Invest in care to help the economy

Investing 2 per cent of GDP in care industries could create 1.5 million jobs.

A new report launched recently by the UK’s Women’s Budget Group for the International Trade Union Confederation (ITUC) shows that investing public funds in childcare and elder care services is a worthwhile investment that is more effective in reducing public deficits and debt than austerity policies.

It would boost employment, earnings, economic growth and fosters gender equality.

Key findings of the report, entitled ‘Investing in the Care Economy: A gender analysis of employment stimulus in seven OECD countries’, are:

The government should rescind damaging austerity policies and invest in social infrastructure. It would provide employment, address the current crisis in care, and reduce gender inequalities in both paid and unpaid work;

In total, up to 1.5 million jobs could be created in the UK if 2 per cent of GDP were invested in care industries, compared to 750,000 for an equivalent investment in construction;

Simulation results from seven OECD countries showed that investing 2 per cent of GDP in public services of care would create almost as many jobs for men as investing in construction industries in the UK, USA, Germany and Australia but would create up to four times as many jobs for women;

Women’s employment rate would rise by up to 8 points in the USA and more than 5 points in the UK, Germany, Australia and Japan, reducing the gender employment gap by up to 50 per cent in the US and a quarter in the UK and

Compared to business-as-usual austerity policies, a significant public investment boost would have larger positive effects on economic growth and debt reduction in the mid-term (by 2030).

Commenting on the findings, Dr Jerome De Henau, Senior Lecturer in Economics at the Open University and one of the authors of the study, said: “The recipe for a recovery based on a combination of ‘quantitative easing’ – that is expanding the money supply available to investors – while cutting back on public expenditure, has failed to stimulate growth, just as feminist economists and those on the political left predicted.

“This has now even been recognised by international institutions, including the OECD, whose Chief Economist called for greater public investment in developed countries to stimulate growth.

“Our research clearly shows that investment in the social infrastructure – in particular the care industries – not only delivers better social outcomes than austerity cuts by ensuring we have a healthy and educated society but also significant economic benefits.

“Far from seeing the care industries as a drain on public finances, spending should be seen as an investment akin to investing in the physical infrastructure,” Henau continued.

“In fact, our research clearly shows that investing in the social infrastructure generates more jobs and has a greater effect on output than a comparable investment in construction.

“It is also worth noting … that an investment in the care industries has the potential to significantly reduce the gender employment gap, although a large number of jobs would also be created for men.”

And he called on the Chancellor George Osborne to invest in Britain’s future by making the care industries a priority for public investment.

The report’s co-authors along with Henau were Susan Himmelweit, Zofia Łapniewska and Diane Perrons.

The full report is available here.

A briefing paper summarising key findings is available here.