Recognising the economic value of unpaid work in India

How valuing women’s unpaid contributions can reshape our understanding of economic productivity and foster policies that address inequity and promote the redistribution of gendered unpaid labour

Sahoo, S., Sarkar, K. K., and Kumar A. ‘Valuation of Unpaid Household Activities in India’, Vol 59, Issue no. 39, September 28, 2024

The invisibility of women’s contributions to the economy through unpaid care work, parenting, and domestic responsibilities has been a growing topic of research and discussion. This dialogue emphasises the need to recognise and value these contributions in national accounts, highlighting their monetary worth. While the System of National Accounts has included household production in Gross Domestic Product (GDP) calculations since 1993, it has notably excluded unpaid care work. The Time Use Survey is often employed to quantify this labour; however, its infrequent implementation limits comprehensiveness.

Through their paper, authors Satyananda Sahoo, Kaustav K. Sarkar, and Amit Kumar contribute to this discussion by measuring the monetary value of unpaid household work within the Indian context. Their objective is to highlight the economic significance of unpaid activities, particularly as data reveal that women not in the labour force spend over seven hours daily on unpaid domestic and care work. Employed women closely follow, dedicating 5.8 hours to similar tasks. In contrast, unemployed men spend less than four hours, while employed men contribute only 2.7 hours daily. This stark contrast underscores the significant burden of unpaid labour borne by women. By addressing these disparities, the authors advocate for policy reforms that acknowledge the economic contributions of unpaid household activities, ultimately seeking more equitable recognition of women’s labour in the national economy.

Methodology

The authors use data from the Consumer Pyramids Household Survey (CPHS) by the Centre for Monitoring Indian Economy (CMIE), covering individuals aged 15 and above from September 2019 to March 2023. The CPHS gathers annual data in three waves — January to April, May to August, and September to December — on employment, health, and financial information from approximately two lakh households and nine lakh individuals each year.

To estimate the economic value of unpaid household work, the authors employ two input-based valuation approaches — Opportunity Cost (GOC) and Replacement Cost (RCM).

Around the world

Globally, there is a growing effort to recognise and value unpaid work, as countries increasingly understand its significant economic contributions. In 2016, the United Nations integrated this focus into its Sustainable Development Goals (SDGs), particularly in SDG 5, which emphasises achieving gender equality and empowering women. Target 5.4 seeks to recognise and value unpaid care and domestic work through supportive policies and shared household responsibilities, particularly in low and middle-income countries by 2030.

Similarly, a study by the Asia-Pacific Economic Cooperation (APEC 2022) revealed that unpaid work contributes an estimated 9% to the GDP of APEC member economies, equivalent to $11 trillion. Contributions vary widely. Indira Hirway, in her paper, “Unpaid Work and the Economy: Linkages and Their Implications (2015),” estimates that unpaid work constitutes between 10% and 60% of GDP in most countries. For instance, while it may form up to 41.3% of Australia’s GDP, it may only contribute 5.5% to Thailand’s GDP. In South Africa, unpaid work accounted for between 14.6% and 38.1% of GDP in 2010, while in Canada, unpaid household labour was valued between $516.9 billion and $860.2 billion in 2019, amounting to 25.2% to 37.2% of Canada’s nominal GDP.

Economic value of unpaid work

Unpaid work in India contributes approximately ₹22.7 lakh crore or about 7.5% of the country’s GDP, according to a 2023 State Bank of India report. This significant figure underscores the vital role of unpaid labour in the economy, predominantly provided by women who spend about 36 hours per week on such tasks compared to just 16 hours for men. This disparity highlights the gendered nature of household responsibilities and reflects broader societal norms regarding domestic labour.

The authors explain that addressing this imbalance could have substantial economic implications. Research indicates that enhancing women’s participation in the labour force could boost India’s GDP by as much as 27%. For instance, Rajeswari (2021) notes that women account for nearly 88% of unpaid domestic work, while studies by Choudhary et al. (2009) estimate that women’s unpaid labour constitutes approximately 61% of India’s GDP.

To harness this potential for economic growth, it is vital to create policies that recognise and value unpaid work, encouraging gender equity in the workforce and boosting India’s overall productivity. It’s also important to explore how the pandemic has affected these inequalities and to develop policies that effectively address these issues.

Wage variations in calculating monetary value

The authors estimate the monetary value of unpaid household activities using two input-based methods: opportunity cost and replacement cost.

The opportunity cost method suggests that individuals forgo other activities and their associated monetary benefits while engaged in unpaid household work. This approach calculates the value of unpaid labour by determining the annual average hourly wages for unskilled labour, assumed to be accessible to everyone within a specific region. Due to limited data, the analysis assumes wage rates do not differ by age. Average wages are categorised by various factors to evaluate the time spent on unpaid domestic tasks annually. The authors note that while some assumptions could introduce an upward bias, using unskilled labour wages may also lead to a downward bias in estimating the value of unpaid household labour.

In contrast, the replacement cost method values household tasks as if performed by hired market workers, utilising average wages for comparable occupations instead of the unpaid individuals’ wage rates. This approach assumes equal productivity between household members and market substitutes, regardless of age. For example, cooking tasks are valued at the wage rate for kitchen helpers, while caregiving is aligned with wages for nursing or midwifery assistants. Unpaid tasks are matched to similar occupations to assign a value to these tasks annually. The authors explain that while this method could lower market wage rates if labour supply increases, it may also raise demand and wages for domestic help.

Monetarily, the authors found that the value of unpaid household work was ₹49.5 lakh crore based on the gross opportunity cost (GOC) method and ₹65.1 lakh crore using the replacement cost method (RCM) for 2019–20, equating to 24.6% and 32.4% of nominal GDP, respectively. The COVID-19 pandemic significantly impacted these values, with household contributions rising to 27.2% and 42.3% of nominal GDP in 2020–21 for GOC and RCM estimates. Men’s contributions to household tasks increased from 10.4% of nominal GDP in 2019–20 to 13.1% in 2020–21, indicating a shift in household labour dynamics, while women’s contributions rose to 26.2% during the pandemic.

As the economy recovered in 2021–22 and 2022–23, the overall percentage of GDP attributed to unpaid household work declined, suggesting a redirection of labour toward other sectors. The authors underscore the significant contributions from women, valued at 14.5% (GOC) and 21.5% (RCM) of GDP in 2022–23. However, they caution against directly incorporating these estimates into GDP calculations, highlighting the potential for recognising unpaid labour and its contribution to the country’s economy. Through this analysis, the paper calls for future research to refine methodologies, promote equitable recognition and redistribution of care responsibilities, and ultimately enhance women’s labour force participation.

The writer is a freelance journalist.

Published - October 31, 2024 08:30 am IST