Unpaid Work, National Accounts, Economic Analysis and Economic Policy Diane Elson Emeritus Professor, University of Essex Seminar on Unpaid Work and National Accounts Lima October 2013

Analysis of National Economies: Gender Neutral or Gender Biased? National output, income and expenditure Savings and investment Flows of money, labour, goods and service Stocks of assets: physical, financial, human Policy issues: employment, inflation, budget deficits, economic growth No mention of men or women Appears to be gender-neutral but is it? Lack of support for inclusive and equitable economic growth because of lack of recognition of unpaid work

Structure of Presentation Unpaid Work in the National Economy: A Framework for Analysis Unpaid Care and Volunteer Work and the System of National Accounts Unpaid Work and Growth of GDP Differences between Paid Work and Unpaid Work Public Expenditure, Public Services and Unpaid Work Conclusions: Recognize, Reduce and Redistribute Unpaid Work

SNA and Unpaid Work Paid domestic work always included in the SNA, tends to be underestimated in the GDP statistics because of its informality. Agricultural subsistence production always included in the SNA, tends to be underestimated in the GDP statistics because it is non-market. Other types of subsistence production, such as collection of water and fuel initially excluded, but revisions to the SNA subsequently included them; however, national statistical systems have not kept pace and most do not try to include this production in GDP; Unpaid care work not included in the SNA and rarely included in the statistics, but now recognized as activity within the production boundary, sometimes described as Extended SNA Activities. Governments encouraged to measure its output through satellite accounts. Volunteer work treated in same way as unpaid care work.

Mean time spent per day on activities by SNA category, country and sex, for full sample population

Why is Unpaid Work Excluded from SNA? ‘..inclusion in SNA is not simply a matter of estimating monetary values for the outputs of [household production]. If values are assigned to the outputs, values have also to be assigned to the incomes generated by their production and to the consumption of the output. It is clear that the economic significance of these flows is very different from that of monetary flows. For example, the incomes generated have little relevance for the analysis of inflation or deflation or other disequilibria within the economy. The inclusion of large non-monetary flows can obscure what is happening on markets and reduce the analytic usefulness of the data.’ UN (2009) System of National Accounts 2008

Challenges to Reasons for Exclusion Substitution of unpaid for paid production of care services or subsistence goods in the household sector could dampen inflation, and even lead to deflation, as it would, other things being equal, reduce market demand for goods and services. Ignoring this effect could lead to underestimation of the downward multiplier following falls in output and employment and overestimation of the prospects for speedy recovery of the market economy following a downturn. Modeled by Erturk and Cagatay (1995) who argue that net effect depends on whether depressive effect of more unpaid work is outweighed by a stimulus to investment through an added worker effect.

Unpaid Work and Growth of GDP Important driver of GDP growth in medium term is increased employment of women. Unpaid work constrains women’s employment and hence economic growth. In 2009, average female labour force participation rate in Latin America and Caribbean was 52%, while the male labour force participation rate was 80 %. In high income countries, the rates were 52% for women and 70% for men. EU countries have explicit goal of increasing women’s employment rate to support future economic growth. Women’s employment rates lag in EU countries in which women have to spend more time taking care of children because of lack of good quality affordable child care. Plunkett (2001) estimates somewhere around 1 million women could be considered missing from the UK workplace due to lack of child care.

Public Provision of Child Care in Low and Middle Income Countries Lack of adequate public provision of child care forces women in low income households into low paying informal employment, such as home- based paid work, where children can be to some extent supervised while mothers work- though this runs the risk that children will also be incorporated into the work force. Elder daughters are also given the task of caring for younger siblings, putting their education at risk. Provision of publically funded child care has increased maternal employment rates in Colombia and Brazil( World Bank 2012). The World Bank has recommended increasing access to child care and early childhood development programmes ( World Bank 2012).

Differences between unpaid work and paid work Unpaid work is conducted within non-market relations. It does not produce an income for those who do the work (such as cooking a meal), rather it produces an income in kind for those who consume the services (eating the meal). Unpaid work is not done in return for pay, though there may be non-financial rewards. It can have elements of: – a gift (as in some volunteer work); – an obligation (to be a ‘good’ wife and mother requires a certain quantity and quality of unpaid work); – forced labour (as when the threat or reality of domestic violence is used to coerce women to undertake unpaid work). Those who specialize in unpaid work are at a disadvantage in a market economy : women’s unpaid work obligations are a key reason for the persistence of the gender wage gap, as is recognized by the World Bank in World Development Report Recognizing unpaid work does not entail advocating wages for house work. It means designing policies to reduce and redistribute unpaid work.

Cuts to public expenditure Well-designed public expenditure: Reduces unpaid work through provision of infrastructure and services; Redistributes unpaid work between women and men, for example by well-planned parental leave subsidies. Poorly designed cuts in public expenditure reverse reduction and redistribution – Cuts to maintenance of water and sanitation – Cuts to food subsidies – Cuts to care services – Cuts to subsidies for father’s parental leave  Negative feedback effects: women can not infinitely extend their unpaid work.

Reliance on volunteers to run public services Example: Budget of the municipality of Villa El Salvador in Peru A food assistance programme that took up one third of the municipal budget Relied on the unpaid work of women in the municipality to distribute the food. If the municipality had had to pay for this time at the minimum wage rate, the cost would have been equal to 20 per cent of the budget for this programme (Pearl 2002:39). Does this matter? Danger of ‘volunteer’ work being required to access services- a user fee paid in time.

Increasing the efficiency of public services Example :measures to improve the ‘efficiency’ of public hospitals (measured in terms of monetary costs per patient) such as shortening the time that patient spend in hospital, introducing more ‘day surgery’, lengthening the period of convalescence at home. Cuts back on the financial costs of employing medical staff, but increases the costs of households (and primarily women within households) in time and energy spent on caring for convalescing patients. A false economy: higher absenteeism and lower productivity of unpaid carers in their own paid work.

Conclusions Failure to take account of unpaid work in economic analysis and policy can: hamper economic recovery after a crisis, reduce medium and long run growth prospects, overburden women and increase rather than reduce gender gaps. Lack of statistics on unpaid work hampers policy makers. They fail to recognize unpaid work and do not take action to reduce it and redistribute it. Conduct regular time use surveys, construct satellite accounts and build in procedures to take account of unpaid work in economic policy making.