Three Ways Improving the Care Economy Increases Women’s Wage Employment and Economic Growth

Women’s labor force participation is a critical determinant of women’s economic empowerment, and yet, the International Labor Organization (ILO) reports that 606 million women around the world are not working or seeking employment because of unpaid care responsibilities. In middle-income countries, 46.7 percent of women identified unpaid care work as the reason for staying out of the workforce, compared with just 6.3 percent of men (ILO). The COVID–19 pandemic has reinforced gender inequities in unpaid care work at home, and in labor market participation. Given the pandemic’s stark impact, the Gates Foundation identified job loss related to unpaid care responsibilities as a threat to women’s economic empowerment.

We hope this week’s blog in the Marketlinks' spotlight on the care economy will spark ideas and discussion about how market systems, enterprise development, and private sector activities can address this barrier to gender equality and women’s economic empowerment, while simultaneously creating jobs, improving company performance, and increasing economic growth. Here is what we gathered in our own research:

1. Access to safe, high-quality, and affordable care enables women to work

The World Bank’s Better Jobs and Brighter Futures report shows when affordable childcare is accessible and of high-quality, mothers are more likely to participate and stay in the labor market. Women who received vouchers for subsidized, high-quality daycare were more likely to find and maintain employment, increasing earnings. Providing access to quality care not only lessens the unpaid care burden, but also supports women’s labor market participation and increased household earnings. Conversely, without access to childcare, women are more likely to take informal, more flexible and precarious employment, or reduce their working hours – which all reduce household income. In Uganda, self-employed women who brought their children to work saw reduced profits, and similarly, childcare responsibilities kept traders in Ghana and South Africa from being active at the best times for business (morning and evening). 

2. Millions of new jobs will be created in the care economy

Demand for care services is growing quickly as more women enter the labor market and attitudes towards women’s employment become more positive. The ILO estimates that by 2030, an additional 269 million new care jobs are needed to meet demand. While these jobs are open to men and women, the current care workforce is overwhelmingly female, employing 249 million women. By some estimates, more than 19 percent of employed women work in the care economy. Jobs are created through entrepreneurs starting new care businesses, as well as care business providers who employ both caregivers and back-office operations staff such as accountants and human resources specialists. 

Decent work and pay are critical to attract and retain staff. The Better Jobs and Brighter Futures report underscores how an under-paid, under-supported workforce contributes to low job satisfaction and high rates of job attrition. Historically, care workers have been vulnerable to low wages, poor working conditions, discrimination, and gender-based violence. The 5R’s Framework for Decent Care Work outlines how policy and regulation are critical to ensuring care workers have safe, equitable work environments. Decent work, workers’ rights and protections, and workers’ voice and agency have been critical pieces of newly launched initiatives like International Development Research Center’s Care Economy Knowledge Hub and Gates Foundation’s Policy Summary.

3. Improving the care economy increases company performance

There is a strong business case for investing in care. The International Finance Corporation describes employers that offer childcare at work sites as a “win-win-win for families, employers, and economies.” Childcare and family-friendly policies open the door to a larger, more diverse talent pool, boost employee productivity and job satisfaction, and reduce turnover and absenteeism. Tackling Childcare: A Guide for Employer-Supported Childcare walks employers through how to provide childcare, including legal requirements around health and safety and understanding employees’ needs and preferences.

Access to safe, high-quality, and affordable care services is good for business. The ILO Research brief, Economic Impacts of Reducing the Gender Gap, estimates that closing the gender gap in labor participation by 25 percent by 2025 could increase global GDP by $5.3 trillion. Similarly, The Power of Parity estimates that unpaid care work by women amounts to as much as $10 trillion of output per year, highlighting the untapped potential of this market.

The Donor Committee on Enterprise Development describes women’s economic empowerment as “one of the major driving forces of global economic growth and well-being”, and yet, many women are excluded from both care and non-care employment because of unpaid responsibilities at home. Addressing the care burden will unlock women’s economic access and agency, increasing gender equality and strengthening the economy. To learn more about how to design, procure, implement, monitor and evaluate programs that increase women’s economic empowerment and gender equality outcomes, please see the Women’s Economic Empowerment and Gender Equality Technical Guide on Marketlinks

This post is authored by Caitlin Hurley, Senior Adviser for Education Finance, Zemitek LLC Contractor in the Center for Education, USAID Development, Democracy, and Innovation (DDI) Bureau and Gigi Koch, Women’s Economic Empowerment Program Analyst, USAID Contractor: PM Consulting Group.