depicts that the percentage of children in municipal ECEC increased from 49 in 1997 to 61 in 2019. In addition, the private ECEC included 5% of the children with funding from PDAs and 12% from vouchers in 2019. The change regarding private providers was noticeable: nonprofit ECEC centers were becoming fewer, while for-profit ECEC centers were expanding rapidly. Traditionally, private ECEC centers were run on a nonprofit basis. The reform regarding service vouchers appeared to create a market for for-profit actors. We can see the increase in the number of private forprofit ECEC centers: in 2017, there were 907 private ECEC centers, and in 2019, there were dozens more—a total of 993 private centers. However,

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the number of private providers had decreased. In 2017, there were a total of 501 private providers, 46% of which were nonprofit and 53% for-profit. In 2019, the number of private providers had decreased to only 468  in total, arguably related to the development of larger for-profit companies buying smaller ECEC centers. Most private providers, 86% in 2017 and 84% in 2019, had only one ECEC center (FINEEC, 2017, 2019). However, three providers had over 60 ECEC centers, and together, they provided over one-third of the private provision. All the larger chains with over 10 ECEC centers were for-profit providers. The largest provider had 177 ECEC centers in 2019 (FINEEC, 2019). The changes in capacity of the nonprofit, for-profit, and public sectors are indicated by the number of employees in Fig. 5.5. There has been a very small increase in public sector employees from 2000 to 2018, from approximately 53,300 to 53,900 employees. However, the figure does not show full-time employment; moreover, if employees typically worked fewer hours per year in 2000 than in 2018, the increase in capacity may have been larger, as the steeper increase in share of children enrolled in municipal ECEC indicates (Fig. 4.5). In for-profits, the number of employees has increased very rapidly from approximately 2100 to 8300 from year 2000 to 2018, while there has been a decrease in the number of employees in nonprofits from 3000 to 2400. This implies that the share of public sector employees has decreased from 91.3% to 83.5%, that of for-­profits has increased from 3.6% to 12.8%, while that of nonprofits has decreased from 5.1% to 3.7%. In contrast, Norway, Denmark, and Sweden have witnessed more stability in their nonprofit sector shares of the ECEC service area (Fig. 4.6). Overall, corporations had the fastest growth in Finland in recent years. The growth is particularly evident after the introduction of the voucher system in 2015. In Iceland, the majority of ECEC units are owned, operated, and regulated by municipalities, and it is the municipality’s responsibility to grant licenses to operate both public and private ECECs. Private ECECs can be both nonprofit entities (self-governing organizations in most cases) and for-profit entities. Private ECECs operate under the same legislation and regulatory provisions as public ECECs. In addition, both these organizational forms run on an equal economic footing, which implies that private ECECS only can charge parents the same amount as municipalities do and get the same public funding per child. Usually, private entities have a formal service contract with the relevant municipality (the Preschool Act 90/2008).

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70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

2000

2005

2010 Public

2014 For-profit

2015

2016

2017

2018

Nonprofit

Fig. 4.6  Employees in Finnish ECEC after ownership. Source: FINEEC (2021)

Private ECEC services in Iceland have traditionally involved nonprofit providers. Almost all day care institutions were run by voluntary organizations before 1978, when the government took over most of their services. However, a few alternative private schools have always provided ECEC services. Usually, these operations are based on ideology, religion, and parental or entrepreneurial initiatives. A case in point are the Waldorf schools that operate both ECEC and primary education based on Steiner’s ideology. In 2008, a milestone was reached when legislation on the entire Icelandic education system was passed. There were several fundamental changes in this legislation, such as enabling the further privatization of playschools in Iceland. The legislation specified that “municipal councils may authorize third parties to build and operate ECEC using the form of nonprofit organization, a company limited by shares or any other legal form.” In general, the emphasis was on deregulation and, accordingly, opportunities to write a new national curriculum for the whole school system. Each school was supposed to write its own curriculum based on its philosophy and methods. The emphasis was much in the spirit of NPM—that is, a focus on measurements and goals (Dýrfjörð & Magnúsdóttir, 2016). It is up to the municipalities concerned to allow other parties to operate ECEC institutions according to the guidelines in the Preschool Act.

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Municipalities can decide whether to outsource ECEC to private providers or run the services themselves. Private ECEC can decide regarding selection and admission procedures (Eurydice Report, 2019). However, they have to fulfill the same national standards as public ECEC, such as staff qualifications, national curricula policy frameworks, and child–adult ratios (Act on Preschools 90/2008; National Curricula Framework 2011). Before the 2008 legislation came into effect and enabled further privatization of ECEC, it was possible to establish private for-profit playschools. Figure 4.7 presents the number of children attending public and non-­ public ECEC from 1998 to 2020. Private ECECs are shown to be on the rise, and the number of children increased from 795 to 3203. The share of children in private ECEC grew from 5% in 1998 to 17% in 2020. Municipal ECEC fluctuated around 15,000 children. The number of children increased from 13,733 children in 2000 until 2014, when the number peaked at 17,121 children, and then declined to 15,573 children in 2020. While there are no large multinational chains providing ECEC services, there is an alternative ECEC (Hjallastefnan ltd.) based on the ideology of gender equality, which is the largest company in the field. Currently, they 25000 20000 15000 10000

Municipality

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

0

1998

5000

Private

Fig. 4.7  Total number of children aged 0–5 years attending ECEC in Iceland. Source: Children in pre-primary institutions by age of children and daily attendance for the period 1998–2020, Statistics Iceland

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operate 17 ECECs and 3 primary schools (Hjallastefnan n.d.). In a few cases, they have contracted with smaller municipalities that have given them a monopoly in the provision of ECEC services. In these cases, parents have no freedom of choice. The second largest provider is Skólar Ltd., which operates five health-promoting ECECs. Other private ECECs are mostly run individually, often based on a certain alternative pedagogy. As there are no official statistics on the division between profit and nonprofit (self-governing organizations or associations) ECECs, we decided to search the website of the Association of Independent Schools in Iceland, although not all private ECECs are members. We also decided to look at the websites of the municipalities in the metropolitan area to locate private ECECs. As mentioned earlier, in 2019, Statistics Iceland indicated that 43 ECECs were private. Through this method, 38 private ECECs were found. Interestingly, 32 of them were limited companies and 6 were nonprofits (self-governing organizations/associations). Three of the nonprofits were established many years ago, and the other three were run by the University of Iceland’s Student Services, which is a self-­governing organization. It is evident that, at least from the year 2000, nearly all private ECEC institutions in Iceland are registered as limited companies. It is difficult to account for these statistics, except through a detailed empirical study. However, it appears that after the implementation of legislation in the year 2008, forprofits have almost crowded out the nonprofits that traditionally played a large role in the Icelandic ECEC system.

Explaining the Growth of Private Actors: Framework Conditions, Financing, and Public Debates As we have seen, the five countries have had very different developments regarding the role of private providers in their welfare mix. A few contextual differences play a role in explaining these deviations. As was evident in Chap. 3, the countries were able to increase supply to cover demand within the means of the public sector to varying degrees. The more unfulfilled demand, the more of a role available to play for the private sector. Similarly, the existence of private actors willing and able to expand also vary. Nevertheless, the developments can best be explained through the governance choices made by the governments in the different countries. In this section, we examine which governance choices were made, discuss the debates that surrounded them, and trace their effects to the developments we demonstrated for the welfare mix.

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As mentioned, in Norway, it was a parliamentary agreement from 2003 to expand supply that was the basis both for expansion of supply and for changes in the welfare mix. This was the first broad welfare service area in Norway where the combination of user choice, free establishment, payment per user, and vague restrictions on extraction of profits was introduced. This has similarities to the model that has been a driver of rapid privatization in Sweden (Sivesind et al., 2017). Additionally, a maximum fee for kindergartens was introduced, something that increased demand as lower prices made ECEC attractive for more families. However, most of the policy documents at the basis of the reform are descriptions of tools aimed at achieving the goal of full coverage in the ECEC system by providing private actors access to the same funding as public kindergartens, with little concern regarding the regulation of private providers. The main goal of increasing the supply of kindergartens was achieved. However, the question remains of whether growth that is more balanced could have been achieved had a similar stimulus used to target the nonprofit and public sectors. The relevant policy documents make it evident that private providers should be invited to create supply on equal footing with the public sector. However, the documents do not make any statements regarding the expected developments in market shares for different sectors. Indeed, we found no policy document at the time that foresaw the development or reflected on how the change in governance might influence the welfare mix or the consequences of concentrated ownership by large entities. In a 2020 interview, one of the architects of the agreement, the then deputy leader of the leftist party (SV) Øystein Djupedal, made the following statement: At the time, nonprofit foundations and organizations ran the existing private kindergartens, and I did not have the imagination to understand that the kindergarten field would be taken over to such an extent by commercial providers. (Mejlbo, 2020 our translation)

This lack of foresight regarding the development of the private ECEC business appeared to be widespread among policymakers and stakeholders during the 2003 reforms. It is also evident that public regulation has constantly lagged behind the evolvement of new types of for-profit actors that have gained control over an increasing portion of the sector (Storberget et al., 2021).

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The new legislation from 2003 has been adjusted a number of times or adjustments have been attempted. In 2011, municipalities gained more control over the kindergarten service in their area as it limited the right to establish for private providers. At the same time, there were also changes in the financing of kindergartens, which had consequences for how municipalities could govern their kindergarten sector. Until 2011, kindergarten financing was earmarked state subsidies. In 2011, this was changed to block financing, where private kindergartens would obtain their grants based on the average cost of a kindergarten place in municipal institutions. This provides a few incentives to municipalities. If they reduced their kindergarten-related expenses, they could also reduce funding for private kindergartens, thereby achieving an enhanced cost-saving effect. Conversely, if they wanted to invest in their kindergartens, they would also have to pay more to private kindergartens; however, they could not demand that private kindergartens make the same kind of investments in developing the service content. From 2011 onward, private kindergartens were entitled to 85% of the expenses per child in municipal kindergartens. This percentage was gradually increased until 2016, when it reached 100%. Simultaneously, expenses for pensions were omitted from the calculation, and private kindergartens received 13% of their salary expenses to cover pension expenses, which was later reduced to 10%. The law specifies a few limitations on how kindergartens can spend public funding. While public funding shall benefit children, the law (§ 23) emphasizes that kindergartens can generate a “reasonable” profit. Private kindergartens must be able to document that this is the case. Reasonable profit is not explicitly defined. However, the paragraphs indicate certain frames regarding how private kindergartens can operate lawfully: the kindergarten may not have expenses that are not related to the operation of the kindergarten; transactions with other entities in the same ownership structure must be on market-based terms; and the kindergarten cannot have significantly lower expenses per employee than comparable municipal kindergartens. In a review of economic supervision activities, the consultant company Agenda Kaupang (2017) found that few municipalities had actually supervised the use of funds in private kindergartens and that the municipalities had found the rules to be unclear and difficult to interpret. In cases where municipalities found private kindergartens to be in breach of the rules, the county governors often overruled their decision. Moreover, a common theme in the report was that it was much more difficult to

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supervise important aspects of the operations of kindergartens that were part of the big commercial chains. A common example was that the buildings where the kindergartens were located were often owned by other parts of the kindergarten’s parent company. Thus, a crucial question for the supervision was whether the rent level was reasonable. This is difficult to assess, and municipalities do not want to confront the legal and administrative capacity of the big chains and the PBL. A central actor in the debate regarding the framework conditions for private kindergartens is Private Barnehagers Lansdforbund (PBL), an employers’ organization that actively advances the interests of private kindergartens. Its members consist of a range of actors from small nonprofit kindergartens to large chains of for-profit kindergartens. Their adversaries on the political left have attributed to them the central role of creating a regulatory framework that has enabled a level of for-profit expansion that is unique to Norwegian welfare (Skrede, 2021). These actors also claim that while representing both nonprofit and for-profit actors, PBL pursues the interests of the latter, often at the expense of nonprofits. An internal governance structure that gives undue influence to big chains supposedly contributes to explaining this priority (Skrede, 2021), but the PBL leadership has disputed this description. In any case, PBL has repeatedly and successfully argued for beneficial financing for private kindergartens. The centrality of the topic in political debates may be considered an example of the heavy politicization of the subject, and the growth of big for-profit chains has created actors with economic and administrative capacity to do advanced advocacy work to pursue their interests (Børhaug & Moen, 2014). Over time, the for-profit kindergartens have had a lower staff-child ratio than the public and nonprofit ones. To address this, new legislation was introduced. From 2018 onward, new national regulation has limited this difference and, consequently, the profit levels of for-profits declined in 2019 from the level of the preceding years (Bjøru et al., 2021; Lunder & Måøy, 2022). Today, Lunder and Måøy (2022) find that the large ECEC chains generally have relatively low labor costs and high property costs, while the opposite is found for nonprofits and independent businesses. For the individual ECEC institution, it is generally beneficial to own their own building, but the big chains are increasingly selling off their properties and rather basing their operations on leaseback agreements. There is no differentiation in level of the financing of for-profit and nonprofit kindergartens. Although the owner can only transfer a

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reasonable percentage as profits, there is no form of capital lock to ensure that funds granted to this service actually end up there. This has made it possible for kindergarten owners to sell their institutions and keep the earnings generated over the years from, for example, a free or below market price on a plot of land, subsidized loans, and public funding contributing to building and developing the kindergarten (NOU, 2020: 13, pp. 226, 409). This is in contrast to the school sector where it is not allowed to take out profits and, should the school operation be terminated, the Ministry can demand the return of values remaining from the public support (Privatskolelova, 2003: §§ 6A-6 and 7-2). An official Norwegian report (NOU, 2020: 13, pp.  490–491) found that the major for-profit chains have had beyond-reasonable profit margins. Nonprofit institutions have a lower profit margin at around 2%. At the same time, the profit margin is not the most important form of value realization in the sector, as selling institutions is what generates most profit for owners (NOU, 2020: 13, p. 406; BDO Norge, 2018). The growing tendency of multinational companies and investment funds allocating resources in the Norwegian kindergarten sector is an indication of a sector with a beneficial relationship between risk and profit (NOU, 2020: 13, p. 338). The level and organization of financing have both been an ongoing struggle. Unions, activists, a number of municipalities, and left-leaning politicians have found that funding of private kindergartens has been too generous, thereby constituting a waste of the public purse as the operation of kindergartens has built large private fortunes for some (previous) owners. Nevertheless, private providers have lobbied for more funding through their well-organized networks, claiming that their real expenses are not covered. They generally received sympathy from the center–right parties that governed Norway from 2013 to 2021, but the challenges in supervision was evident (Agenda Kaupang, 2017), and there was cross-­political agreement to establish a national inspection unit under the Directorate of Education that among other things would examine accounts to determine if the transfer of profit was too generous or if there were excessively large transactions with closely related companies. To improve transparency and reduce economic risk, a law was passed in 2022 that required each ECEC unit to be a separate legal subject that is not allowed to engage in other types of economic activity, or take up loans, except from regular banks and financing institutions (Endringslov til barnehageloven, 2022). An illustrative example of the current complexity facing supervisors of Norwegian ECEC appeared in Norwegian media in the fall of 2022. The

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Norwegian Directorate for Education and Training announced it would assess the transactions of the ECEC building from the biggest Norwegian ECEC chain to a Swedish real estate company. This happened after the ministry received a notification from an investment company that the transaction was not in accordance with set standards. We do not know the merit of this notification. However, it is noteworthy that the ECEC chain, in its reply, pointed out that the investment company occasionally shorts other companies and that the notification could be an attempt to run down the price of the shares of the ECEC company (NTB, 2022). We are not in a position to judge this claim, but we do note that an interest in shorting ECEC companies is a new aspect to consider when supervising Nordic welfare institutions. Currently, the rapid expansion of the field has ended, as there is a decline in the number of children in numerous regions, and a timelier topic has been to be able to scale the supply to expected demand. In this context, certain municipalities have attempted to reduce the private capacity, but this has often been met by legal challenges and the adjustment has often been made in public sector institutions. The central government is currently reviewing this governance dilemma (Kunnskapsdeparte mentet, 2023). Financing in Danish ECEC is organized through municipalities. Up until 1987, the state would reimburse expenses to the owners of the institutions; however, from 1987 onward, state financing started being given as a block grant. This change was not intended to alter the level of financing, only how it was transferred. Municipalities are able to both agree on contracts with nonprofit self-owning institutions and to terminate the contracts. These contracts can provide rather detailed specifications regulating the operations for these providers. The nonprofits engaging in such contracts are also part of the municipal system for distributing places and caps on tuition. It was only after the legislative change in 2005 that a new kind of private kindergartens could generate private profit in the Danish ECEC sector (Thøgersen, 2013). This was controversial, and the voting in parliament was 60–49 following the left–right divide. Private institutions needed to be approved by the municipality based on predefined criteria, but they had the right to establish if they fulfilled these criteria. Therefore, the municipalities had a hard time regulating their presence. These actors would get funding from the municipality per child and would themselves admit children to their institutions, independently from

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the municipality. The public funding was equal to the average expenses in the public institution for a child of the same age. There was no cap on how much these kindergartens could charge parents. To the best of our knowledge, there are no statistics or reliable sources on how much profit has been extracted by private ECEC companies. The main argument for passing the law in 2005 was to provide parents freedom of choice (L 25, 2004–2005). Private kindergartens were expected to provide parents with substantive alternatives but not to achieve a certain pedagogical approach or changes in pedagogical activities. Furthermore, private kindergartens do not consist of large chains with political power or interest organizations that advanced certain pedagogical agendas. Interestingly, numerous institutions under the legislative framework established in 2005 are like self-owning entities, even if there are no formal limitations on their ability to generate profit. One reason for this is that they are attracted by the increased freedom and autonomy that comes from this relationship with the municipality, but not necessarily to generate profit (Thøgersen, 2013). No data exist on how many of the private institutions are run on a nonprofit basis, and there are no data on how many of these kindergartens actually extract profits from their operations (Brogaard & Petersen, 2020, p. 11). Indeed, if a municipality chooses to end its contract with a nonprofit self-owning institution, this nonprofit may seek to continue its operation under the organizational form of private institutions. A new legislative change in 2011 enabled municipalities to outsource the operation of kindergartens by open tenders to private providers, although it has not been used by any municipalities according to data from Statistics Denmark (See also Lærke Larsen, 2014; Reiermann & Andersen, 2019). For municipal and self-owning kindergartens, supervision involves all aspects; but, for private kindergartens, economic aspects are not supervised by municipalities (Dagtilbudsvejledningen, 2015 chap. 8). However, private institutions may not use funds in violation of the law, and if the municipality is informed of such practices, it must stop the transfer of funds to the private institution. The content of the supervision of self-owning institutions is normally agreed upon in the contract between the institution and the municipality. In 2020, an agreement was negotiated among the red–green parties that supported the Social Democrats minority government of Mette Frederiksen to regulate staff to child ratios and remove the possibility to transfer profit from kindergartens. This led to a debate regarding what this implied for the private kindergartens, which in practice would become like

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the self-owning institutions. There were mobilizations against this law on a Facebook group and from the business lobby, which argued that there would no longer be any incentive to establish new kindergartens. In February 2022, the centrist Social Liberal Party pulled out from the agreement with the Social Democrats in government and the other supporting parties; the Unity List and the Socialist People’s Party (Kirkeby Theilgaard, 2022). Consequently, there would be no restrictions on extraction of profits, despite a publicly funded staff to child increase that reduced the risks of the owners. In Sweden, during the expansion period, the ECEC service area became part of the public sector. From 1941 to 1951, the share of municipalities increased from 7% to 36%, but this was before the real growth begun. In the 1970s, municipalities operated 96% of all ECEC activity (Korpi, 2015, p. 40). This particularity of the Swedish welfare state was not hugely popular. In the 1980s, the conservative–liberal block, including the Moderate Party and Liberal People’s Party, argued for privatization with public funding in order to give parents choice and inspire competition and development. The ruling Social Democratic Party was very much opposed to involving private corporations in the welfare system and enacted a law (“Lex Pysslingen”) against giving public funding to private institutions for the purpose of generating profit. The only private alternatives were family cooperatives and nonprofit organizations (Hanspers & Mörk, 2011). After the 1991 election, a conservative–liberal minority government came into power and immediately reversed “Lex Pysslingen,” thereby allowing municipalities to decide to include private actors in their childcare plan. The new bill was termed “Freedom of Choice within Early Childhood Education and Care.” It introduced a layered policy that allowed public institutions to operate as earlier, while certain municipalities could let additional private institutions operate under the same conditions but within restrictive regulations. Not surprisingly, municipalities dominated by social democrats would still operate as if “Lex Pysslingen” was still in place (Westberg & Larsson, 2020). However, the Swedish conservative–liberal government was determined to further increase freedom of choice in the ECEC sector. In 1993, they took a further step toward virtual vouchers, which were introduced two years earlier in primary and secondary schools. This implied that parents could choose if they wanted municipal funding to pay for ECEC in the public, nonprofit, or commercial sector (Westberg & Larsson, 2020). In 1994, a bill extended virtual vouchers to parents who chose to stay home

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to take care of their child instead of using ECEC institutions. The left-­wing parties were not completely opposed to using private services, but they wanted municipalities, and not parents, to choose providers in order to secure quality. There were only a few private ECEC providers and, thus, ECEC staff were encouraged and provided information regarding how to establish their own institutions, although not many had such ambitions (Korpi, 2015). This demonstrated the somewhat naïve thinking by policymakers at the time—that small-scale actors would constitute the private owners and not international investment funds. After the 1994 parliamentary election, there was no longer any support for the bill; consequently, the system of childcare vouchers was abolished in the fall of 1994 (Westberg & Larsson, 2020). The social democratic government in power from 1994 to 2006 remained skeptical about investors with commercial motives, but it did not question the status of private ECECs. However, its political position was weakened; in 2005, a coalition comprising the right-wing parties and the Green Party was able to secure public funding for private ECEC institutions that were not included in the municipalities’ plans as long as they satisfied certain standards set by laws and regulations (Westberg & Larsson, 2020). In 2008, the right-wing government again allowed private alternatives in all municipalities. The legislation mirrored the system for private schools that was well established by then. The purpose of the vouchers was to further increase parental freedom of choice. Interestingly, the left-wing minority did not dispute this motivation. However, they expressed concerns regarding public funding going to private pockets, drainage of municipal economies, and a deterioration of quality (Westberg & Larsson, 2020). The legislation would allow independent initiatives and private enterprises with access to investor capital and stronger incentives for expansion to improve coverage of ECEC demand. Family kindergartens were no longer a separate type but were included in the concept of “pedagogical care” (“pedagogisk omsorg”) (Korpi, 2015). When the Social Democratic Party and Green Party came into power again in 2014, changing the voucher system was no longer a priority, and only the Left Party remained outspoken critics. Through the power shifts, the reforms that resulted in the voucher system in ECEC were introduced stepwise: first, reversing Lex Pysslingen; second, granting private institutions the right to establish after approval by national agencies; and third, giving parents the right to choose the provider (Westberg & Larsson, 2020). However, as evident in Fig. 3.4, the percentage of children in

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different age groups reached a maximum before the full virtual voucher system with free right to establish was given in 2008. The public sector coverage had reached 82% by that time, which limited the room for expansion for the for-profits (see Fig. 4.3). Currently, the municipality in which a child is registered pays a subsidy to the provider. The fees must be paid as long as (1) regulations that apply to similar public institutions are followed, (2) there are no negative consequences for similar municipal institutions, (3) it is open to all children, and (4) the fees are not unreasonably high. Municipalities regulate the subsidies in accordance with their own costs, with additions for children in need of special care. This implies that private actors entering this quasi-market get the same level of funding per child as the municipal ECECs. The current situation in Swedish ECEC is that Swedish municipalities have an obligation to offer ECEC to all parents who are working or those with other needs recognized under the law. Nevertheless, for practical reasons, such as travel distance, not all available options are relevant for parents. It is not possible for municipalities to satisfy all needs. In remote areas, it is particularly difficult to offer broad enough differentiation of services. Even in big cities, not all applicants get offers according to their first choice on the list of priorities. In particular, it may be difficult to find suitable places for children just arrived from other countries in smaller municipalities (Garvis & Lunneblad, 2018; Skolverket, 2021). Private alternatives may provide more options, but owners can choose where they want to establish or continue to operate their ECEC institutions. This leaves unsatisfied demands, which municipalities, cooperatives, and other nonprofits with different criteria for localization may attempt to fill. The effects of different preferences among private and municipal providers are evident from the statistics. Many municipalities have very few or no children in private ECEC institutions. Small, thinly populated municipalities have, on average, from 5% to 10% of children in private ECEC institutions, while big city areas have the highest coverage, with an average of 32% (Hanspers & Mörk, 2011, pp. 44–47). The Swedish model for vouchers and the free establishment of ECEC institutions weakens the control of politicians over the location of institutions. The financing of non-public institutions comes from municipal budgets, but the national regulation of financing provides little discretion to the municipality. This may reduce their ability to prioritize remote districts or deprived neighborhoods. In contrast, the goal of equal possibilities for all was an important part of the Scandinavian welfare model in the post-war

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period (Telhaug et  al., 2004). Furthermore, private institutions gaining market shares from public institutions may reduce the potential for economies of scale if public institutions built for a given number of children can only attract a fraction of their capacity. The municipality or school inspectorate does not have the right to examine the operator’s accounts or economic dealings and there are no restrictions on the transfer of profits to the owners or other purposes. It is also important to note that stocks can be sold without the need for approval of the new operator. The right to operate can, in practice, be sold with the institution, which may favorably affect the market value. The Swedish system of vouchers and the regulation of private operators in ECEC and primary schools are designed to create competition with the municipal institutions in a quasi-market system (Le Grand & Bartlett, 1993). This implies that competition should be about attracting users and not about lowering prices and standards. An important reason that the public sector still has almost 80% of the children is that most of the expansion of ECEC places in Sweden occurred while the municipalities could still decide whether or not they wanted to include private providers in their ECEC plans. This phase with layered policies was extended as a result of political disagreements in parliament between the red–green block and the conservative–liberal block. The voucher system in Sweden was implemented through incremental reforms, with occasional setbacks from the early 1990s to 2008. This supports the view of Westberg and Larsson (2020) that by the time the red–green block had to accept full vouchers in ECEC, the public sector had reached a critical mass. A governance system was established, with public inspection and regulation, subsidized places with socially differentiated fees, and all children were eligible for at least 15 hours of ECEC for free every day. Private ECEC provision in Finland has traditionally involved nonprofit actors such as parental cooperatives, churches and NGOs, and local and small for-profit entrepreneurs. According to the day-care legislation that was enforced in 1973 (Act on Children’s Day Care 36/1973), profit-­ making was prohibited; instead, a private day care center could receive state aid for 30% of its operating costs. Consequently, the share of private provision has been moderate. Nevertheless, in 2000, only 11% of children enrolled in ECEC services and attended ECEC from a private provider (Säkkinen & Kuoppala, 2017). During the economic recession of the 1990s, a couple of important legislative changes were enforced. First, the legislation concerning the

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financing of social and health services was reformed in 1992 (Laki sosiaalija terveydenhuollon suunnittelusta ja valtionosuudesta 733/1992), which increased municipalities’ freedom to organize their services. For example, this made it possible for municipalities to purchase outsourced services (Local Government Act 365/1995) as the Public Procurement Act 1505/1992 regulated public procurements between 1992 and 2007. Second, the regulation related to the sizes of children’s groups was substituted by staff–child ratios (Decree on Children’s Day Care 239/1973, Asetus lasten päivähoidosta annetun asetuksen muuttamisesta, 806/1992). This was followed by increased monitoring of the efficiency of ECEC services in municipalities in the spirit of NPM principles (Paananen, 2017). These changes reflected austerity policies aimed at economic savings and strengthening market approaches. As we have seen, for-profit providers have witnessed considerable growth over the last decade. There are two important mechanisms for funding private ECEC that can help explain this. First, parents can choose private ECEC services and claim state-funded subsidies called the private day-care allowance (PDA) was introduced in 1996 (Law 1128/1996), which is provided by municipalities to reduce or cover the cost of private ECEC services. The PDA consists of two parts: it has both fixed and income-tested components. Municipalities can top up the PDA with a municipal supplement, which can be income-tested or fixed. Although the PDA is claimed by the child’s guardian, it is always paid directly to the private caregiver or the ECEC provider. The PDA is taxable income for the ECEC provider but not for the family claiming the allowance. It is available for all families whose children are not in municipal ECEC (Räsänen et al., 2023). As the largest part of the PDA is a fixed sum and the clientele fees of private providers are not typically income-tested, families with low incomes need to use a larger proportion of their income on clientele fees compared to higher-income families. Second, municipalities can also subsidize the demand of private services by providing service vouchers for families. Families can choose a private provider from among those approved by the municipality. Moreover, municipalities have the autonomy to define the monetary value of the voucher (Act on Service Vouchers in Social Welfare and Health 569/2009) and the eligibility criteria for the providers to be approved as part of the ECEC services in which parents are able to use the service vouchers. For example, they can set a price ceiling for providers by defining it in the voucher contracts used for governing private providers. Vouchers are most

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commonly income-tested and dependent on the age of the child (Lahtinen & Svartsjö, 2020). It is common for the family to pay the remainder of the service fee after the value of the service voucher has been subtracted. In principle, vouchers maintain clientele fees at a level close to those in municipal ECEC and are, therefore, typically more attractive to families with lower incomes compared to the PDA. The popularity of these vouchers has grown remarkably in recent years. However, there is considerable regional variation in their deployment (FINEEC, 2019). In 2018, every third of municipalities offered vouchers and in 2020, every 36% did (Lahtinen & Svartsjö, 2020). In short, PDA is a state-funded subsidy per child in private day care that is partially fixed and partially (but weakly) income-tested. However, alternatively municipalities may issue vouchers, which are subsidies for private day care that can, depending on the municipality’s policy, vary—for example, according to the parent’s income, the child’s age, number of hours in day care, family size, etc. Vouchers result in parental fees that are close to the level charged in municipal day care, while PDA is less favorable for lowincome families. The increased marketization of ECEC services appears to be more closely linked to the voucher systems that have been rationalized by many other countries through the discourse of individual choice and “the creation of managed care markets for private providers” (Anttonen & Häikiö, 2011, 95). According to Anttonen and Häikiö (2011), the voucher system was piloted in the 1990s with childcare and homecare for older people in some municipalities. It was integrated into legislation in 2004 (Laki sosiaali- ja terveydenhuollon suunnittelusta ja valtionosuudesta, 733/1992, Laki sosiaali- ja terveydenhuollon suunnittelusta ja valtionosuudesta annetun lain 4§ muuttamisesta, 1309/2003). Furthermore, the position of the vouchers was made more stable with the new Act on Social and Healthcare Service Vouchers in 2009 (Act on Social and Healthcare Service Vouchers 569/2009). However, local authorities are not obliged by any law to provide vouchers. There were two major consequences when service vouchers were introduced. First, because of enacting the Act on Service Vouchers, the private ECEC sector expanded rapidly. In 2019, the share of private providers was 18% of all ECEC provision. Second, private provision did change: In addition to nonprofit and small for-profit operators, large national and multinational companies have entered the ECEC market in Finland. In sum, it appears that public income-tested demand-side municipal subsidies

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(particularly vouchers) have enabled the expansion of the private sector (Ruutiainen et al., 2020). Based on company databases, Ruutiainen et  al. (2021) find that the revenue of the three largest for-profit chains increased from approximately 46 million euros to 146 million euros between 2015 and 2019. The workforce also tripled from 1033 to 3566 employees. Therefore, not only has the number of private ECEC increased but the trend has also centered on larger for-profit providers. Since there is a maximum fee for municipal services and municipalities are obligated to provide a place for all children whose guardians so wish, the fees of private services appear to remain slightly higher compared to public ECEC fees. However, there are no comprehensive reports on private service fees. The policy debate regarding privatization in ECEC has increased in the past couple of years. It has been argued that the funding of private ECEC centers has built large private fortunes for a few owners at the expense of service quality. Simultaneously, private provider networks have been pushing for more funding, arguing that more funding will provide families equal-choice opportunities. Sanna Marin’s Government Program from 2019 set out to examine the possibility of restricting profit making in the ECEC sector. The report on this was published in 2021, concluding that the restriction could violate the right to engage in commercial services protected by Finnish constitutional law (Tuori, 2021). Nevertheless, private ECEC has since 2022 been subject to a licensing practice instead of the earlier practice of a notification system. Municipalities have been the key actors, particularly in the growth of the private sector (Ruutiainen et al., 2020), as they have considerable autonomy in deciding how they organize their services. We observe a remarkable variation of the local share of private ECEC provision between municipalities. In certain municipalities, there is no private provision, whereas in others, the share of private provision is close to 50% (FINEEC, 2021). More recently, a few smaller municipalities have been outsourcing all their ECEC provision to private operators under the service voucher scheme. This might present problems if parents refuse to claim vouchers, as they have a legal entitlement to ECEC services organized by the municipality. Vouchers are used only for subsidizing private provision, not for funding municipal ECEC. Compared to Norway, Denmark, and Sweden, the municipalities play an exceptionally central role in determining the welfare mix in Finland.

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Private providers need to notify the municipal authority in the municipality where the services are provided prior to the introduction of ECEC services. Municipalities have the freedom to determine the welfare mix. The municipalities can choose between a voucher system and topping-up the private day care allowance through local private day care allowance, or they can use both. The municipality defines the monetary value of both the ECEC voucher and the municipal supplement for private day care allowance. The form of subsidy used in a municipality has an effect on the public sector’s regulatory power (Wadsworth & George, 2009). Voucher-­ subsidized private ECEC can be more regulated than services subsidized with the PDA municipality supplement. In addition, local politicians can attempt to influence the welfare-mix and the location of the centers through town planning and service guidance, yet they have limited possibility to influence service structure in sparsely populated remote areas. At the same time, as municipalities play a key role in ECEC governance in Finland, the actors increasingly become international. In 2020, the biggest Norwegian ECEC chain, Læringsverkstedet, acquired the Finish chain Pilke Päiväkodit OY with all its 146 institutions (Lunder & Måøy, 2022). This might signal an increased Nordic dimension in ECEC, as the same owners increasingly dominate the field in different countries. In Iceland, there is a dearth of research on privatization in the context of ECEC. However, Iceland, like other Nordic countries, went into large governmental reforms in the spirit of NPM in 1991. When a new government, a coalition of the Independence/conservative party and The Peoples Party was established in 1991, they published the first White paper that included privatization objectives and outsourcing programs to private parties in order to assure efficient and effective public service. Among the changes that took place at that time was that primary education (ECEC) was deferred to municipalities (Hrafnsdóttir & Kristmundsson, 2011; Kristmundsson, 2003). A legislative framework for contracting and tendering for outsourced services became mandatory if costs exceeded certain limits. Tendering in social and health services was barely existent before this legislation was passed. Indeed, it was not until 2002 when the first tender was put forward regarding service of a nursing-home and a for-profit entity won the contract. However, most of the first contracts were so-called soft contracts and less specific with nonprofits that the government trusted and had already been in co-operation with (Hrafnsdóttir & Kristmundsson, 2011). With regard to the educational system including ECEC, there was greater emphasis on monitoring, quality assurance, assessment, and

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standardization in the spirit of NPM (Einarsdottir, 2019; Sigurðardóttir et al., 2020). According to Dýrfjörð (2011), the manifestations of NPM are evident in the curriculum discourses regarding deregulation, choice, performance indicators, etc. However, the outsourcing of ECECs to private providers and formal service contracts are also evidence of the rhetoric of NPM. A historical analysis following the 2008 act indicated that there has been increased formalization of relations between the state and private entities in the welfare and education sector in Iceland (Kristmundsson & Hrafnsdottir, 2012). Moreover, there is also evidence that for-profit ECECs with formal service contracts are on the rise in municipalities (Dýrfjörð, 2011; Dýrfjörð & Magnúsdóttir, 2016). However, the main focus of offering private ECECs is to provide parents more freedom of choice and not necessarily to develop private ECECs run by companies. In any event, there were no heated debates in parliament regarding privatization when the 2008 bill was submitted. Before the 2008 legislation came into effect and enabled further privatization of ECEC, it was possible to establish private for-profit playschools. However, the 2008 act did not mention whether ECEC owners could extract profits from their operation. Interestingly, in 2016, the Compulsory School Act from 2008 was changed and stated that public funding should only benefit the educational activities of the school. No such modifications have been made to the legislation on ECEC, which suggests that there are no limitations on owners with regard to the generation of profit. Nevertheless, as municipalities usually approve formal service contracts for private ECEC operations, it is possible that restrictions on profits to private owners were specified in some of the contracts. However, this has not been the case in Reykjavík municipality. A recent report by Reykjavík’s Inner audit office criticized that some of the for-­profit playschools in Reykjavík had paid a considerable surplus to the owners (Reykjavíkurborg, 2022). This resulted in a heated debate in media and in the city council, thereby resulting in an establishment of a working group to revise the policy and put forward propositions to improve the operations and supervision of private ECECs. Among the propositions is that for-profits should not be allowed to pay surplus to owners and that their operations must be more transparent. If there was a surplus, it should only benefit the educational activities of the ECEC (Reykjavíkurborg, 2022). However, the propositions regarding these changes have not yet been enforced in Reykjavík municipality.

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Chapter Summary In all five countries, ECECs were originally established by nonprofit actors. The legislative changes around the 1970s led to municipalities becoming a central provider of ECECs, but to a varying degree. In Norway, the nonprofit share never fell below approximately 40%, while in Sweden, the municipalities had a dominant position with 96% of all ECEC activity in the 1970s (Korpi, 2015). Further, kindergartens in Denmark were predominantly nonprofit, self-owning institutions up until the 1970s. A legislative change in 1976 laid the path for municipalities to run the institutions; ever since, municipalities have gradually become the dominant providers of kindergarten services (Thøgersen, 2013, p.  11). However, in all countries, for-profit providers entered the scene at different times, and in the 2000s they became an integrated part of the sector. Today, the Nordic countries represent contrasting cases in terms of the welfare mix. In Norway, approximately half the children attend public ECEC institutions, while half attend non-public ones. The corresponding number in Sweden, Denmark, Iceland, and Finland is approximately 80% public and 20% non-public in all cases. Furthermore, the role of for-profit and nonprofit providers varies across the countries. For-profits increasingly dominate in Norway, they are growing in Finland, and they have crowded out nonprofits in Iceland, while the picture is more stable in Sweden and Denmark. Norway and Finland both opened to for-profits while still being in the process of rapid expansion of the service, thereby using private providers to reach full coverage of demand for places in ECEC. The political response to the increase in for-profit actors varies and is not always in line with the strength of the development. In Norway, this has been one of the big welfare debates, but with limited application of policy tools to govern the welfare mix. Currently there appears to be political willingness to govern the welfare mix and the flow of public sector funds through national regulations and auditing. However, the regulation of private ECEC increased gradually from 2011 onward, with municipalities obtaining more influence on establishment of new centers. In Iceland, ECEC does not appear to have been a big topic in public debate until recently, when the Reykjavík’s inner audit report was published in 2022 (see discussion above), while Denmark proposed banning profit-transfer in 2020 but the political parties subsequently disagreed about the reform. In Sweden, the role of for-profit ECEC has been a symbolically important conflict between social democrats and the liberals and conservatives since

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the early 1990s (Westberg & Larsson, 2020), while in Finland the issue has gained prominence over the last few years. Simultaneously, it is striking how the governance of the ECEC sector differs from other welfare fields. For example, Norway has been a reluctant privatizer in many service areas, but is a forerunner in ECEC, while Sweden is generally the privatizing juggernaut in a Nordic context, but has seen developments that are more modest in the ECEC sector. To a certain extent, the increased state steering regulates the room for maneuver for private ECEC and for municipalities as providers. If private providers have the right to establish as they have in Sweden and earlier in Norway, municipal control is limited and freedom of private actors is expanded. We see a varied picture in the balance the state finds in terms of municipal discretion in governing the local welfare mix. In Finland and Iceland, the municipality has ample room to govern the inclusion of non-­ public providers. In these countries, we see great variation among the municipalities as well as considerable for-profit growth nationally. In Sweden, this room is smaller; in Norway, the state is currently looking for ways to expand this room (Kunnskapsdepartementet, 2023). After failing to prevent super-profits from the sales of property (Lunder & Måøy, 2022), the government has imposed stronger restrictions on the legal and employment structure of private ECEC providers and committed resources to supervise their economy in order to secure that public funding will be used for the intended purposes. As we approach a time with a reducing number of children in all these countries, at least in certain regions, it is unclear if the rescaling of ECEC supply can be managed at the national level. In light of the political salience of private providers and the considerable amounts spent on ECEC, it is a surprisingly weak supervision of the economic aspects of non-public ECEC. It is evident that all countries find it challenging to both regulate and supervise the economic dispositions of private institutions. In all the countries, there are limitations on how public funding (and fees from parents) may be spent, but the willingness and ability to supervise these aspects of the operations have been limited across all the selected countries. Table 4.4 sums up the important aspects of changes in the welfare mix in Nordic countries over the last two decades, approximately, which is the period when this issue has been most relevant.

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Table 4.4  Development in the ECEC welfare mix during the last two decades in Nordic countries Norway

Massive growth in the sector to achieve full coverage. All three sectors have grown in real terms, but for-profit providers have gained shares at the expense of the public and nonprofit providers. Big for-profit chains increasingly dominate the private sector. Denmark Stable picture with public, self-owning (nonprofit), and private (nonprofit and for-profit) providers. Proposal to ban transfer of profits did not obtain sufficient support. Sweden Relatively stable relationship among public, nonprofit, and for-profit providers. This is surprising in light of strong for-profit growth in other service areas with user choice. However, there is increasing concentration of ownership in bigger Norwegian and Swedish for-profit chains. Finland The latest country to achieve full coverage, partially due to family-oriented policies. In the last seven or eight years, this has led to for-profit growth both in actual and relative terms. It is unclear if the government has governance tools to steer the development due to strong municipal autonomy. Iceland Steady for-profit growth, but continued public sector dominance. Nonprofits are crowded out. Up until 2022, profit was not a salient policy issue, but this changed as information appeared that economic dispositions in for-profit ECEC were considered inappropriate. Increased coverage of ECEC demand to bridge the gap between parental leave and ECEC remains the main priority.

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CHAPTER 5

Reigning in Provider Diversity? Regulation, Steering, and Supervision

Introduction As we have seen earlier, the traditional uniform governance of Nordic ECEC has to a considerable extent been replaced and supplemented by quasi-market steering of the sector, albeit to different degrees in different countries. Currently, we thus have a situation where quasi-market reforms have increased the plurality in providers in several of the countries, with for-profit becoming major actors in the area. Simultaneously, this governance mode has undermined the often-tight relationships between municipalities and individual institutions, thereby creating a more contract-based relationship. In the previous chapter, we discussed the economic frames and incentives for the different kinds of providers. In this chapter, we examine the non-economic governance in the form of regulation, steering and supervision. The core question is: have the more diverse set of providers of ECEC that we documented in Chap. 4 resulted in more active regulation, steering, and supervision from the public sector? To give an answer to this question, we need to establish if there has been an increase in such public sector attempts to control the sector and whether it is the provider plurality that explains this development.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4_5

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As we discussed in the introductory chapter, governments face a dilemma when deciding if they should impose central control of the ECEC services or if more regulatory leeway should be granted to the local level. Local discretion can be granted to municipalities to govern their local ECEC market or to individual ECEC institutions. In light of what we showed in Chap. 3, one could expect increased central steering, as ECEC has become one of the core services of the welfare state over the last decades. Almost all children attend ECEC before commencing formal school. Accordingly, the population expects high quality standards across municipalities and ownership of the provider. Furthermore, a more contract based relationship and more for-profit providers can make it more rational for the state to safeguard quality standards through regulation and supervision. An efficient system of monitoring the service is a core strategy for creating a well-functioning quasi-market (Le Grand & Bartlett, 1993), and detailed regulation can be a tool to avoid profit-seeking at the expense of service quality (Hart et al., 1997). On the other hand, too much central control may undermine the potential positive effects from provider plurality. As the population becomes more diverse in terms of religion, culture, and preferences (Garvis et al., 2019), it is increasingly difficult to develop services for the entire range of populations within the public administration (Phillips & Smith, 2011). Thus, having a plurality of providers may create a more complete offer in which a larger share of the citizenry obtains services in line with their preferences. As mentioned in the introductory chapter, this is one of the rationales for having a differentiated welfare mix. To reap these potential benefits from having providers belonging to the public, for-­profit, and nonprofit sectors, there needs to be a certain level of local discretion (Trætteberg, 2017). When analyzing the available tools for governments to govern a service area, the most common approach is to differentiate between hard and soft governance tools (Blomqvist, 2022). Hard governance is typically legally binding, commonly sanctioned, precise in content, authoritative, and inflexible. The key is that compliance is secured and that there is little room for interpretation of what steering actually involves. Soft governance is characterized by many of the opposite qualities: it is not easily enforceable, vague, and flexible. Soft forms of governance can be, for example, providing guidelines and comparative statistics or assessments. The implication is that compliance depends on a certain form of genuine willingness in the parties who are actually steered. While this dichotomy is useful for analytical purposes, in reality, steering will often have a more

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hybrid nature. Thus, one may think of scale where different governance tools can be placed on a range from hard to soft governance (Brandsen et al., 2006). When applying this to the ECEC sector, we refer to a conceptual model we presented in the introductory chapter. Maroy (2012) developed a model that describes the shift from traditional professional-bureaucratic steering to post-bureaucratic steering in the form of quasi-markets or evaluative steering. This is indeed a shift from a governance approach based on hard governance to one dominated by different soft governance tools (Blomqvist, 2022, p.  270). As evident in the previous chapter, quasi-­ markets have grown in relevance across the Nordic countries. In this chapter, we examine the extent to which the ECEC sector has also been subject to evaluative steering (Maroy, 2012). This implies more autonomy for institutions, but where the autonomy is followed by an expectation to work in order to improve results in externally administered tests. In this manner, the government steers developments through the assessment regime but without micromanagement of the content. To review the non-economic governance of the provider mix in the Nordic countries, we proceed by first examining alternative rationales the states have for imposing control over the ECEC sector. Apart from changes in the welfare mix, Nordic ECEC is also undergoing other relevant changes like the increased role of ECEC as part of the educational ladder. Subsequently, we discuss the use of the most important governance tools of the national governments, laws and regulation, and national curriculum. These are potential examples of hard governance, but that depends on how the national regulation is supervised. Accordingly, we discuss the supervision activities in the Nordic countries. Thereafter, we study the use of softer governance tools ex ante in the form of manuals and ex post in the form of evaluations.

Educational Promotion—The Rationale for State Steering Childhood institutions—such as ECEC centers and schools—reflect constructions of good childhood and future citizenry. National policies and legislation seek to enable the appropriate care and development of children to ensure the nation’s prosperity and the health of its population (Millei & Lappalainen, 2020). Increased political attention to ECEC over the last

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decades can be traced to at least two developments. First, as ECEC has come to be constructed as a general welfare good, elected officials are forced to take interest in the service. Second, how governments think about education, human development, and the role of ECEC has changed. In this respect, the Nordic countries are not alone, as the OECD (2018, p. 9) observes that the government increasingly views ECEC as “a platform for children’s development […] especially [children] from disadvantaged or immigrant backgrounds.” This is of course imperative for the development of the individual child, but the current discourse also highlights the importance for the country, as these children will later become part of the workforce (or benefit receivers) of the country. This dual perspective on ECEC is reflected in a Norwegian white paper entitled “Early intervention and inclusive education in kindergartens, schools and out-of-school-hours care” (Meld. St. 6 (2019–2020)), in which the government made the following statement: A sustainable welfare state requires more people to participate in the labor force and more people to work for longer. The government is therefore investing in education and knowledge for all. Early intervention and inclusive practices are key to ensuring that all children and young people can realize their dreams and ambitions.

This makes the ECEC sector a key field in securing long-term economic development for the country. Given this expanded role of the ECEC sector, the incentives for state steering tend to be enhanced. In Denmark, a telling example of the role of ECEC in the development of human capital was the establishment in 2011 of a task force (Task Force for Fremtidens Dagtilbud, 2012, p. 5) to provide advice on the future of Danish ECEC. A central aspect of their mission was based on the view from the government that “children who experienced quality early in day care perform better in school and later as adults in the labor market. This is especially true for children from disadvantaged families” (our translation). The task force gave advice leading to new legislation in 2018, which further advanced the expected learning outcomes from ECEC.  While Dannesboe et al. (2021) identified international organizations and trends as the reason behind this shift in focus, others point to the role of schools in pushing their agenda on the ECEC field (Aabro, 2014).

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When the social democrats formed a new government in Sweden in 1996, one of their main ambitions was to fight unemployment through a highly competent work force, and the instrument to reach this goal was high quality throughout the educational system, from ECEC to higher education (Korpi, 2015). Part of this policy orientation was that the responsibility of the ECEC sector at the state level was moved from the Ministry of Health and Welfare to the Ministry of Education, thereby mirroring the administrative order in many municipalities. A framework curriculum was developed to secure appropriate development in ECEC. In Finland, we identified changes in the discourses related to the societal function of ECEC. Traditionally, in public debate, the main role of ECEC has been enabling labor force participation, increasing either gender equality by allowing mothers to enter the labor market, or increasing equality between children by counteracting the risks of social exclusion. This reflects ECEC’s earlier role as a labor and social policy tool. Lately, the discourse that highlights the role of ECEC as a learning intervention has taken space. This discourse, for example, fueled the policy pilot for free-of-charge ECEC for five-year-olds (2018–2021) and the policy experiment for two-yearlong pre-primary education (2021-ongoing). In this discourse, ECEC is constructed as a first step of the education system that improves children’s learning skills for school and increases educational equality by narrowing differences in learning. The government proposal (HE 149/2020) concerning the experiment of two-year pre-primary education justifies the change by constructing pre-primary education as being more effective when five-year-olds also attend (in addition to six-­year-­olds) “systematic education and learning activities.” In Iceland, shifts are evident in discourses in ECEC policy from providing care for deprived children to the emphasis on enabling labor participation of women and, last, toward increased emphasis on the educational and developmental aspects of ECECS. Although ECEC was moved under the Ministry of Education with legislation in 1973, it was not until 1994 that ECEC was officially defined as the first level of education. This resulted in increased emphasis on children’s education, development, and rights of all children to attend ECEC. The social investment/human capital discourse is also apparent in certain publications regarding educational reforms, where emphasis is—among other things—on dropout rates, literacy skills from an early age, and the importance of education (including ECEC) in developing thriving society (Ministry of Education and Culture, 2014; Samtök sveitarfélaga á höfuðborgarsvæðinu, 2013).

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Thus, it is evident that in all countries ECEC is considered a tool to solve challenges at a societal level, such as labor market participation, human development, and dropouts. There has been an international trend in emphasizing ECEC as a form of social investment in which public intervention at an early stage can have important positive consequences for each individual as well as for society (OECD, 2011). For the investment to make sense, the state needs to know that the investment is made in line with its preferences. Karila (2012) has shown how these trends become evident when recent developments in Nordic legislation are examined: the goal of lifelong learning widely appears in ECEC legislation in Nordic countries. Moreover, Otterstad and Braathe (2010) have argued that there is a current political shift in Nordic countries toward a learning paradigm. The holistic approach of Nordic countries to early childhood education has been said to resist the approach highlighting school preparation (Jensen, 2009). However, there are voices that challenge some of the key principles that have been influential in Nordic countries, such as the importance of child-initiated play. Additionally, surprisingly low scores in international school comparisons (e.g., the PISA survey), barring Finland, have been accompanied by the discourse of worry regarding the educational system in Nordic countries (Elstad & Sivesind, 2010). Moreover, this discourse of shortcomings in school policies has had ECEC as part of the answer in all the Nordic countries, as something that incentivizes the central government to take charge of the content of services across municipalities and providers.

National Policies Pursued in Terms of Regulation and Curriculum In all five countries, the public governance of the ECEC sector is divided between the state and municipalities. The state passes laws and national regulations and, in certain cases, supervises institutions. In all cases, the municipalities are the service providers, but their role in governing the local “market” varies. ECEC has in all countries been a field where individual institutions have enjoyed considerable autonomy. Scholars have referred to this as a field with “grass root autonomy,” meaning that much decision-making takes place close to where the service is actually provided. One explanation for this is a lack of interest in more detailed interventions (Borgund & Børhaug,

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2016). As we have seen, interest in such steering has increased. An example of consequential national regulation is the number of staff per child. Norway and Finland have such regulations in place, and Denmark will introduce such regulations from 2024, while in Sweden and Iceland, it is up to local discretion to decide the group sizes and staffing (Urban et al., 2022). In Norway, the growth of for-profit providers in the ECEC sector over the last 20 years is paralleled by increases in the state’s central steering of the service content. Increased state steering might well have happened without the privatization. However, some of the central steering is motivated by the unwanted differences between private and public providers. The 2018 regulation of staff per child was partially driven by lower staff levels in private ECEC (Prop. 67 L (2017–2018), p. 15). The Norwegian law on kindergartens regulates the operating framework. The law provides general guidelines regarding care for children and educational offerings and obliges all institutions to follow the framework plan for kindergartens. It also provides detailed instructions regarding the ratio of children per employee, the educational level of different staff members, and the education of the general manager. There is also legislation requiring a certain skill level in the Norwegian language that secures a safe and inviting environment for children (NOU 2020:13, p. 233). The content of the service is primarily regulated through a national framework plan, the first version of which was adopted in 1995. This was considered a recognition of the importance of the field and, simultaneously, mostly a codification of the prevailing norms in the sector (Østrem et al., 2009). Revised framework plans have since been adopted in 2006 and 2017. The evaluation of the framework plan from 2006 found that it was greatly inspired by international trends for work with children (Østrem et al., 2009). This development left less room for local professional judgment and constituted a break with some of the traditional values of the Norwegian ECEC sector. Norway is the Nordic country with the largest share of non-public providers. In a decade-old study, Børhaug et al. (2011) found that private and public kindergartens used nationally developed guidelines and professional standards to approximately the same extent. However, much has changed over the last decade. In an evaluation of the last framework plan, Homme et al. (2021) presented findings suggesting that this may no longer be the case. Indeed, in an analysis of local curricula in ECEC institutions with

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different forms of ownership, Dahle (2020) found that institutions belonging to the big for-profit chains were more inclined to focus on learning vs. play compared to the remaining institutions. Furthermore, as the big ECEC chains have developed organizational capacities, they have also actively attempted to advocate for beneficial hard national governance in place of local municipal discretion (Haugset, 2021). This is a topic ripe for further research. Danish ECECs have traditionally had local freedom in how to develop their service and decisions regarding substantive content. This was reflected in kindergartens being regulated by social legislation instead of school policy and that the educational staff are pedagogues rather than teachers (Kjær et  al., 2020). However, following universal coverage in the 1990s, the emphasis changed from expansion of the service to debates regarding the content (Borchorst, 2000). All ECEC—municipal, self-­owning, and private—are required to adhere to national regulations. In addition, each municipality must develop its own quality standards that all kindergartens must adhere to. Like the other Nordic countries, except Finland, Denmark in the early 2000s experienced the “PISA shock.” This spurred further debates regarding how to improve the educational system, and the ECEC sector was assigned a more instrumental role (Kjær et al., 2020). This led to the introduction of a curriculum for kindergartens in 2004, and the government established expert commissions regarding how ECEC could be used to improve the school system (Regeringens Skolestartudvalg, 2006). In 2007, a new law on kindergartens took effect. It represented a leap in the development of prioritizing the educational aspects of kindergartens. The integration of ECEC into the educational system made it clear that school preparedness was a distinct goal. The goals are fourfold (dagtilbudsloven, 2007): (1) to promote development and learning, (2) to give families flexibility and freedom of choice, (3) to counteract negative social inheritance and exclusion, and (4) to make public services complete and connected. Gulløv (2012, p. 103) considered this a downsizing of the tradition of promoting children’s play, creativity, and fantasy at the expense of a predefined take on children’s interest in harmony with the interest of the larger society. The state’s steering of the sector increased, thereby reflecting increased political interest in kindergartens and their role in society. An interesting aspect is that as a means to expand the flexibility of families, the law extended economic support for childcare as an alternative to

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the use of ECEC, although with an exception for people who have lived in the country for less than seven years (except EU citizens). This exception is telling in terms of the role that kindergartens are assumed to have for integration, learning, and establishing relationships between immigrant children, their families, and Danish society (Gulløv, 2012). Traditionally, there was no legislation that demanded standards in terms of the number of children per employee. Over the last years, the ratio of children per employee has become a salient issue, and in December 2020, it was forged an agreement between the social democratic government and the other center–left parties, thereby securing minimum staffing-­related standards, which involve considerable public expenditure on more staff. Sweden stands out in the Nordic comparison in terms of regulating ECEC by the same national law as schools. Furthermore, among the five countries, Sweden has the only law where the word “play” is not included (Vallberg Roth & Broman, 2018). According to Vallberg, Roth, and Broman (2018), the lack of legislation on the child-to-staff ratio has left Sweden with less staff per child than the average in the OECD.  As we documented in Chaps. 3 and 4, difficult economic circumstances for the municipalities made density in staff resources a measure for savings as ECEC coverage expanded in Sweden. Furthermore, the evolving for-­profit sector has resulted in structural quality differences by having fewer personnel per child and lower education levels compared to municipal ECECs (Enfeldt, 2022). Sweden introduced the first national framework curriculum (“Läroplan”) for ECEC in 1998 (Korpi, 2015). The ECEC reforms over the last 15 years have mainly focused on quality control. Over time, Swedish ECEC has been characterized by “educare,” the combination of care and education for children from one to five years. The main goal of Swedish ECEC has always been a good childhood as a value in itself. Simultaneously, Sweden was an early mover in the Nordic context to treat ECEC as part of the educational system in a social investment strategy (Jönsson et  al., 2012). In line with trends promoted by the EU and OECD, lifelong learning inspired the new Pre-school Law in 2009 and a revised framework curriculum (Jönsson et al., 2012). ECEC providers in Finland have traditionally had extensive local leeway with regard to the pedagogy and content of ECEC. Also in Finland, the growth of the share of private providers in the ECEC sector has been accompanied by increased central steering of the service. For example,

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beginning on January 1, 2023, private ECEC providers must apply for a permit from the Regional State Administrative Agency when aiming to establish a new center. Earlier, private day care center activities required only a notification. In the reforms of ECEC legislation in 2018 when the Act on Early Childhood Education came into effect (the Act on Early Childhood Education 540/2018), the regulations for private ECEC providers were integrated into the new legislation. In this reform, among other things, the proportion of ECE teachers required in center-based ECEC increased, while the number of children per staff member decreased. Private providers need to comply with the same national regulation as municipal ECEC, for example, child–staff ratios and staff qualification requirements. The Act on Client Fees in Early Childhood Education and Care (1052/2020) is an exception, as it does not apply to ECEC provided by private service providers. In addition, the salaries in private ECEC are lower compared to those in public ECEC, as employees in public ECEC are party to different collective labor agreements. In addition to the legislator framework, both private and public providers follow the same curriculum guidelines. They were introduced following the OECD recommendations in 2003 and revised in 2016, 2018, and 2021. These documents are broad and leave considerable leeway for local decision-making. Municipal authorities are required to draw up local curricula based on the core curriculum. This is not to say that privatization alone has caused increased steering. However, there have been reports and news (see for example Korhonen, 2022) regarding problems in private ECEC, such as not meeting the qualification requirements or staff–child ratios, followed by demands for stricter monitoring and quality assurance systems. In Iceland, the educational system has been decentralized in terms of responsibilities and decision-making to the municipal level. Historically, ECEC institutions have had much freedom to decide the content of their services. However, with the implementation of the Preschool Act of 2008 and the national curriculum policy framework guide in 2011, national control and coordination have increased (Einarsdottir, 2019). Nevertheless, every ECEC is responsible for writing its own curricula based on the 2011 national curriculum policy framework guide, thereby retaining certain liberties within this framework. Private providers must comply with the same regulations as public providers and follow the same curriculum guidelines—such as education,

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training, and staff-children ratio—and provide counseling and support to children with disabilities and foreign backgrounds. Overall, there has been a movement in all countries to streamline the content of the service with the use of framework plans or curriculum. This is used by all ECEC institutions and is a means for the central government to support the pedagogical work done locally as well as to ensure certain content and a certain quality level. Simultaneously, the framework plans are somewhat vague, and it is difficult to ensure compliance. Therefore, they may be regarded to belong to a stretch toward the soft governance pole, as they leave considerable leeway for local institutions and municipalities.

Securing Compliance—Supervision For the use of legal instruments to be an efficient means to govern a service area, the providers in the field need to adjust their operations in accordance with the steering. To ensure that providers comply with national policies, supervision is the fundamental instrument. In most cases, regulation is done at the national level and in certain cases supplemented at the municipal level. Moreover, supervision of Nordic ECEC is, in most cases, conducted by the municipalities, but Sweden has national supervision for public ECEC and municipal supervision for private ECEC.  Typically, municipalities are tasked with the supervision of all ECEC units in their geographical area, including non-public providers. Supervision includes issues such as physical aspects of the building and play area(s), staff qualifications, and the substantive content of the service. As we discussed in depth in Chap. 4, economic issues in certain cases are not under municipal supervision. The units in the municipalities that conduct the supervision may lack competence and knowledge to supervise economic aspects, thereby leaving this to national agencies or leaving the economics not particularly supervised. Generally, the inspection authority may demand that the provider corrects errors or irregularities and sanctions can be enforced in serious cases. For non-public institutions, the authority may even withdraw the provider’s approval (for Sweden, see SOU 2016:78, p. 157). Typically, there are also state agencies that can monitor whether the municipalities fulfill their role as supervisors to a satisfactory level. The role of municipalities as owners, financiers, and supervisors has been problematized on a number of occasions (Askim, 2013). The role of

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supervising both oneself and the competitors of one’s own kindergartens can pose potential problems. However, national governments have struggled to find a better organizational structure. One exception is Sweden, where the state supervises the municipal ECEC institutions. Moreover, in Sweden, the municipality is responsible for the inspection of ECECs, pedagogical care, and leisure homes with an independent operator (Skollagen, 2010, 26 kap. 4 §). This includes ECEC operated by private enterprises, associations, foundations, registered faith-based communities, or single individuals. New approval is required for a change of provider, unless this takes place through a sale of stocks (SOU 2016:78, p. 156). When applicants fulfill the demands of relevant laws, the municipality must approve the applicant. Although municipalities are the main actors of supervision, state agencies typically provide information and guidance for how to conduct this task. In Finland, the Ministry of Education and Culture is responsible for the guidance and monitoring of ECEC in Finland, and the Finnish Education Evaluation Centre (FINEEC) has a responsibility for providing national information regarding ECEC and supporting ECEC providers in their task of self-evaluation. In addition, municipalities and Regional Administrative State Agencies (AVIs) are jointly responsible for monitoring the provision of all ECEC services. The municipality is obliged to monitor private ECEC services in their geographical area. Overall, it is evident that although the service area developed with a professional-bureaucratic governance mode, supervision has traditionally not been very thorough in the Nordic countries, thereby reflecting the large room for maneuvering for individual institutions. However, today we observe an increase in the infrastructure for supervision. While municipalities remain in charge of most supervisory tasks, national agencies increasingly support them in this work. This implies that Nordic ECEC institutions have probably never been subject to more supervision than they are today.

Soft Steering—Manuals and Evaluations While all countries have tightened their hard steering of ECEC—all of them have increased the amount and level of details in the legislation—soft governance remains the main approach to pursue enhanced quality, for example, through quality building programs (Haugset et  al., 2019). Furthermore, we find new soft governance tools that supplement the old

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ones. We see the growing use of soft steering ex ante in the form of manuals guiding ECEC staff in their work and ex-post in the form of strategic use of evaluations. Unlike the use of quasi-market steering, we find small differences between the countries regarding evaluative steering and the use of manuals. Manuals give recipes for how staff in ECEC should screen the capabilities of children and/or approach different issues when interacting with the children. Proponents of these models frame them as constructive tools that ensure that all children get the follow-up they need and are entitled to, at the same time as a high level of professional-based interventions is secured. Critics argue that the use of manuals undermines the professional discretion of well-educated staff in ECEC at the same time as it standardizes how to work to an undue extent across varying contexts and might lead to narrowing of the curriculum and marginalizing practices (Pettersvold & Østrem, 2019). The programs generally have an apparently evidence-based underpinning, and are often promoted by commercial actors. This implies that it is not always the local situation and context that determines which program is used in which municipality or institution. Indeed, the manuals are often developed in foreign countries with a different ECEC system and traditions than what we find in the Nordic countries. It can also entail programs being developed as a result of demand for such manuals from policymakers and practitioners rather than purposes identified by researchers (Aabro, 2019). This implies that the manuals occasionally lack the evidence-based foundation they claim to have (Ottesen et al., 2013). All Nordic countries have witnessed a growth in such manuals over the last couple of decades. We have no overview of the extent of use or the total number of programs that exist, but it is evident that they are gaining an increasingly central place in Nordic ECEC (Pettersvold & Østrem, 2019). One of the few studies that examine the scope of this development is from Denmark, where Aabro (2016) surveyed all municipalities regarding the use of manuals. He found that these concepts had become very widespread. Indeed, at the time of the survey, the most commonly used manual was used in 61 of the 98 municipalities. Furthermore, other manuals were also used by almost half of the municipalities, thereby documenting a dense distribution of manual usage. It is likely that these numbers are even higher today. In all the Nordic countries, there are debates regarding the roles of such manuals, and we have many examples of scholars who have reservations

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(Bartholdsson, 2021; Englund et  al., 2009; Jensen, 2017). Indeed, in Sweden in 2010, this led to the authorities even giving warnings against certain manual programs. However, the use of these manuals was not abandoned, and there was no general discouragement against using the manual approach. The new idea was that the programs should be seen more as suggestions than fixed guidelines (Bartholdsson, 2021). The special interest of such manuals in our context is that they constitute what Ball and Youdell (2007) refer to as “hidden privatization.” This implies that the manner in which the service is organized and provided changes in accordance with external interests. This can alter professional development in the field, as the relationship between educational facilities, professional staff, and the regulatory authority is changed. Although there have been a small number of studies from the last 10 years, the overall effect of this new aspect in Nordic ECEC is unclear. In contrast, evaluative steering is a more direct ex post form of governance. It provides institutions considerable autonomy to develop their service, but they need to deliver results where they are measured. Whereas supervision is focused on adherence to state regulations, and manuals provide prescriptive instructions for practices, evaluative steering focuses on goals for the service and not on the process. In a recent report examining the Nordic approaches to evaluation and assessments, Urban et al. (2022) found a growing emphasis on evaluations and assessments in all five countries. However, a core feature is that much of the evaluations are conducted locally in the municipalities or at the institutions themselves. This provides autonomy to providers, since even if all organizers of ECEC—including private providers—are obliged to conduct self-evaluations, the legislation does typically not specify how the evaluations need to be conducted or followed up. The positioning of evaluation close to the individual child implies that many of the assessments are conducted at this level. For example, in Finland, the curriculum states that there should be an individual ECEC plan for each child and that it should be regularly evaluated. Different versions of such ongoing evaluations of each child’s plan are prevalent in all countries. What is common in all Nordic countries is that evaluation of the ECEC system has intentionally been kept separate from the assessment of child development and learning. Self-evaluation at the institutional level is widespread. In practical terms, this implies that various evaluation tools have been used to evaluate either

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the ECEC environment and practice or the development and skills of children. This can take place through various ready-made tests or through checklists developed by municipal ECEC authorities (Rintakorpi, 2018). Additionally, municipalities are tasked with aiding the institution in their evaluation work. To ensure that this takes place is part of their roles as supervisors. All countries have national agencies that play a role in facilitating evaluation by collecting statistics and other tools that enable local evaluation processes. An example of this development is The Finnish National Educational Evaluation Centre (FINEEC), which became responsible for conducting national-level evaluations in 2018. At the same time, participating in external assessment and conducting regular self-evaluation became mandatory for the organizers of ECEC. Although national curriculum guidelines provide a general framework for assessment and evaluation, organizers of ECEC have the autonomy to decide the kinds of assessment and evaluation methods they employ. Generally, the assessments FINEEC is tasked with performing follow the principle of “enhancement-led evaluation,” which is aimed at a participatory approach to quality assurance. It aims to consider a (local) democratic approach to defining the key values, aims, and objectives of ECEC, as opposed to the international standardization trend (Repo et al., 2019). Even if self-evaluation and local development are the main instruments for evaluation, ministries and municipalities also perform external evaluations. External evaluations can include evaluations of most aspects of the operations of institutions, including parental satisfaction. The main purpose of external evaluations, apart from improving work quality, is to obtain an overall picture of activities or specific aspects at each ECEC institution at a given time. This provides valuable information used by public authorities in governing the sector. Nevertheless, nationally administered forms of evaluations of individual children are rare in the Nordic ECEC sector. In Denmark, all children are tested in their language skills at three years of age. However, the results from this test are not necessarily tied to the efforts made in the ECEC institutions at this early stage. It may just as well be a result of the background of the family of the individual child. Consequently, the results are not widely distributed and published but are used as a basis for local interventions at the concerned ECEC institution. Other countries, such as Iceland, offer language tests, but on a voluntary basis.

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A different example is parental satisfaction questionnaires that are widely used and tend to occupy a central place in debates regarding ECEC.  In Norway, higher scores among non-public than public ECEC institutions has been a central argument in debates on the welfare mix and privatization. The differences are mainly the result of different approaches to food services, and the debate is uninformed with regard to the differences between nonprofit and for-profit providers. While public institutions must participate in national parental satisfaction tests, private institutions can choose if they wish to participate. Furthermore, the results are arguably not analyzed in a sufficiently sophisticated manner for them to be helpful for policymakers (Trætteberg & Fladmoe, 2020). Therefore, the dynamic relationship among the institutions, municipalities, and the state levels in evaluation work is different from what we see, for example, in the school sector. Whereas schools to a large extent use nationally developed and often administered evaluation and assessment systems (Camphuijsen et al., 2021; Wallenius et al., 2018), in ECEC, evaluations are conducted at the municipal or institutional level, but occasionally with support from the national level. National-level support may also have a function in pushing for more evaluation work at the local level. It could be argued that the increased focus on the pedagogical role of ECEC and aims related to professionalism have materialized in a demand for evidence of the effects of ECEC on children’s learning (Alila et al., 2014). There is also a commercial interest in assessment systems—private providers provide evaluation services or evaluation tools to municipalities and private providers. Chapter Summary The growth of private providers in general and for-profit chains in particular has coincided with increased central steering of the sector. As we saw in Chap. 4, this is clearly related. Expanded economic regulation and supervision in Norway is a result of municipalities struggling to supervise the economic dispositions of the big for-profit chains. Finland has recently had strong for-profit growth, followed by attempts to increase economic regulation. We see increased state steering through an array of different methods. However, it is difficult to completely disentangle what is economic regulation and what is not. Norway, which has the largest share of for-­profits, witnessed increased hard governance in the form of tighter regulation of

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staff-per-child ratio and the educational level of staff. This was introduced in large part because private providers had lower staff density than public providers. Thus, the regulatory change led to smaller differences in the staff density as well as smaller surpluses among private providers. These relationships between economic regulation and other aspects of operations like staff-per-child ratio may be most visible in Norway, as this is the country with the largest share of for-profits; it is also evident in Sweden, where we see calls for quality regulation to curb unacceptable levels of private profit (Enfeldt, 2022). Further, we see few traces in policy documents and in practices that diversity in service content is a strategic goal sought through provider plurality. Yet, the increased political attention on ECEC as an educational arena would, in all probability, have led national policymakers to impose increased control, regardless of the ownership structures. It has been argued that the “governance turn” we have witnessed in the Nordic ECEC sector is related to the emergent knowledge on early brain development along with the aims of the knowledge economy, which have both highlighted the role of ECEC in society. Simultaneously, municipalities have experienced increasing economic pressure. This has intensified the aims to monitor, govern, and control the provision of ECEC. It is partially related to the increased popularity of the use of corporate management models as the main tools for improvement (Ball, 2003). Municipalities remain at the core ECEC governing actors; however, in all countries, we find growing emphasis on process quality through the imposition of hard national steering in the form of legislation and guidelines. All countries have increased the use of national curricula or framework plans to steer the content of services. In this manner, the state streamlines the contents of the service to a certain extent. Soft steering using manuals and formal concepts, occasionally purchased from private companies, does not follow the same systematic development in which the national government imposes them on local institutions and municipalities. Rather, they are occasionally encouraged and at other times facilitated by the central government. Thus, the use of these manuals and formal concepts is not streamlined and the varying use of manuals provides diversity to the field. We lack systematic studies that identify if the use of such programs differs among public, nonprofit, and for-profit providers. Even if the use of such manuals does not co-vary according to the ownership of the ECEC institutions, they may constitute a form of “soft

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privatization,” where private interests are invited to define the problems and solutions for the institutions (Bjordal, 2022). Accordingly, what we see is not primarily new governance tools replacing old ones. We see new governance tools supplementing old ones, thereby making the overall ECEC governance layered (Streck & Thelen, 2005). This implies that traditional steering through legislation and supervision is increasing. Simultaneously, the state imposes increased self-evaluation and facilitates the use of manuals that are often developed abroad. Additionally, large ECEC chains may have internal governance mechanisms and manuals. Thus, individual ECEC institutions may have multiple governance structures layered upon their operations. As is often the case in such layered governance structures (Howlett & Rayner, 2007), certain tools are incoherent and may pull in different directions. Additionally, we see examples of audits and evaluations as a means of some form of “evaluative steering.” Language testing of children in Danish ECEC is an example of such developments. Compared to primary schools, the evaluative approach in ECEC is generally less focused on the idea of testing children’s performance and more focused on enhancement-led approaches where the ECEC environment, curriculum, and ECEC practices are the focus of evaluation. This is despite ECEC becoming more closely connected to the educational system. Thus, one may ask whether this is a form of public sector steering or if it is rather an expression of a turn toward an international trend called “evidence-based approaches” in public education. This could be considered an example of the development that Danish political scientist Dahler-Larsen (2012) calls “the evaluation society.” One of the key features of the evaluation society is the increased trust in metrics and numerical data to measure and compare performance. However, the development appears to be different in ECEC compared to that in primary schools. There are at least two reasons for this. First, there is ideological resistance from the field, which is shared by practitioners and academics. For example, play has a strong position in the Nordic countries, an aspect that is to a certain extent in opposition with more formal forms of learning that are more suitable for test regimes (Bubikova-Moan et al., 2019). The second point is that ECEC does not have a similar type of selection function as comprehensive education. In comprehensive education, in addition to providing knowledge, skills, and education needed in society, education also serves as a function of selection, as individuals become trained for different social positions. This leads to a smaller focus on testing

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children in ECEC compared to comprehensive education. This makes an evaluative turn a more comprehensive reform of the service in ECEC than what we see in schools, which have always had tests to a certain extent. The administrative work required to establish test regimes is then more extensive compared to other sectors of education. Simultaneously, we see that easily administered surveys, such as the parental satisfaction survey, receive considerable attention and policy relevance. It could be argued that partially because of the lack of alternative sources, this data source enjoys an undue position.

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CHAPTER 6

Does It Matter? Quality Differences Among Public, Nonprofit, and For-Profit Providers

Introduction As we have seen in earlier chapters, over the last few years, Nordic ECEC has witnessed increased diversity in terms of the share of non-public providers and governance strategies based on quasi-markets. Simultaneously, the governments have increased central control in an attempt to regulate the service across different types of providers. With regard to this balance, the question is if and how it matters who provides the service. In this chapter, we review the existing research in the five countries regarding differences among public, nonprofit, and for-profit providers of ECEC. We approach this question by first examining the theoretical expectation to differences between public, for-profit, and nonprofit providers. Second, we discuss the concept of ECEC quality and how to measure it. Third, we examine the international research comparing public, for-profit, and nonprofit provision of ECEC, before we zoom in on the Nordic countries and review the relevant sources we could find from these countries.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4_6

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Theoretical Underpinnings of Different Ownership and Quality As discussed in the introduction, expectations that user choice and increased competition should lead to better, more-tailored, efficient, and effective services have been the main ideologies underlying the privatization and contracting out of welfare services (Le Grand, 2007; Savas, 2000). The scholarly literature particularly refers to public choice theories and property rights theories in arguing for privatization and marketization of services. Public-choice theories assume that marketization of services leads to better quality, less bureaucracy, and more innovation of services (Domberger & Jensen, 1997). According to the theory, public employees are motivated by self-interest and to make the most of their own well-being; therefore, public services are not run as efficiently and effectively as possible, thereby leading to lower quality. In addition, it is proposed that public managers have limited incentives to measure the efficiency of the services with those of other similar organizations (Petersen et al., 2018). Consequently, privatization of services should lead to increased competition between providers and more pressure to provide more effective services with better quality. In the property right theories, it is implied that when the ownership is for-profit, there is more motivation to run the services effectively compared to public organizations that cannot go bankrupt and have limited incentive to operate efficiently. In addition, public organizations have no investors or shareholders that demand efficiency, and lacking competition undermines the motive to innovate (Petersen & Hjelmar, 2014; Sivesind & Saglie, 2017). In the same manner, nonprofits lack the incentive to maximize profit; therefore, they have reduced motivation to provide efficient quality services (Enjolras, 2009). The solution that is proposed by the advocates of these theories is to provide services on the open market to increase competition and thereby efficiency and quality of services. There is also more critical extension of these theories, such as the transaction cost theory (Williamson, 1981). It suggests that privatizing complex services such as ECEC or other welfare services often involve higher costs in terms of signing service contracts, following up, monitoring, and controlling the services compared to the transaction costs within public organizations (Bennett, 2017). The public choice and property contract theories have also been criticized in terms of information asymmetries (Baxter et al., 2008). Parents and regulators do not have as much oversight on the quality and content as professional providers do. Therefore, it is a

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risk that for-profit actors are tempted to reduce the quality of services by “cream skimming” and “parking” strategies. This means the risk in the case of ECEC to cherry-pick children that do not have any disadvantages, such as disabilities or immigrant backgrounds, to avoid more costs and, secondly, to choose the easiest tasks to minimize costs. Therefore, it could be a temptation in for-profit ECECs to maximize profit by cutting costs that would reduce quality. Additionally, a differentiated welfare service with providers stemming from different service areas can lead to social segregation if certain providers cater to given groups in society. This has received a lot of attention and documentation in the Nordic school sector (Trumberg et al., 2022; Varjo et al., 2018). With regard to nonprofits, Weisbrod (1988) has pointed out that different service providers have different motives on prioritizing different forms of quality. A for-profit ECEC would have an incentive to use resources to attain measurable indicators of quality, while ignoring unobservable qualities that can be hard to measure. On the other hand, nonprofits can have employees and managers that should be devoted on the service mission instead of profit-gaining and therefore be motivated to increase quality (Roomkin & Weisbrod, 1999). Additionally, in the scholarly literature on nonprofits it is argued that nonprofits are useful in situations when users have little information of what they are purchasing and must therefore trust the service provider. Hansmann (1980) suggested that asymmetric information in the markets for certain services can explain the existence of nonprofits, because of their non-distribution constraint. Therefore, they are not as tempted to take on opportunistic behavior as for-profits. Therefore, the users and regulators may trust nonprofits service providers to a greater extent than for-profits in providing good quality services (Sivesind & Trætteberg, 2017). Ideally, public regulation of quasi-markets should facilitate potential benefits and inhibit potential pitfalls of marketization. Ultimately, it is an empirical question if there are any differences in the quality of public, for-­profit, or nonprofit ECEC providers generally and particularly in the Nordic context. Additionally, it is important if there are differences in the users who are attracted or accepted to different kinds of providers. Does privatization lead to segregation? These are vital questions for policymakers in taking decisions regarding how to organize the ECEC system and what the outcomes could be on the quality of services for children and families.

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Quality of ECEC There are different paradigms of how to measure the quality of ECEC. On the one hand, it is the technical rational paradigm with quantitative measurements. On the other hand, it is the dynamic, qualitative, democratic paradigm with qualitative studies and letting the voices of different stakeholders be heard (Dahlberg et al., 2007). The first is built on the assumption that the aims and goals of the ECEC are set, stable, and agreed upon, and the second is more focused on the contextual variation on the aspects that are considered important. Studies have revealed that stakeholders such as governments, parents, children, and educators have different views on what constitutes high-­ quality settings in ECEC and value different contexts of ECEC. For example, studies outside Nordic countries have shown that parents want their children to be happy in ECEC and that the setting is close to their home, while governments emphasize on outcomes such as developmental skills and educational performance (Siraj et al., 2019). Despite differences in views on what constitutes a high-quality setting in general, the quality framework of Donabedian (1980, 1988) is widely used in the evaluation of the quality of welfare services, including childcare services. This framework distinguishes between structural, processual, and outcome quality. Structural quality includes all the regulations, accreditations, and requirements that influence the setting in which ECEC is delivered, such as arrangements of health and safety, governance, curriculum, group-sizes, staff-children ratio, qualification of staff, turn-­over rates, etc. Process quality refers to indicators of children’s experiences in their programs, such as interactions with staff and peers, materials, and available activities. Indeed, all activities that are meant to increase those things that have been defined as being important, such as children’s social, cognitive and language skills, or children’s well-being and sense of belonging to a community are part of process quality. Lastly, outcome quality consists of both short term and long-term effects of ECEC. Examples of such outcomes include a sense of agency and experiences of joy and care, and all aspects of children’s development such as social, emotional, moral, mental, and physical well-being later in life, and educational performance (Brogaard & Helby Petersen, 2021; Kjørholt, 2013).

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The concepts structural quality and process quality are related. Within this model, high-process quality is the outcome of high structural quality. As an example, staff-child ratio or access to a good quality environment can smoothen the progress of positive child experiences. However, structural quality does not inevitably result in higher process quality (Janta et  al., 2016). There are numerous structural inputs that work together to produce process quality. The outcome measurement is related to the long-­term impact of the services and is not simple to measure in the ECEC context or in welfare services in general. There are also opposing ideas on what are important primary outcomes. The research that addresses the long-time learning outcome of ECEC reveals that ECEC with good structural quality appears to have positive effects on certain learning outcomes, although the advantages appear to decline as children progress through school (Cascio, 2015; Dietrichson et  al., 2020; Havnes & Mogstad, 2015; van Huizen & Plantenga, 2018). The relationship between these measures is complicated and it is important to consider the wider sociocultural economic context in which ECEC is provided in different countries. ECEC services are not static, and the needs, organizations, and wider environment are always changing. Therefore, it is challenging to isolate particular outcomes and measure the ways in which they were produced.

International Experiences: Quality Differences Among Public, Nonprofit, and For-Profit ECEC? Research reviews on the quality differences among public, nonprofit, and for-profit ECEC are scarce. Most studies compare the quality of private and public ECEC and do not differentiate between nonprofits and for-­profit ECEC. Furthermore, most of the literature is from AngloSaxon countries with a different welfare system, regulatory settings, and cultural contexts compared to the Nordic countries. In certain countries, numerous private ECECs are publicly funded, while in other countries private ECECs rely solely on parental fees. The studies on ECEC quality differences according to ownership status also measure a wide variety of quality factors such as quality of life, user satisfaction, social skills, intellectual progress, etc. Bearing these limitations in mind, there are a few research reviews that provide certain tentative conclusions. To the best of our knowledge, there

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are only a few systematic reviews that examine differences between public and private ECEC (e.g., van Huizen & Plantenga, 2018) and only one international cross-sectoral systematic review of quality differences among public, nonprofit, and for-profit ECEC providers (Brogaard & Helby Petersen, 2021). In the review, the research question that is addressed is: What are the documented quality differences between public and private providers (for-profits and nonprofits) of ECEC for children aged 0–5 years? To address this research question, Donabedian’s model (discussed above) is used as a frame of reference. They identified 31 studies as relevant, and the final population included only 15 studies that met the criteria and answered the research question. Most of the studies are from Anglo Saxon countries and only three are from the Nordic countries. Moreover, a majority of the studies measure structural quality, such as staff qualifications, child-staff ratio, and group size. There appear to be differences between structural quality over time among providers. Public ECECs had higher staff-child ratio than private ECECs (both profit and nonprofit). Four studies measured group sizes and the results were diverse. Further, six studies measured staff qualifications (implying professional or bachelor’s degree), which were either higher in public and nonprofit centers or comparable to those in for-profit centers. Few studies measured process quality and the results were mixed, with a few suggesting that public providers performed better and others indicated that process quality is similar or diverse with regard to ownership status. One study addresses user satisfaction and suggests that it is higher in nonprofits compared to for-profit and public ECECs. Two studies examine the long-term outcomes of public ECECs compared to private ECECs on educational attainment in the context of the US. The results revealed that children in private ECECs scored higher in the third grade in language and art tests and had lower retention rates. A meta-analysis of evidence from natural experiments by van Huizen and Plantenga (2018) reveals that publicly provided programs produce more favorable results than privately provided programs. However, their analysis did not include analysis between nonprofit and for-profit providers. In general, it is concluded that public ECECs tend to be of slightly higher quality compared to other providers with regard to structural and process quality. It must be noted that several studies revealed a similar quality among different providers on these quality factors. There are also international findings that suggest that for-profits providers might have tendencies to design their services around “the average”

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child, leaving more resource-demanding children with public and nonprofit providers, thereby using parking and cream-skimming strategies by excluding certain children and families. This is supported by studies from Australia and Canada that indicate that children from low socioeconomic backgrounds attend lower quality ECEC compared to children from more advantaged backgrounds (Cleveland & Krashinsky, 2009; Cloney et al., 2016).

Research in the Nordic Countries on Quality Differences Among Public, Nonprofit, and For-Profit Providers We find that only a few studies have compared the quality of ECEC institutions with different owners in the Nordic context. There may be different reasons for this. One issue is that, with the exception of Norway, the public sector dominates to the extent that such studies are not deemed relevant. A more important aspect may be that it is difficult to design studies that capture the complexity of quality in a human service such as ECEC, given the fact that particularly in Nordic context, the local democratic approach to the definitions of quality has been dominant. A few studies have examined limited issues, such as parental satisfaction and differences between structure and process quality by ownership status, but these studies are not conclusive regarding whether one owner type is superior. The few studies that have addressed the issue are those based on Norway, Sweden, and Denmark; however, to the best of our knowledge, there are no studies based on Finland and Iceland. This is surprising because all these countries have undergone increased growth of for-profit ECEC services in recent years, although the extent of these developments differs among the countries. The primary approach we identify in studies comparing different providers in the welfare mix is different measures of structural quality. In a recent report from the Danish context, Brogaard and Petersen (2020) distributed a survey to all non-public kindergartens (for ages 3–5) and 1000 municipal ones (with a response rate of 30.4%). In a descriptive analysis, they found that private and self-owned institutions were smaller and had fewer children per employee. They had a better score on most quality indicators, except food quality and welcoming children with disabilities, which were better in municipal institutions. When introducing appropriate controls, for example

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regarding the composition of children and the socioeconomic status of the neighborhood, there were no significant differences. Thus, there was no basis to infer that there were important differences in quality among public, self-owning, and private kindergartens. This is in line with an older report on the Danish context published by Udbudsrådet (2011); the report sought to uncover the potential for increased competition and private provision in the ECEC area in line with the policies of the government at the time. They found little competition in the service area and only small differences among providers. Published at about the same time, a chapter in the book Konkurrensens konsekvenser (The Consequences of Competition) examined quality differences in private and public ECEC in Sweden (Hanspers & Mörk, 2011). The data revealed small differences between municipal and private ECEC, but they do not differentiate between for-profits and nonprofits. However, there were more children per ECEC teacher in private ECEC than in the municipal ones. Interestingly, newer data from Sweden identify these same differences. The average size of groups in Swedish ECEC has decreased from 2011 to 2020, with municipal providers decreasing from 17 to 14.8 children and private ECEC from 16.2 to 14.7 children. This implies that there are no differences in this aspect of structural quality. However, when it comes to the number of children per full-time equivalent ECEC teacher, private providers have 17.1, on average, while municipal providers have 11.9. This indicates a higher level of qualifications in public ECEC institutions (Skolverket, 2021). Unfortunately, the statistics from the Swedish National Agency for Education (Skoleverket) do not allow for differentiating between for-profit and nonprofit ECEC institutions. Process quality is barely compared in any of the Nordic countries. In a review of quality differences between private and public ECEC in Norway, Haugset (2019) found only small differences in a number of quality indicators. However, she did call for more nuanced categories for private institutions, as few studies had differentiated between for-profit and nonprofit providers. Similarly, in an observational study, Bjørnestad and Os (2018) found surprisingly low quality scores for Norwegian ECEC, but no difference between private (for-profit and nonprofit combined) and public ECEC. With regard to output quality, Trætteberg and Fladmoe (2020) analyzed user surveys of parents in the city of Oslo. These surveys typically receive much attention in Norwegian media which emphasize that despite

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high overall satisfaction, the private institutions (for-profit and nonprofit combined) on average have higher scores than public institutions. In their analysis, Trætteberg and Fladmoe found that users of parent cooperatives were most satisfied, with other nonprofits coming in second, for-profits third, and municipal providers fourth. When controlling for food services, the differences were even smaller, and there were no differences between for-profit and municipal kindergartens. Vamstad (2012) compared municipal and nonprofit cooperative ECEC in Sweden based on data from 2007. The study analyzed qualitative interviews conducted with 36 ECEC managers and quantitative surveys of 271 families and 116 staff members. From both the staff and user perspectives, the parent cooperatives were viewed of better quality. The staff was more satisfied with both the physical and psychosocial environment, despite fewer resources in cooperative ECECs. The parents were particularly satisfied in their comparisons of service quality experiences from other types of ECECs. The study ascribed this to an extensive two-­way communication in cooperatives where parents are significant stakeholders and more involved in governance and voluntary work (Vamstad, 2012). In Iceland, there is no research available to compare quality differences among providers. The main emphasis in academic research on quality has been to display the perceptions of children and parents regarding the quality and process of services (Einarsdottir, 2019). In the standardized assessment that is conducted by the authorities, there is no distinction made among for-profits, nonprofits, and public providers of ECEC; moreover, to the best of our knowledge, no research has been conducted that addresses this issue. In Finland, there are no comparisons regarding structural or process quality in private and municipal ECEC. The focus in the research has been on the processes of privatization (for example Laiho & Pihlaja, 2022) and selectivity of clientele in a mixed-welfare system (Ruutiainen et al., 2021; Vainikainen et al., 2018). With regard to this latter topic, the research provides evidence that the increase in private provision has, at least to a certain extent, increased the segregation among ECEC services. This is evident in, for example, the ECEC arrangements of children with special needs. Significantly fewer children with special needs enrolled in private ECEC services compared to public ECEC services, and it is rare for private ECEC service providers to hire special education teachers (Vainikainen et  al., 2018). In Finland, children from higher socioeconomic backgrounds are more likely to participate in private ECEC. Furthermore, in municipalities

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where the share of private provision is over 18%, children in need of extended care hours are more likely to participate in public ECEC compared to their peers (Ruutiainen et al., 2021). Nevertheless, the research concerning the role of private ECEC in segregation among children according to their socioeconomic background is still not conclusive. We find similar results in Sweden and Norway. In Sweden, children from middle-class families attended ECEC of better quality than children from working-class families (Fjellborg & Forsberg, 2022). In Norway, children from families from a higher socioeconomic status are somewhat segregated from children from families with more disadvantaged backgrounds (Drange & Telle, 2020). This could lead to fewer service qualities for disadvantaged children if public (and nonprofits) providers have to compete with forprofits that select/attract the more easily serviced children. The consequences could be segregation and possibly lower quality services for disadvantaged children. However, research is inconclusive of how the ownership status is of consequence in this regard; moreover, there could be other mediating factors that are important here such as the cultural and socioeconomic contexts. From other service areas, there are indications that the Nordic regulatory regime is suitable for avoiding quality deterioration associated with for-profit provision in other geographical regions (Meagher & Szebehely, 2013). One explanation for these differences could be that public, nonprofit, and for-profit providers establish centers in neighborhoods that differ in terms of important structural dimensions. For example, Trætteberg and Fladmoe (2020) find that for-profit and nonprofit providers establish themselves in neighborhoods with higher average income compared to public institutions. Studies from Sweden and Finland suggest that the situation was also present in other parts of the Nordic welfare sector (Gustafsson et al., 2016; Ruutiainen et al., 2021). In addition to the socioeconomic background, a study examining the organization of special support in ECEC in Finland reveals that this also applies to children who need additional support: considerably fewer children receive special support in private ECEC compared to publicly provided ECEC (Paananen et al., 2018). In the Norwegian context, there are a few differences between public and non-public kindergartens in terms of user characteristics. Public kindergartens have a higher share of children who are speakers of minority languages (23% vs. 16%) and who receive special educational assistance (3.7% vs. 2.7%) (Storberget et al., 2021).

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In addition to quality differences and segregation, marketization can lead to new dynamics that provide differentiated services by public, for-­ profit, and nonprofit providers, but that do not necessarily have a normative connotation. In an analysis of 100 annual plans from ECEC institutions in Norway, Dahle (2020b) found systematic differences between kindergartens in terms of how they approached issues of care, education, and the use of formal manuals. One main finding was that profit-based kindergartens tended to favor structured learning activities at the expense of time and space for social play. Complementing this study, Dahle (2020a) conducted a qualitative study based on interviews with staff in large for-­profit chains and found that staff were torn between professional judgment and the need for the kindergarten to attract customers. The study had a limited empirical scope and could not be generalized to the entire sector. However, it did render empirical backing to mechanisms known to operate in publicly funded quasi-markets. In the same vein, an evaluation of the Norwegian national framework plan, Ljunggren et al. (2017) found that the major private chains created standardized national plans for implementation, an aspect that made the role of local staff less influential and increased the potential differences between private and public institutions. Moreover, the first report from the evaluation of the framework plan adopted in 2017 found that Norwegian kindergarten owners increasingly steered the pedagogical content of their kindergartens to an extent that challenged the professional autonomy of the staff and created cleavages between kindergartens with different owner profiles (Homme et al., 2021). Thus, the dynamic of ownership changes in the private kindergarten sector appeared to have consequences for the content of the services. However, we have no information enabling us to make normative judgments about these consequences.

Chapter Summary Our review of findings from our Nordic case studies are in line with international research on quality in ECEC. A recent systematic review of international research from Brogaard and Helby Petersen (2021) revealed that there are a slightly greater number of studies that have found higher quality in public than private ECEC on structural indicators such as educational qualifications of staff and group sizes. There are mixed results regarding process quality, such as activities and communication. However, none of the studies reviewed revealed that private for-profit providers offered higher

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process quality than public providers. Vamstad’s (2012) study from Sweden was the only one that revealed higher process quality in nonprofits (Brogaard & Helby Petersen, 2021). This raises questions regarding whether quasi-markets make such a large contribution to quality in ECEC in general, as one would expect from public choice theories and property rights theories, and whether this makes the transaction costs of the voucher system worthwhile. However, the existent research in the Nordic countries is rather limited to draw any conclusions. In international reviews (that are mostly based on Anglo Saxon data), there are varying results regarding the process and structural quality differences between various ECEC providers. However, there appears to be a tendency of indicating higher quality levels for public and nonprofit ECEC compared to for-profits in numerous Anglo-Saxon countries. However, the studies are few and some of them do not make a distinction between forprofit and nonprofits. Notably, neither international nor Nordic research indicates a higher quality of for-profit ECECS compared to that of other providers, which is in line with what has been advocated by economic theories on markets and competition (Akgunduz & Plantenga, 2014; Brogaard & Helby Petersen, 2021; Cloney et al., 2016; Sosinsky, 2012; van der Werf et al., 2020; White & Friendly, 2012). There is not sufficient research on the long-term quality outcome to say something significant about the importance of different providers with regard to differences in quality. However, there appear to be consistent results in the literature to indicate that it is more common for parents belonging to a higher socioeconomic status to choose private ECEC services and that children from disadvantaged backgrounds and those with a need for additional support are more likely to attend public ECEC compared to other groups. There is evidence that this is also the case in the Nordic countries (Gustafsson et  al., 2016; Ruutiainen et  al., 2021; Vainikainen et al., 2018). The consequences of different providers on quality are more difficult to account for, but concerns have been raised that this can lead to exclusionary practices and segregation in societies. Studies reporting on the differences in user characteristics are important for assessing the functioning of this kind of welfare market. As discussed in the introduction, a situation where “easier” users are somehow overrepresented among private providers is a strong signal that the market is not functioning well. We do see a few indications that this is the case, but there is insufficient research designed to capturing this phenomenon.

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These inconclusive results can be explained by different regulations, funding systems, type of settings, history, and the welfare regimes of different countries. The scarce Nordic research on the subject is consistent with the international literature. The result of this analysis indicates the complexity of the relationship between ownership status and quality. It is important to note that service quality is not only dependent on the type of provider but also on overall governance/regulation. The increasingly detailed level of regulation described in Chap. 5 might be related to the goal of reducing quality differences among providers. Because Nordic ECECs differ—to a certain extent—from ECEC systems elsewhere, there is a need to conduct further research in the Nordic context on the quality differences between providers and possible consequences for segregation. Nordic research would allow a focus on, in addition to structural elements, the matters of process and outcome quality that have been generally viewed as important in the Nordic context, such as the sensitive interaction between educators and children, children’s sense of agency, and children’s sense of belonging. As the situation is now, we can conclude that we know very little about whether who provides the ECEC services affects the quality of the services. In general, there is a remarkable lack of studies in this field in the Nordic countries. Given the considerable political attention devoted to this topic, this is a surprising finding. It should be obvious that we need further research on whether quality is determined by who provides the services before we are able to conclude anything regarding the consequences for quality. On the other hand, the issue concerning segregation appears clearer: privatization appears to lead to, at least to a certain extent, increased segregation. Additional research could provide more nuanced information that could aid public authorities and politicians who are responsible for regulating ECEC services.

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CHAPTER 7

Conclusions

Introduction We began this book by showing how ECEC in Norway had become a commodity where owners could realize hundreds of millions of Norwegian crowns in mergers and acquisitions. Simultaneously, Denmark considered major steps in the opposite direction. This called for questions regarding the developments in this area over the last few decades. In this concluding chapter, we attempt to answer the question about how this could come about through different institutional lenses. Furthermore, we assess the consequences for children and families, how governments reap potential benefits from provider plurality, and if we can still talk of a Nordic model.

Why Private Growth in Nordic ECEC? The privatization of education is a global phenomenon (Verger et  al., 2016). Thus, it is no surprise that the Nordic countries are part of this development. Nevertheless, a major takeaway is that privatization here has occurred in a distinct way. One important institutional feature is the scope of public sector responsibility. Privatization does not necessarily imply limitations on public responsibility in any of the countries. If we look at the long lines, Nordic © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4_7

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ECEC has never been a public service to a larger extent than it is today. Coverage has expanded and with the most recent developments in Finland, almost all children attend ECEC before commencing formal schooling. This happens at the same time as public subsidies are at its height, with both caps on tuition and special schemes for low-income families. The content of the service has never been more regulated and supervised by the public sector than it is now. One aspect where the role of the public sector is not increasing is in the shares of provision of services. Here we have seen a trend with increasing shares of non-public provision, and especially growth for the for-profit providers. As we have documented, nonprofits established the service in all these countries, the dominant role of the state in provision might therefore be seen as a temporary exception. At the same time, the composition of the welfare mix of publicly funded services is a political question, and whether privatization will continue is in the end an issue of political will. For example, in Norwegian elderly care for-profit provision of nursing home places has all but collapsed between 2015 and 2021 (SSB table 09929), due to center-left coalitions gaining political control in the major cities. Both recent and forthcoming developments in the welfare mix in ECEC are thus a matter of political will and priority. Furthermore, privatization is typically not motivated by obtaining increased user fees or savings for the public purse. In all countries, the public sector heavily influences, or even controls, the fees that providers can charge parents with special schemes for low-income families. Despite divergent levels of private provision, one can thus say that there is a distinct Nordic regulatory regime that aims to safeguard the service as truly public in the eyes of citizens. In addition, in an international comparison, the limited level of privatization of ECEC is evident in the Nordic countries (OECD, 2018, p.  168). Barring Norway, the public sector is more dominant in the Nordic countries than what is commonly found elsewhere. Yet, we do observe a commercialization of the ECEC sector in a few of these countries, in a way that is genuinely new for the sector. For example, in Norway, ECEC has arguably become the most commercialized aspect of the welfare state. The most consequential political decision we identify for Nordic ECEC is the opening for for-profit chains in Norway in 2003. To explain the country differences, we can apply a perspective inspired by discursive institutionalism, which directs us toward what dominates the ideas regarding welfare governance (Schmidt, 2008). The discursive context of ECEC developments appears to frame the course of action for

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policymakers, thereby resulting in specific policy solutions. ECEC privatization is an issue that mobilizes left-wing politicians, unions, and left-leaning think tanks to reduce the role of for-profit actors; on the other hand, right-wing politicians, federations of enterprises, and right-leaning think tanks support governance tools that provide development opportunities to for-profits. The balance of power may shift between these actors at the national and municipal levels. Simultaneously, there are certain deep-rooted welfare traditions that are partially shared among the countries, but where there are also certain important deviations. These deviations can help explain why the debates in the different countries took dissimilar shape. The quasi-markets in Norway developed rapidly, something mostly unseen in other parts of Norwegian welfare services. At the time, policymakers did not foresee the dramatic growth in for-profit provision. However, the new policies were the result of an ideational battle regarding welfare governance. Norway has been a reluctant country to open up to for-profit actors in welfare, except in the ECEC sector (Sivesind, 2017). This peculiar position of the ECEC field may be due to the special circumstances of the Socialist Leftist Party (SV) needing the support of the rightwing Progress Party (FrP) to push through the big reform of 2003 and fulfill the promise of ECEC for all and catch up with Sweden and Denmark. The SV had to accept opening the gate for for-profit providers on equal terms as the municipal providers, but it could not envision how the forprofits would be able to exploit a beneficial regulatory environment. Despite certain adjustments such as changes in employee–child ratios, the center–right government (from 2013 to 2021) has been content with the main lines in the current governance regime. The Center–Labor Party minority government that assumed power in September 2021 has begun to implement reforms that could become more consequential. The investigative report initiated by the former government could serve as a starting point. The majority of the working group developing the report argues for a different governance approach now that the ECEC sector is able to cover the demand (Storberget et al., 2021). In most municipal welfare services in Norway, the municipality decided if it wants to involve non-public providers. In ECEC, the national government imposed an almost free right to establish private alternatives. This led to a transformed provider-mix in Norwegian ECEC (from 2003 to 2011), with big chains becoming increasingly dominant. These chains had initially grown organically, but at the end of the right to establish

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freely in 2011, they grew by buying existing institutions. Thus, the 2003 reforms in Norway were a critical juncture in establishing the role of private providers in ECEC. The background of the Norwegian reforms was that Norway in the 1990s experienced a perceived policy failure with a lack of supply in ECEC. This created a window of opportunity for a policy response that laid the ground for rapid expansion of for-profit provision in ECEC. This was an anomaly in Norwegian welfare governance, and the lack in the country’s ability to generate sufficient supply through traditional means appears to have constituted a policy failure that enabled the implementation of radical and nontraditional governance tools (Pierson, 2000). Thus, the failure of traditional bureaucratic policies enabled the implementation of new ideas. The dominant public welfare service provision in Sweden in the 1980s led the conservative–liberal governments to take a principled stand regarding the privatization of the welfare state through outsourcing or voucher competition. Unlike Denmark, Iceland, and Norway—which already had models for the involvement of the nonprofit sector in different service areas—the Swedish public sector was uniquely dominant (Lundström & Wijkström, 1997). These differences may explain why the question regarding individual freedom of choice versus the political option to exclude for-profit actors became a bigger issue in political debates and parliamentary power struggles in Sweden than in the other Nordic countries. The result was first vouchers in compulsory education and subsequently in ECEC; second, a law was established regarding a system for freedom of choice (Lag om valfrihetssystem) that lead to widespread growth of for-profit providers in numerous service areas (Hartman, 2011). The conservative–liberal governments pushed for the voucher system in ECEC through gradual reforms, while the red–green parties attempted to be veto players at all available opportunities, until the system was fully implemented in 2008 (Westberg & Larsson, 2020). In contrast, in 2003, Norway opened up to private actors on equal terms through a political compromise in parliament, although not everyone foresaw the long-term consequences of this. It is striking how the Swedish and Norwegian reforms of welfare mix in ECEC deviated from the general welfare mix pattern. In Sweden, opposition to “profit in welfare” has become vocal over time, but it has not been able to mobilize sufficient support in parliament. This is partially due to the lack of willingness from social democrats to do

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so (Meagher & Szebehely, 2019) and partially because the minority red– green government has not been able pass propositions that would benefit nonprofit welfare providers, such as the profit restrictions in publicly funded welfare services (SOU 2016:78), as the conservative–liberal parties are blocking such attempts. An exception from this is a proposition passed by parliament in June 2022 that allows the reservation of tender calls for nonprofit providers (2021/22:FiU28); however, the consequences for ECECs, which are primarily out-contracted by user choice, are probably small. The political discourse in Sweden has been dominated by a struggle of user choice versus political control of welfare provision. In Sweden, when a sufficiently large part of the population gave support to the arguments of the center-right parties that the public sector monopoly on service provision had failed, for-profit providers were the only option to rapidly diversify welfare service provision. The nonprofit sector in the country is smaller than that in any other Western European country and lacked economic and institutional footing to scale-up their activities. Despite broad political support for the nonprofits, there has not been sufficient political will to pass reforms of any consequence. A case in contrast is the Danish policy. Denmark has the strongest tradition of self-owning, nonprofit welfare providers, which represents an alternative to public welfare provision. This has made opening up for for-­profits a less pressing issue than that in Sweden. Additionally, the for-profit actors mostly chose a similar organizational structure as the self-owning institutions (Henriksen et  al., 2016), which is something that gives them less advocacy capacity to pursue their interests. They also lack capital and incentives for expansion, as we see in the big chains in Norway, Sweden, and Finland. The limited size of the for-profit sector makes the introduction of regulatory measures that limit their development more achievable than would be the case in, for example, Norway or Finland. As the investment bank ABG Sundal Collier (2020, p. 9) indicated in an analysis of ECEC in Sweden, “by increasing the size of private sector penetration, the political risk decreases.” An attempt to abolish for-profit operations in Danish ECEC began in 2021 as a demand from the left-wing Socialist People’s Party, one of the red–green parties supporting the exclusively social democrats’ minority government. The attempt failed in 2022 when the centrist Social Liberal Party, also in the support-group of Mette Frederiksen’s government, pulled its backing of the proposal after some heated public debates (Kirkeby Theilgaard, 2022).

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As evident from Chap. 2, Finland has had a strong familyist tradition connected to the organization of ECEC ever since the initiation of such services. We still see traces of this in the lower use of ECEC. However, Finland has witnessed ideational change, as the historically dominant position of familyism has lost some of its importance (Hiilamo & Kangas, 2009). This is one important explanation for the increasing ECEC coverage, which is paralleled by growing for-profit market shares and ownership concentration, thereby catching up with what happened in Norway and Sweden. By using discursive institutionalism as our framework, we can identify a shift in policies related to privatization and marketization and a struggle of power between worldviews (Schmidt, 2008). At the policy level, universal ECEC as a policy tool for redistribution has been accompanied by a new kind of demand-side subsidies—that is, vouchers— incentivizing the quick expansion of for-profit services. Consequently, Finland is gradually becoming more similar to the other Nordic countries, with the exception of Denmark, in terms of the private provision and for-­ profit ownership. As indicated by Ruutiainen et al. (2021), marketization and privatization also reflect the shift in worldviews: increased focus on individualization in the society. In such a framework, traditional universalism is viewed as inflexible, ineffective, and incapable of answering to the various preferences of families (see also Anttonen, 2002). Both in national and locallevel policymaking, decisions concerning the support of private ECEC have proceeded almost without public debate. Laiho and Pihlaja (2022) have argued that privatization has increased rather invisibly illustrating hidden privatization. Privatization has taken place as ECEC has been part of or more closely connected to the social service sector prior to being part of the educational sector. However, over recent years, the growing commercialization has met resistance. For example, Sanna Marin’s red–green government attempted to restrict for-profit growth; however, the attempts faced judicial hinders. In Iceland, the privatization of ECEC has not been high on the agenda in public or political discourse. The main emphasis has been on user choice of parents and bridging the gap between parental leave and ECEC. For-­ profit growth has been an overlooked side effect, although it got much attention in 2022, because of the Reykjavík’s inner audit report (Reykjavíkurborg, 2022). It remains to be seen what effects this will have on the operations of private ECEC institutions.

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This implies that for the three Scandinavian countries, commercialization of ECEC has been a salient political issue but one where different majorities have been able to advance their interests. In Denmark, for-profits never gained a strong standing in ECEC, thereby making it possible for the left-­of-­center political parties to attack their position. In Norway and Sweden, the right-of-center parties have triumphed in carving up a market for such actors. In Finland, we see much of the same development as that in Norway and Sweden, but one that occurs at a later time; in Iceland, this has not been a politicized issue until it suddenly became a salient topic in 2022.

How to Respond to Adverse Effects From Marketization? Nordic Attempts to Reign in Quasi-markets Through this book, we have demonstrated how the five Nordic countries have similar points of departure in many respects. In Chap. 2, we demonstrated the close affinity in the establishment of the service, and in Chap. 3, we showed that the countries developed very similar legislation at about the same time. Access for for-profit providers was closed until the countries, at different points in time, chose different approaches to commercialization (Chap. 4). Today, the five countries have important differences in how they govern the mix of providers in the ECEC area. The ideational approach cannot alone explain the developments. As we have seen, the timing of events is paramount for explaining how judicial changes resulted in different roles and “market shares” for commercial providers. Timing was of particular consequence in the case of Norway and Finland. Here, the opening for for-profit actors happened in a market that was still not saturated. Indeed, for-profit providers were instrumental in expanding supply to cater to unmet demand. This situation did not occur in the other countries, where most of the demand was covered and growth was limited by public and nonprofit actors. In all Nordic countries, commercial growth led to decline in public sector coverage, but the nonprofit sector was more stable. The only exception is Iceland, where the nonprofit sector was crowded out (Figs. 4.1, 4.2, 4.3, 4.4, 4.5, 4.6). Sweden, Norway, and, lately, Finland have witnessed a small number of large chains buying up shares in commercial ECECs and, in certain cases, also nonprofits.

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Weaknesses in the regulatory systems appeared, since they were not designed for such commercial actors and ownership structures; however, governments were reluctant to make amendments to ensure that public funding and parental fees were used for the intended purposes. It appears that laws, directives, and supervision did not reflect the fact that the ECECs were part of a quasi-market without competition regarding price or quality, only about users. In the introductory chapter, we differentiated between a traditional bureaucratic-professional governance mode that could be supplemented or replaced by post-bureaucratic governance in the form of quasi-market governance or evaluative steering (Maroy, 2012). Obviously, the growth of for-profits is the result of quasi-market regulation, as we described it in Chap. 4. However, we can arguably talk of weak traditional steering with professional bureaucratic means to counteract the unwanted effect of commercial interests. In Norway, unintended consequences of weak regulations of the for-­ profit providers gradually became apparent, but they were difficult to manage due to the concentration of ownership and lack of transparency in economic transactions. Several reports and public investigations have indicated that undue profits could be made, particularly during the process of selling institutions and properties (BDO Norge, 2018; Lunder, 2019; NOU 2020:13; Storberget et  al., 2021). Thus, a set of professional-­ bureaucratic measures was introduced to reduce the adverse effects of quasi-markets: stricter regulation for staff–child ratios and skill level of staff; and forcing all units to become separate individual legal entities to improve economic transparency. Additional plans include strengthening the municipalities’ control over funding and supply of ECEC to match local conditions (Kunnskapsdepartementet, 2023). This implies the strengthening of governance tools that belonging to a professional-­ bureaucratic model. There is a greater possibility of the availability of such steering tools in Norway than in Sweden. Norway has, in most service areas, been more reluctant to open up quasi-markets than what we have seen in Sweden (Sivesind & Trætteberg, 2017). Sweden has attempted to establish a more self-regulatory system for freedom of choice in compulsory education, ECEC, and through a particular law that can be applied in other welfare service areas (Lag (2008:962) om valfrihetssystem) to create competition with public service provision. In Norway, there has been an ongoing a discussion on retaining public service provision or contracting it out to private providers, leaving the nonprofits as a blind spot (Sivesind, 2008).

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This has encouraged a discourse regarding the distinctiveness of for-profit providers in welfare and the ideas of what constitutes good governance. Therefore, the regulation of private providers appears to be a natural thing to do to avoid unintended consequences. In Sweden, such debates are often reduced to an issue of for or against freedom of choice, and the proponents of choice are concerned that regulating for-profits may discourage further growth. Additionally, commercialization in Swedish ECEC has, to date, not reached the level seen in Norway. This might have made the perceived need for reform less acute and, thus, made it difficult to come to an agreement to reign in the framework conditions for for-­ profits. Yet, we do observe that there are calls for a “Norwegian regulatory model” in Swedish ECEC (Enfeldt, 2022). In Finland, an attempt to restrict profits in ECEC services has met judicial resistance, as public investigations have concluded that planned restrictions on the for-profit sector could violate the right to engage in commercial services protected by Finnish constitutional law. The government reacted by replacing the earlier notification system for private ECEC with a system that requires providers to apply for permission to establish a new center. In light of the existing market situation in Finland and the experiences from Norway, there is reason not to expect much effect from this change. Accordingly, a development toward more extensive quasi-markets, as in Sweden and Norway, is possible. The acquirement in 2020, by the Norway-based multinational chain, Læringsverkstedet, of the Finish chain Pilke Päiväkodit OY with all its 146 institutions (Lunder & Måøy, 2022), is a strong indication that there is interest to advance commercial growth. In Iceland, there are no restrictions on owners extracting profits in the ECEC legislation. However, there are indirect limitations concerning, for example, regulation of fees, children–staff ratios, economic supervision, and evaluations. The role of for-profit providers has, to a lesser extent, been a salient political issue in Iceland compared to the four other countries. Thus, there are limited political interests for altering the existing governance of the welfare mix. At the same time, we have limited information regarding the actual operation of the for-profit actors. They have a strong ideological foundation, but we do not know how this interacts with profit-seeking ambitions. Interestingly, this situation changed somewhat in the summer of 2022. A report from the city of Reykjavik provided new information regarding private providers of ECEC (Reykjavíkurborg, 2022). It was revealed that some of the ECECs paid

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profit to owners despite not having a surplus; others did not have transparent accounts, etc. With this new information, for-profit ECEC suddenly became a more contentious political issue. We do not know what the situation is in other municipalities. A separate aspect is that the discovery demonstrates how Reykjavík municipality has not done its job in supervising the for-profit ECEC institutions, which is their role according to legislation. At the same time as we have seen these different changes in governance of the welfare mix among the Nordic countries, many of the goals of ECEC remain the same. The early goals of providing a healthy environment for children and increasing female labor market participation has, in all countries, been supplemented with goals regarding social cohesion, as early intervention has become a main strategy to fight social exclusion. ECEC has also been given a central role in the integration of families with an immigrant background. These additional goals are present in all countries, even if their consequences occasionally vary. This implies that while the Nordic dimension in ECEC 50 years ago included similar means to meet similar ends, today, we see that the Nordic countries use different means to meet similar ends. Thus, the pattern of seeking the same goals with different means adds complexity to governance schemes. The movement toward quasi-markets has been met with calls for different types of counteracting regulation. In line with institutional theories of gradual change (Mahoney & Thelen, 2010), we see today a layered governance architecture, where aspects from different policy regimes are simultaneously present at both the local and national levels. Governing tools belonging to a professional-bureaucratic model, quasi-markets, and evaluative steering are employed simultaneously by both national governments and municipalities. This yields complex governance structures, where the degree and form of layering are unique for each country, thereby providing a differentiated set of governance models that changing political majorities may use to further their goals. Interestingly, we see all countries have, to a certain extent, moved along an axis between professional-bureaucratic governance and quasi-markets. In Nordic compulsory schools, we see a third pole with evaluative steering (Wallenius et al., 2018). In the ECEC sector, we see that the turn toward evaluation plays out to a lesser extent and in a different manner. As we saw in Chap. 5, there is increasing willingness to regulate and steer the area, but this is more in line with a professional-bureaucratic approach. In Denmark, they have language tests for four year-olds; in Norway, parental

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satisfaction survey results are prominent in political debates on privatization; and in Finland, municipalities have received new tasks related to evaluation of ECEC and a new national digital quality assessment system for national level evaluation is in pilot phase. In Iceland, there has been increased emphasis on standardized language tests for 4–5 year-olds. In all countries, we see municipalities that govern through management by objectives systems. Yet, we can see a very clear difference compared to the school sector. This is the same across all countries; we interpret this as a result of Nordic ECEC, although being under the same ministries, is organizationally (as well as in the opinion of policymakers and administrators) distinct from the school sector. This is one of the important features that set the Nordic countries apart from other Western ECEC systems. Thus, this signals an enduring Nordic dimension in ECEC reflecting a history of putting a high value on a childhood with free play, creative learning experiences, and participating in practical activities.

Governance Challenges in the Welfare Mix In all five countries, the public governance of the ECEC sector is divided between the state and municipalities. The state passes laws and national regulations and, in certain cases, supervises the institutions. In all cases, the municipalities are service providers, but their role in governing the local “market” varies. In Sweden and Norway, municipalities have limited authority in designing the composition of the welfare mix. It is unclear how these countries will govern falling numbers of children in the coming years (if not by unilaterally reducing public sector capacity). In Denmark, municipalities govern the public and self-owning institutions, but lack control over the independent private ones. The municipal-level differences in Finland and Iceland are striking. In these countries, it is evident that municipal autonomy causes a wide variation in the welfare-mix at the local level (see for example Hietamäki et al., 2017). A fundamental Nordic welfare goal in education is having democratic processes at the local and municipal levels (Dahlberg et al., 2007). As a public service, citizens can expect to influence ECEC services not only as users but also at the ballot box. ECEC is a municipal service in all five Nordic countries and, thus, also a subject for local elections. This traditional Nordic welfare value is currently being challenged on at least three fronts.

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First, local politicians may want to emphasize certain ECEC qualities, such as language skills or physical health. When most children attend private ECEC, these local policies may reach only a minority of the children. A related example is in Oslo, Norway, where the local government wanted to spend extra funds on ECEC (private and public) in deprived areas. Due to national rules concerning the financing of private ECEC, the entire project was delayed for months, awaiting a judgment on whether it may be illegal to grant such funds to certain institutions in deprived areas and not include all private ones in the entire city. To the extent that municipalities want to govern their local ECEC, it may be a challenge when big chains are established across municipal or even national boundaries (Haugset, 2018, 2021). These chains often have their own pedagogical approach, which can conflict with local municipal priorities. How to solve such dilemmas between the freedom of private enterprises and local democratic processes is not an area that has been addressed by the national governing institutions in any of the countries. Second, part of the appeal of establishing a quasi-market with nonprofit and for-profit providers is precisely to limit the public control of the service. In this manner, power shifts from citizens as voters to citizens as users who “vote with their feet,” as they exploit the user choice scheme to select their preferred service (Warren, 2011). The idea is that users—in this case, parents—can choose providers that offer services in line with their preferences. Thus, the goal is to move the influence over services from the state to the parents. This also includes the idea of the ECEC’s function being a service to meet the current needs of the family rather than having other wider societal functions. One challenge regarding the empowering of parents is the attendant information asymmetry. In ECEC, children cannot easily report what happens in the service, and parents and the public supervisor have limited insight. In addition, the gains from ECEC are expected to appear only in the long run, which makes it difficult to make informed decisions in the present. Thus, a large non-public sector will normally require advanced mechanisms for supervision. This does not appear to be in place in any of the countries, neither in terms of service content nor regarding the economic dispositions of the companies. It is striking that various reports in Norway point to difficulties tracing what happens with public funds spent on private ECEC (BDO Norge, 2018; NOU, 2020:13; Storberget et al., 2021).

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A related, and fundamental, aspect is that true user choice presupposes that supply exceeds demand. In numerous places in the Nordic countries this is not the case, as a surplus of places is expensive to finance. Thus, in practice, parents have to accept whatever place is available in their vicinity. In addition, private centers tend to be located in areas characterized as having a higher socioeconomic status (Trætteberg & Fladmoe, 2020). A separate issue is the balance between the public sector seeking a plurality in content in order for the services to match the preferences of more parents and the desire to attain certain goals. This can create a dilemma between the interests of the state (that wants services to advance the human capital of the population) and parents (who are entitled to influence the content of service perhaps with other preferences). There are various models that encompass these interests. One example is Denmark, where self-owning institutions are closely linked to the municipal system and can, thus, be integrated into municipal efforts to work on certain development issues, such as language skills. Simultaneously, private independent ECEC institutions in Denmark have more room to develop separate qualities. The larger the non-public sector becomes, the more important it becomes to find the appropriate balance among these interests, as direct public sector control is limited. Third, in all five countries, ECEC is a municipal responsibility, albeit with important national ambitions for the field. Thus, the balance between state and municipal governance is important. In all five countries, we see increased state interest in ECEC, but with variation between the countries regarding the balance between state steering and municipal autonomy. In addition, in all countries, we identified increasing state interest in ECEC and its possibilities in citizenry building. It takes the form of discourse in investment in the learning of the next generation and development to secure the future health, productivity, and economic prosperity of the nation. This might take, for example, the form of increased focus on school preparation and increased use of manual-based approaches to standardize the pedagogical content of the service. Municipalities also have an important governance role for non-public ECEC institutions. This can explain the important differences observed within the countries, as the municipalities choose different governance strategies. A case in point is Finland, where certain municipalities only have public providers while others have basically no public providers at all. This might result in having more variation within the country than among

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countries. More research on the local variation, its reasons, and consequences for attaining welfare goals is required.

Why Diversity in Provision? In all the five countries, we saw historical evidence of nonprofits as principal movers in the ECEC fields. Reforms around the 1970s established ECEC as a central policy field, and the public sector gradually became the main provider. Thus, municipalities have dominated the field since, with the non-public sector as a supplement. The policy choices over the last 30 years have opened the market to for-profit actors that now play an important role in several of the countries. As discussed in the introductory chapter, the establishment of quasi-­ markets and the role of non-public providers can service a number of goals. In all five countries, nonprofits were established in order to address a need before the state was able and willing to take responsibility. When the state entered the scene, coverage increased rapidly and public provision was the main strategy. One exception is Norway, where nonprofit provision remains central, and despite both the municipalities and nonprofit sector increasing coverage significantly since the 1970s, there was a shortage at the turn of the millennium. Another exception is Denmark, where nonprofit and public provision expanded simultaneously to achieve coverage of demand. The actual growth of the nonprofit ECEC providers in Norway and Denmark reveals that the nonprofit sector also responds when the framework conditions are favorable. This illustrates that there were various pathways to full coverage, and it serves as a reminder that reaching full coverage is, in effect, a policy choice. Full coverage can be achieved through the deployment of only private or public providers. Furthermore, whether to use nonprofit, for-profit, or both kinds of private providers is also something policy makers will, explicitly or inexplicitly, have to decide, as different governance tools promote different kind of providers. However, all five countries have witnessed growth in their for-profit provision over the last couple of decades. A core argument for non-public provision generally and nonprofit provision in particular is to spur plurality in service, thereby giving parents more to choose from for their children. However, whether non-public providers contribute to plurality in the current scenario has not been investigated in any of the countries. Nonprofits include institutions such as Waldorf and Montessori as well as

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religious institutions. For-profits can often have a profile such as sports or nature, which is also true of public institutions, but we do not have systematic data on these contributions and how/whether they might differ from public institutions. Additionally, economic arguments related to cost-efficient methods of producing ECEC services, to respond to increasing or changing service demand, and to solve financial issues concerning investments in ECEC infrastructure have been prominent when policymakers justify the public support of private ECEC services (Ruutiainen et al., 2020). Overall, the neoliberal market rationality reflected in ideas related to freedom of choice, economic effectiveness, and quality due to competition forms an important resource for legitimizing and accounting for increasing private provision. Nevertheless, regulation in general does not allow competition on prices, and quality is defined by national standards. In this respect, it is interesting to note that the expansion in the use of private providers occurred at the same time as the national government introduced more central steering of service content. In all countries, we find that the content of ECEC has been influenced by ECEC being increasingly considered an integral part of the educational system. We see examples of countries having increasingly relied on international organizations such as OECD’s country evaluations to inform how they work on developing ECEC. Moreover, we see signs that certain ECEC institutions are embracing this approach in order to differentiate themselves from their competitors. This is a particularly relevant aspect in Norway, where some of the big chains have centralized pedagogical approaches that may systematically differentiate them from public providers (Dahle, 2020). This can be contrasted with nonprofit ECEC institutions that may be directly opposed to such instrumental ambitions for their institutions. This instrumentalization of ECECs is disputed in scholarly circles as well (Pettersvold & Østrem, 2012). These debates are primarily regarding national regulation and developing an understanding of what should be the service content. In the longer term, this development may create a demand for plurality in ECEC as certain parents may, for example, call for more school preparation within ECEC, while others may prefer a play-­ based approach. This is a value-based decision that parents may approach in different ways. However, it is a political question whether this needs to be addressed in democratic decision-making either in the municipality or at the national level or by supporting possibilities for individual choice. Yet, thus far, research suggests that families are making decisions

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concerning their children’s ECEC mainly based on the location of the service (see, e.g., Sulkanen et al., 2020). There is an inherent dilemma in ECEC governance whereby states balance the increasing willingness to use ECEC as school preparation within a social investment agenda and a steady demand from parents to have influence over the daily life of their children as they attend ECEC. While the first perspective pulls toward central steering and standardization, the second veers more toward diversity and decentralized governance. A third angle of complexity is the potential role of ECEC in social equality. Policymakers in all five countries appear to agree that increasing the share of children attending ECEC was good for social equality, as more children would benefit from the positive effects of ECEC. Simultaneously, user choice schemes can contribute to segregation, and private providers may be overly present in affluent neighborhoods (for the effects of user choice on the establishment of for-profit schools in Sweden, see Gustafsson et al. (2016, figs. 4.2 and 4.3). The findings from Finland identify such an effect; moreover, in Sweden (Fjellborg & Forsberg, 2022), Norway (Drange & Telle, 2020), and Iceland (Magnúsdóttir et  al., 2020), we see signs of the same development. As economic factors influence where people live, access to high quality welfare services for all is an increasing challenge for policymakers with traditional Nordic welfare values as a goal. If a long-term effect of user choice is the segregation of children from different socioeconomic classes or who speak different native languages, this is an important component of the governance scheme that needs to be assessed. Currently, however, we cannot conclude the extensity of this case. As important changes occur in the welfare mix, it is interesting how much knowledge we lack about its consequences. As mentioned above, we do not know the extent to which non-public ECEC offers something substantively different from public institutions. Moreover, as evident in Chap. 6, we have little information regarding the potential quality differences between ECEC in public, nonprofit, and for-profit institutions. A part of the reason for the lack of studies in this area is the difficulty in creating a solid design that transcends contextual factors other than ownership. However, it is not impossible to approach this topic and we call for more studies that can inform us about potential quality differences stemming from ownership.

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A Nordic Dimension in ECEC Governance? The Nordic dimension in ECEC has been attributed to the substantive content with play and a holistic approach to the service. In ECEC governance, the model has been based on shared goals and a shared governance strategy to attain these goals. To a large extent, the goals remain shared among the Nordic countries. New goals have gained prominence since the 1970s. Traditional goals of increasing labor supply and providing flexibility to families have been supplemented by goals related to human development and educational benefits as well as, most lately, integration of immigrants and social equality. In all the five Nordic countries, we see an embracing of these newer goals; thus, the addition of new aims for the service does not challenge the notion of a shared model. Indeed, the Nordic dimension might have been strengthened as balance among policies incentivizing home care and ECEC in Finland has tilted toward ECEC. For the governance of the welfare mix, we document important expanding deviations. Clearly, this poses a challenge to the notion of a shared governance model. In Norway, ECEC has become an object for “shorting” by investment companies. This is an alien proposition in the other countries, except possibly Sweden, and would have been alien also in Norway a short time ago. Nevertheless, we see that the countries that go furthest in quasi-market governance also introduce conciliatory governance measures to counteract some of the unwanted consequences of the marketization. This makes the governance structure more complex, layered, and differentiated. Simultaneously, we see a few signs of institutional morphism as the countries learn from each other’s successes and failures in governance simultaneously as the big ECEC for-profit corporations expand across the borders, at least in Norway, Sweden, and Finland. What we have today is five Nordic countries that, to a large extent, share a Nordic dimension in shared goals for ECEC but that use varying governance strategies to reach these goals. Similar means to meet similar ends are replaced with dissimilar means to meet similar ends. Whether the discrepancy in governance strategies will produce different outcomes that, in turn, can result in goal replacement, perhaps inadvertently, is still an open question. In Sweden, for example, the freedom of choice resulting from vouchers and competition between public and for-profit compulsory schools appears to rank higher in political discourse than the previous goal of reducing inequality (reasons for this are discussed in Svallfors and

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Tyllström (2018)). If a corresponding development will appear in the ECEC area is a topic for further studies. Simultaneously, as we see increasing discrepancies in Nordic ECEC governance, we have only made implicit comparisons with ECEC in other regions in this book. For there to be a Nordic governance model, in addition to sharing certain features, these features must also be distinct from what we see in other parts of the world. Some of the developments we report in this book—like growing influence from the OECD, the use of manuals, and changes in welfare mix—may decrease the uniqueness of the Nordic ECEC governance. Going forward, we see that Nordic ECEC governance is challenged in certain places by full coverage, coupled with a reducing number of children. Thus, capacity levels will need to be limited. To date, no country has a strategy for how to adapt the future service level to this relatively new situation. Will the capacity be lowered through market mechanisms where one simply allows some ECEC institutions to fail? Alternatively, will municipalities make strategic decisions regarding the lowering of capacity only in public institutions or also in private ones? In either case, one can expect public outcry, as parents witness closures of “their” institutions. These are the core questions going forward in governing Nordic ECEC.

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Index

A Acquisition, 1, 79, 84, 85, 157 Asylums, 39–44, 70 C Capital lock, 95 Charity organizations, 40, 43 Children’s development, 41, 43, 118, 142 Commercial, 12, 28, 75–108, 127, 130, 163–165 Contract based relationship, 115, 116 Cooperatives, 27, 57, 58, 61, 76, 84–86, 98, 100, 101, 147

E ECEC chains, 1, 79, 94, 96, 105, 122, 132 ECEC governance, 1, 56, 105, 132, 172–174 ECEC quality, 139, 143, 168 Educational ladder, 16, 18, 117 Educational level of staff, 131 Educational promotion, 117–120 Educational services, 4 Entrepreneur, 19, 20, 27, 43, 101 Equity fund, 8 Evaluation, 19, 20, 117, 121, 126–133 The evaluative state, 19 Evaluative steering, 117, 127, 128, 132, 164, 166

D Demographic change, 16–18 Dewey, John, 42, 43 Discursive institutionalism, 20, 21, 158, 162

F Family day care, 54, 60, 64, 86 Familyism, 58, 162 Family policies, 15, 48, 54, 55, 57, 62 Framework agreements, 24

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 H. S. Trætteberg et al., Privatization of Early Childhood Education and Care in Nordic Countries, Palgrave Studies in Third Sector Research, https://doi.org/10.1007/978-3-031-37353-4

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INDEX

Frobel, 40 Full coverage, 51, 56, 60–70, 92, 107, 170, 174 G Gender equality, 5, 15, 53, 90, 119 Governance choice, 91 Governance mode, 115, 126, 164 Governance model, 13, 86, 166, 173 Governance structure, 12, 94, 132, 166, 173 Governance tools, 3, 5, 6, 8, 13, 15, 51, 66, 116, 117, 126, 132, 159, 160, 164, 170 H Hard governance, 116, 117, 130 Historical institutional, 20 Holistic, 4, 17, 40, 120, 173 Home care allowance, 59, 68 I Incremental change, 21 Individual right, 52, 61, 62, 64, 66 Information asymmetries, 20, 25, 26, 140, 168 In-house, 13, 81 Institutional arrangement, 20 K Kindergartens, 16, 39, 42–44, 46–47, 53, 55, 56, 61, 64, 67, 76–79, 81, 84, 92–99, 107, 118, 121–123, 126, 145–149 L Labor market, 5, 52–54, 59, 60, 64, 118–120, 166 Legislative foundation, 51–56, 60

M Manuals, 117, 126–133, 149, 169, 174 Marketization, 28, 103, 140, 141, 149, 162–167 Maximize profit, 140, 141 Maximum fee, 66, 76, 92, 104 Measurable quality, 26 Multiethnic, 16 Multinational chains, 90, 165 Municipal policies, 23, 64, 103 N National policies, 16, 117, 120–125, 131 New public management (NPM), 8, 14, 89, 102, 105, 106 Niches in the population, 26 Nordic model, v, 1–4, 6, 15, 39, 157 Nordic perspective, vi, 28–29, 40 O Outcome quality, 142, 151 P Parental fee, 19, 103, 143, 164 Parental satisfaction, 129, 130, 145, 167 Path dependence, 20 Philanthropic institutions, 2 Play, 1, 4, 17, 18, 20, 22, 40, 41, 45–48, 59, 86, 91, 104–106, 120, 122, 123, 125, 129, 132, 149, 166, 167, 170, 173 Policy failure, 20, 160 Privatization, v, vi, 4, 6–8, 11, 22–25, 89, 90, 92, 98, 104–106, 121, 124, 130, 140, 141, 147, 151, 157–160, 162, 167 Process quality, 19, 131, 142–147, 149, 150

 INDEX 

Professional-bureaucratic, 18, 19, 117, 126, 164, 166 Profit margins, 95 Property rights theory, 24, 140, 150 Provider diversity, 24, 115–133 Provider plurality, 115, 116, 131, 157 Public choice theory, 23, 140, 150 Public procurement, 19, 81, 102 Public responsibility, 7, 51, 55, 157 Public tenders, 3, 24 Q Quasi-market, 3, 18, 19, 24–26, 100, 101, 115–117, 127, 141, 149, 150, 159, 163–168, 170, 173 R Regulation, 5, 7, 12, 20, 28, 52, 66, 69, 86, 92, 94, 98–102, 107, 115–133, 141, 142, 151, 164–167, 171 Restrictions on profit, 106 S Segregation, 141, 147–151, 172 Social democratic, 4, 5, 46, 99, 123 Social equality, 3, 15, 16, 68, 172, 173 Social mobility, 15, 16, 68 Socio-economic level, 43 Soft governance, 116, 117, 125, 126 Staff-child ratios, 102, 124, 164 Steering, 5, 18, 28, 108, 115–133, 164, 166, 169, 171, 172 Structural quality, 58, 123, 142–146, 150

181

Subsidy, 68, 100, 103, 105 Supervision, 28, 44, 93–95, 97, 106, 108, 115–133, 164, 165, 168 Supply of labor, 15 Systematic review, 144, 149 T Trajectory of change, 18 Transaction costs, 25, 140, 150 U Urbanization, 17, 41, 43, 48, 52, 53, 55, 58 User choice, 3, 8, 12, 13, 86, 92, 140, 161, 162, 168, 169, 172 User satisfaction, 143, 144 V Voluntary associations, 44, 76, 84 Vouchers, 6–8, 13, 19, 24, 66, 81, 86–88, 98–105, 150, 160, 162, 173 W Welfare mix, v, vi, 3, 4, 13–15, 19, 22, 23, 25–29, 86, 91, 92, 104, 105, 107–109, 116, 117, 130, 145, 158, 160, 165–170, 172–174 Welfare model, v, vi, 3–14, 23, 48, 75–108 Windows of opportunities, 20 Work force, 119