Date: 03/11/2022

Relevance: GS-3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development, and Employment.

Key Phrases: gross domestic product, unpaid work, Centre for Monitoring Indian Economy, gender equality, gender gap, time use survey, Great Depression, Labour Participation Rate.

Why in News?

• In measuring an economy’s size, GDP only measures paid work, or, as economists put it, it counts only things that are exchanged in the market.
• The unpaid work doesn’t count and that creates its own set of problems by not taking into account a lot of free work done by individuals, particularly women. This leads to the paradox of household production.

The female labour participation rate:

• In October, as per the Centre for Monitoring Indian Economy (CMIE), the female labour participation rate in India was 8.47%.
• Hence, as of October, less than nine out of every 100 women deemed old enough to work were either employed or actively looking for a job, implying that most Indian women were not in the official labour force for various reasons such as household responsibilities.
• In many single-income households where men go to work, women take care of everything else, including daily household chores, care for the elderly, and everything that goes into rearing children which comes under unpaid work.

So, how did we end up here?

• The concept of GDP and a lot of macroeconomics as currently known came into being in the aftermath of the Great Depression and World War II.
• When the Great Depression started in 1929, governments around the world had no idea of what was going on when it came to the economy as a whole.
• They could only address the problem of economic contraction if they were first able to define and measure it.
• In 1934 a statistician called Simon Kuznets produced the United States’ first national accounts, this was the birth of GDP.
• World War II led to further developments and the main aim was to understand how much output could be produced and what consumption needed to be sacrificed to make sure there was enough available to support the war effort.
• In the process, the economy ended up being defined as everything that governments and businesses do. Unpaid work never entered the picture, despite the economic value it has.
• Principles are man-made, and much debate over how you would measure and value unpaid household services, it was decided that this would be too big a task in terms of collecting the data and so things have stayed since then.

Negative impacts of not counting unpaid work:

• This reinforces the sexist prejudice that women do nothing when they are at home when the amount of labour put into care work at home is often much larger than what their male partners put into their paid employment.
• At the same time, it also leads to situations where women end up with no pension or less pension, given that pension is tied to paid work.

Arguments for Inclusion

• Huge step towards gender equality:
  • Across the world, women consistently bear more of the burden of unpaid labour.
  • In India, women spend 299 minutes a day on unpaid domestic services while men spend 97 minutes, according to the 2019 NSS report on time use.
  • This unequal distribution is harmful to women because they have less time to learn, relax, work on hobbies, or put in extra hours at work to get a promotion.
  • This disparity between men and women directly inhibits women’s quality of life and limits their financial mobility.
• Economic value of woman’s work:
  • Some economists believe that including unpaid labour in GDP accounts for the tremendous economic value of tasks such as gathering wood and cooking at home.
    • For example, cooking food prevents starvation, nourishes those who go to work or school, and can allow a household’s breadwinner to earn more income.
  • Similarly, taking care of children allows other household members to spend time working, relaxing, or learning.
  • All of these tasks hugely benefit individuals, the household, and the community as a whole.
• Quantifying the economic value of unpaid work:
  • Quantifying the economic value of unpaid work in GDP would increase its perceived worth, reinforce the benefit this work brings to the economy, and recognize sacrifices that unpaid labourers make to allow other members of the household to do paid work and thus create a stronger paid workforce.
• Addressing the gender gap:
  • Measuring unpaid care work is a key to arriving at more inclusive socio-economic indicators and formulating policies to address the gender gap.
• Feasibility of inclusion:
  • Much data has been collected on unpaid labour, making its inclusion in GDP increasingly feasible for many countries.

Conclusion:

• It has been close to nine decades since GDP as we know it came into being. It’s time now to address this basic problem at the heart of it.
• In the 1930s, there were probably very few women economists around but that is not the case now.
• It’s important that female economists around the world lead the cause of setting this major deficiency in the measure of GDP right.
• A change to GDP is needed to improve its accuracy and bring to light the contributions of those who work behind the scenes to keep economies running.

Source: Live-Mint

Mains Question:

Q. What are the challenges and opportunities of counting unpaid work in the gross domestic product (GDP) of a country? Examine.