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Counting the cost of Australia’s care economy

Mapping the scope of Australia’s care economy — both paid and unpaid — has been challenging. Flickr\Wunkai

It is easy to measure the national economic value of primary industry production, of manufacturing, and of the wholesale and retail sectors. But many Australians don’t work in profit-focused enterprises, so how do we measure and recognise their contribution to the economy and the contribution of those who provide the paid and unpaid care that supports our society? Does care work count?

The care economy vs the market economy

Mainstream economics has traditionally only considered goods and services in the market as productive. This ignores the fact that markets could not continue to operate without an ongoing workforce, which is supplied by social reproduction in families. The care economy provides a new vision of economic life that counts unpaid work in statistics, explains the role of care (as well as commodities) in the working of economies, and integrates the care economy into policy.

The scope of the care economy

The care economy is comprised of paid care, unpaid care, and government investment in the care sector. It is defined as:

“The total (paid and unpaid) labour required to meet the needs of children to be cared for and educated, everybody’s physical and mental health that requires attention, and the needs of individuals who require assistance with the activities of daily living because of illness, age or disability”.

“Care work” provides assistance and support to community members suffering from mental illness, chronic ill-health, terminal illness, disability and frailty associated with ageing. The volunteer sector is a key component of the care economy. The care economy therefore operates in a wide range of care settings, including: paid care in childcare, schools, hospitals and other health care facilities, and disability and aged care facilities; and unpaid care of children, elderly people and people with disabilities in homes and community settings and by volunteers in formal health, disability and aged-care facilities.

Paid care is provided usually by qualified professionals and trained assistants. Unpaid care is provided by families, friends and neighbours, by members of non-government organisations, and by community volunteers.

The value of the care economy

Although there is vast literature on different aspects of the Australian care economy, until recently there has been no comprehensive mapping of it. Given the complexity of care work and its profound social and economic implications for our nation, it is crucial that this sector is defined and valued as a distinct segment of economic activity. The recent research reports [2010 and 2012] commissioned by economicSecurity4Women (eS4W), a national women’s alliance under the Australian Government’s Office for Women, draw attention to the worth of the care economy and the risk to Australia of ignoring its economic value in these changing times.

The Scoping the Australian Care Economy report, published in 2010, was the first research in Australia to examine the size and significance of the care economy. The recently released report, Counting on Care Work in Australia, built upon this scoping data and has quantified the Australian care economy for the first time.

The Counting on Care Work in Australia report examined the three intersecting spheres of paid care work, unpaid care work and government investment in the care sector and sought to measure the labour and resources devoted to the daily care of Australians including: care of children and those who are elderly or disabled; education of children from kindergarten to year 12; and delivery of health care to both well and sick citizens regardless of age.

This seminal report reveals that in 2009-2010, the care economy in Australia was worth an estimated $762.5 billion.

While paid care was worth $112.4 billion - 8.8% of GDP - providing nearly 20% of all paid employment, unpaid care was imputed at a staggering $650.1 billion. The 21.4 billion hours of annual unpaid care work (60% of which is undertaken by women) equates to 50.6% of gross domestic product (GDP); 11.1 million FTE workers and 1.2 times the total Australian full-time employed work force.

In addition, in 2009-10, local, state/territory and Commonwealth governments invested a total of $135.9 billion in the care sector (excluding wages, salaries and social security payments) equivalent to 10.6% of GDP.

Unpaid care

The report acknowledges that the value of unpaid care is likely to be underestimated since it does not account for the opportunity costs of providing unpaid care, the value placed on emotional wellbeing and the financial cost of caring. Undertaking unpaid care work can restrict a carer’s ability to change jobs, accept job promotions, or take on new job opportunities, and unpaid care providers may need to reduce their working hours or resign to meet care needs. The research indicates higher rates of poverty among carers than in the general population.

The report presents a snapshot of the caring load on families in a single year, but it will enable future trends to be monitored and modelled. As carers age and become consumers rather than providers of care, replacing the significant amounts of unpaid care provided each day with formal paid care will be impossible. When unpaid carers enter the labour force, this reduces the total availability of unpaid care and places higher reliance on the paid care sector. As women’s role in the formal workforce expands, men will be required to provide a greater share of unpaid care. More data is needed to assess the future impacts of an ageing population and shifts in employment patterns of current carers, and the unmet need for respite for carers providing disability or aged care.

What do the findings mean for Australian families?

The Counting on Care Work in Australia report describes the scope and value of the care economy in 2009-10. The authors relied extensively on ABS census data collected every five years [especially for paid care] and time-use data collected at less regular intervals [especially for unpaid care]. It is essential that the care economy should be regularly monitored to inform government planning for childcare, health care, disability care and aged care.

Given our ageing population and the rising expectations of Australians, we can expect that a population shift in the proportions of children and older people will impact significantly on the resources available in the formal and informal sectors to care for our more vulnerable citizens. Shortfalls in formal care services will inevitably be picked up by families providing unpaid care.

Other factors need to be taken into account. For a start, the aged care workforce itself is ageing and less able to take on the heavy manual handling and emotional support the role requires. The report also highlights the need to monitor trends in housing costs (that now require two wages per household), in the demand for aged care (as carers become those cared for), in costs of living that prevent carers from choosing to combine caring with part-time work, and in lifestyle demands and expectations that limit women’s ability to continue their unpaid roles.

Fair Work Australia recently recognised the low value placed on care work in the social, community and disability services industry that has resulted in poor recruitment and retention rates as workers seek better paid work. The care load borne predominantly by women – both paid and unpaid – reduces both their incomes and retirement savings. Unpaid care work restricts the capacity of carers to earn a living in general and to save for retirement in particular.

What should happen next?

We know that countries with higher levels of government investment in the paid care sectors tend to have a more equitable split of unpaid care work](, and that Australia is not one of those countries.

As a nation, we need to recognise care work as a public good and count the contribution to productivity of carers, acknowledging the need to retain workers and maintain the supply of care. EconomicSecurity4Women recommends increasing government investment in care work by improving the wages and conditions of paid care workers and supporting the rights of unpaid carers to secure and flexible work arrangements that accommodate their caring responsibilities and protect their retirement incomes. That, at least, would be a good start.

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