Economic Effects of the Care Economy: Evaluating Its GDP and Employment Contributions

Relevance: GS III Economics 

Introduction

The total of all paid and unpaid activities that offer individuals support and care is known as the “care economy.”  Children, the elderly, and those with disabilities are all included in the care economy.  The care economy has the potential to provide a significant number of jobs in the future.  Despite its enormous potential, low pay and lack of recompense continue to plague the care industry worldwide.

What is the Care Economy?

Does the Care Economy exist?

The wide range of paid and unpaid labour that is necessary to promote the welfare of people and communities is referred to as the “care economy.” Caregiving activities such as child care, elder care, disability care, and housework are included in this sector. These activities might take place in homes or in professional settings like hospitals, daycare centres, and nursing homes. One important feature of the care economy is that, although it is essential to the operation of economies and communities, it frequently entails jobs that are typically performed by women and is underappreciated. Women are typically responsible for providing unpaid care, such as taking care of the elderly, children, or housework, which exacerbates gender disparities in earnings and labour participation.H2: Why is the Care Economy Gaining Global Attention?

Need of Care Economy

The need for the care economy results from the requirement to prioritise growth while simultaneously meeting the needs of the ageing population. In addition to bridging the gender gap, the care economy supports the formal economy. The specifics are listed below:

Core of Growth: By offering routine care work, it contributes to maintaining human activity for both current and future generations. The WEF predicts that unpaid labour would account for 9% of global GDP if it were rewarded.

Supports Formal Sector Workers: Because care workers are taking care of their children, elderly parents, and loved ones, employees in the formal sector are able to continue working.

Increasing Number of Elderly People The Care Economy’s main beneficiaries are the elderly. The need for care services rises as their numbers continue to rise.

The United Nations Population Fund (UNFPA) predicts that 20% of Indians would be 60 years of age or older by 2050. The demand for a strong Care Economy is further increased by this demographic trend.

Encouraging Gender Equality: Women have historically been disproportionately responsible for providing care, which has led to a rise in inequality. Their expansion was restricted as a result of their limited involvement in paid economic activities.

Features of Care Economy

The care economy’s characteristics include its emphasis on women and the fact that the majority of its employees do unpaid labour. Below is an explanation of the specifics:

Since the majority of unpaid labour is not compensated, unlike paid labour in a monetary economy, it is an essential component of the care economy.

Women’s Role: In the Care Economy, women continue to perform the majority of the labour. They work in caregiving for longer than men do.

Compared to males, women work in caregiving for 3.2 times as long.

Human Capital Development: By caring for young children, the disabled, and others, it promotes human capital development.

Contribution of the Care Economy to GDP

Due to the informal nature of most of the work involved, the care economy contributes significantly to India’s GDP and employment, but most of its worth is frequently underrecognized and underreported.

 Contribution to the GDP:

It is challenging to determine the precise amount that the care sector contributes to India’s GDP because traditional GDP calculations do not account for a significant amount of caring, especially unpaid care work (such as home labour, childrearing, and elder care).  However, estimations indicate that this unpaid labour would contribute significantly to GDP if it were monetised.

According to a 2019 International Labour Organisation (ILO) estimate, unpaid care work accounts for about 7-9% of the world’s GDP; this is probably the case in India.

 Healthcare, education, childcare, and domestic work are examples of formal care industries that directly contribute to GDP through their services.  A substantial portion of the care economy, the healthcare industry alone accounted for over 4.7% of India’s GDP in 2020

Contribution to the Employment 

In India, the care economy is a significant employer, especially for women and under-represented groups. But a large portion of this labour is done in the unorganised sector, which results in unstable working conditions and low pay.

Unpaid Care Work: Women perform the great bulk of unpaid care work, especially household chores, child care, and elder care. The Indian government’s 2019 Time Use Survey found that men spend roughly 97 minutes a day providing unpaid care, compared to 299 minutes for women.

Employment in the Formal Care Sector: Millions of jobs are created by the formal care industry, which includes industries including healthcare, daycare, eldercare, and domestic work..About 2.2 million nurses and midwives as well as a sizable number of domestic workers (an estimated 4.75 million in 2017) worked in India in 2020. The Integrated Child Development Services (ICDS) Anganwadi system employs millions of women in rural regions as nutritionists and health workers.

Domestic Work: Although it is still mostly unregulated and informal, the domestic worker industry in India alone employs over 4-5 million people, mostly women from low-income families.

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Care Economy and Monetized Economy

One way to separate the Care Economy from a Monetised Economy is to consider that the former comprises activities that are either unpaid or paid modest wages, whilst the latter includes activities that receive direct payments and are included in GDP. The table below discusses the distinctions between the Care Economy and the Monetised Economy.

Challenges of the Care Economy.

The absence of rules and infrastructural assistance are just two of the many issues facing the care economy. Low government spending, labour rights abuses, and gender inequality are further difficulties. Below is a detailed discussion of the challenges:

Underappreciated Unpaid Work: In the care economy, unpaid labour is frequently underappreciated, which results in lower pay and more inequality.

Over-representation of women: Women have been disproportionately burdened with caregiving, which has caused mental exhaustion and a general decline in wellbeing.

Inaccessible Labour Rights: It is challenging for even paid care providers to exercise their rights and freedoms.  Many paid carers in India, including Accredited Social-Health Activists (ASHAs), Auxiliary Nurse-Midwives (ANMs), and Anganwadi workers, do not get set monthly pay in a number of states.

 Low Government funding: The low level of government funding in this area highlights the lack of attention paid to the care economy. 

 In India, the government spends less than 1% of GDP on services and infrastructure related to care work.

Initiatives for the Care Economy

The care economy has been supported by a number of efforts from public and private entities in India and around the world. In order to grow the care economy and make it a supplement to the monetised economy, this support is essential.

Government Programs

The Indian government has been aggressively attempting to enhance the nation’s care economy. Saksham Anaganwadi Poshan 2.0, Palna Ghar, Rashtriya Vayoshri Yojana, the Child-Care Leave (CCL) Policy, and other programs have been brought about by it. Below is a detailed discussion of the initiatives that were taken.

Private Projects

Numerous international organisations have also started the process of enhancing the care economy, bringing with them initiatives pertaining to child care, women’s support, and the care economy’s general growth. Among the noteworthy initiatives are the following:

The International Finance Corporation is working to increase awareness of the value of employer-sponsored childcare through the Global Tackline Childcare Project.

It demonstrated how childcare subsidies from employers might benefit economies, businesses, and families alike.

Childcare Work by Kidogo: Using a social franchising model, Kidogo, a non-profit organisation in East Africa, assists female childcare microbusiness owners, or “Mamapreneurs,” in launching and expanding their enterprises.

Care Economy UPSC PYQs

Q.1 Distinguish between ‘care economy’ and ‘monetized economy’. How can the care economy be brought into the monetized economy through women’s empowerment? (UPSC Mains 2023) 

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Q.2 With refrence to the National Rural Health Mission, which of the following are the jobs of ‘ASHA’, a trained community health worker? (UPSC Prelims 2012)

1. Accompanying women to the health facility for antenatal care checkups 
2. Using pregnancy test kits for early detection of pregnancy 
3. Providing information on nutrition and immunization 
4. Conducting the delivery of a baby 

Select the correct answer using the codes given below: 

(a) 1, 2 and 3 only 

(b) 2 and 4 only 

(c) 1 and 3 only 

(d) 1, 2, 3 and 4

Ans. (a)

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