We've had a child in our home who picked her skin and scabs. She picked it so much that she started bleeding and she got impetigo (infected!) Here's what we've learned from it:
1.) Use the long onesies with the zipper. If your kids won't keep this on, then what we did was to saftety pin it on, the strap has a snap. Our child never did take off the safety pin.
2.) Our child had anxiety problems. We tried calming her down. We were told to tell her that it is okay, you are safe here. The child we had in our home was a foster child. You may want to say It is alright or okay. You may want to offer a hug or a high five.
3.) Our foster child picked mainly in the car while we were driving, however did pick some at home. If driving, wear long sleeve shirts or long pants. If that doesn't work, then use the onesie and you can always change when you get somewhere else if you need to.
4.) We used band aids, however usually our child would pick them off or they would come off later. We used Neosporin for the bleeding and sometimes I used anti-itch cream. We went thru tons and tons of band aids.
5.) You might try one of the bath products by Aveena, I believe that is the company. There is a baby product that you can sprinkle it in the bathtub while they are bathing and it is supposed to help with bites, exzema, itching/scratching.
6.) Give toys, give animals, give other toys to your child when they are picking. Keep them occupied. Let them know that is not okay to do in your house or car,etc....
7.) For the infection we got Bactrim (prescription) and it cleared the infection right up. There are still scars left, however the kids will grow and the scars will fade over time and you eventually won't be able to notice them.
8.) Has he had any major changes going on with him or daycare/home? It is possible it could be related to that.
8.)You might want to reward your child if you see him doing good things and not picking at his scabs.
9.) Keep your childs nails short! This really helps out when they don't have long nails.
We mainly went to the Pediatrician and it got really while she was here. You can also go to a Dermatologist if it continues and doesn't get better with all the suggestions everyone is giving you.
It can be very frustrating! Good Luck with it and I hope it gets better quickly.