Investing in the Care Economy: Simulating employment effects by gender in countries in emerging economies

Organization(s): ITUC
Author: Diane Perrons, Jerome De Henau, Susan Himmelweit
Country: Brazil, China, Costa Rica, India, Indonesia, South Africa
Year: 2017
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Increasing public investment in emerging economies would boost employment and contribute to economic growth and, depending on the form and location of the investment, contribute to enhancing human development and realizing some of the Sustainable Development Goals.

This report makes a case for public investment in social as well as physical infrastructure. By social infrastructure we mean education, care and health provision, where this refers to services as well as the buildings and facilities in which these are delivered. By physical infrastructure we are referring to physical assets, such as the provision of water supply, housing, roads and other means of transport
and communication. It is usually investments in physical infrastructure that are pursued where development and employment outcomes are sought.

The report provides a theoretical argument for investing in social as well as physical infrastructure and presents the results of an empirical analysis that estimates the employment impact of investing two per cent of GDP in social infrastructure, specifically health and care services, and in physical infrastructure, specifically construction, for six countries in emerging economies: Brazil, Costa Rica, China (People’s Republic), India, Indonesia and South Africa. It follows on from a previous study carried out by the UK Women’s Budget Group (WBG) for the International Trade Union Confederation (ITUC) of seven high-income OECD countries (De Henau et al., 2016). In the current empirical analysis, Germany has been added as a benchmark for comparison with the previous study.

Our analysis looks at three employment effects stemming from an initial investment in a given sector of infrastructure: the direct effect, that is job creation in the sector itself; the indirect effect, that is increased employment in the sectors further up the supply chain; and induced effects, that is increased demand due to additional consumption by the newly employed people leading to increased employment overall. Our results show that investing in either the health and care sector or in the construction sector would generate substantial increases in employment in all of the countries in this study. If two per cent of GDP were invested in the health and care sector, it would generate increases in overall employment ranging from 1.2 to 3.2 percent, depending on the country. This would mean that nearly 24 million new jobs would be created in China, 11 million in India, nearly 2.8 million in Indonesia, 4.2 million in Brazil, just over 400,000 in South Africa and 63,000 in Costa Rica. A similar level of investment in construction would also generate a substantial number of new jobs, with the increase in overall employment ranging between 1.3 percent and 2.6 percent depending on country variables (see Table 11). This equates to nearly 18 million new jobs in China, 13.5 million in India, 3.4 million in Brazil, 2.1 million in Indonesia, 511,000 in South Africa and 62,000 in Costa Rica.

 

While both forms of investment would generate a substantial volume of employment, the distribution of that employment differs for the two sectors. In India and South Africa over 20 percent more jobs would be generated by investment in construction than by investment in health and care. However, in the other countries under study, the opposite is the case. In Indonesia and China close to 25 percent more jobs, and in Brazil close to 20 percent more jobs, would be created as a consequence of investment in health and care than by an equivalent level of investment in construction. Only in Costa Rica would the number of jobs created be similar, with just a few more being created by investment in health and care. There are also important gender differences arising from investment in the different sectors. These vary between the different countries depending on the degree of gender segregation in employment in these and other sectors in each country. In the construction investment scenario, only between 22.5 percent (Brazil) and 36.8 percent (China) of all the jobs created go to women. In the health and care scenario, on the other hand, between 32.5 percent (India) and 56.8 percent (Brazil) of jobs go to women.

 

Overall, across all the countries in this study, the direct effect of public investment in the health and care sector would lead to a greater number of the newly created jobs going to women than if the same level of investment were made in construction. Thus while public investment in either of these sectors would have a large positive employment effect, if policies aim to create employment for women and reduce the gender employment gap overall, investment in health and care would be the more effective. However, apart from Brazil and China where, respectively, 56.8 percent and 51.5 percent of all the jobs created from investing in health and care go to women, the majority of jobs created would still go to men. This is an effect of the methodology used in this research that takes the gender proportions in each sector to remain unchanged.In practice large investment in a sector is likely to shift its structure of employment in many respects.

In this respect the findings differ from our previous study of seven OECD high-income countries (De Henau et al., 2016) where the gender impact of investment in the caring industries was much more pronounced. We suspect that the main reason for this relates to having to use the health and care sector as a whole (in which healthcare predominates), rather than the more specific childcare and elder care sector used in the previous study. The different size and gender effects are due to the higher relative wages and the higher proportion of men employed in healthcare than in social care on average across all the countries, as well as lower female employment rates overall in the countries of this study.
In addition to creating new jobs, public investment in social infrastructure, specifically in health and care, has the potential to tackle some of the central economic and social problems confronting countries in emerging economies.

Such problems include the under-provision of affordable and high quality healthcare overall, especially for low-income people and those living in remote regions; problems linked to demographic changes including population ageing, typically associated with growing health needs; urbanization and the erosion of extended families and family care leading to growing needs for more formal provision of child and elder care and continuing gender inequality in paid and unpaid work. Some specific types of physical infrastructure, particularly transport, communications and safe water provision, would also be of value in tackling these problems.

Public investment in the social infrastructure also has the potential to reduce the burden of unpaid domestic work, if structured appropriately. It could therefore reduce many barriers to women’s participation in the labour market and thus eventually rebalance the gender employment gap. Such investment could assist countries in their efforts to achieve Sustainable Development Goals (SDGs), particularly those relating to ensuring healthy lives (Goal 3); achieving gender equality and empowering all women and girls (Goal 5); management of water and sanitation (Goal 6); and decent work (Goal 8). It could contribute to “build resilient infrastructure, promote inclusive and sustainable industries and foster innovation”. However, we would suggest that “resilient infrastructure” in practice should relate to social infrastructure as well rather than just physical infrastructure, on which all targets currently focus (United Nations, 2016). Such policies would contribute towards creating a more inclusive model of development.

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