The Care Economy – What We Don't Count

Every day, millions of Australians work without receiving a wage. They cook, clean, look after children, care for ageing parents and support family members who need assistance. It is work that keeps households running and allows the rest of the economy to function. So why does so much of it disappear from our economic statistics?

The answer comes down to one deceptively simple distinction: whether the work is paid.

A parent working at a childcare centre is employed. Their wages are recorded; their hours contribute to employment statistics and the services they provide form part of measured economic activity. A parent providing the same care to their own children at home is doing something remarkably similar, but their work is largely invisible in GDP. The care has happened. The labour has happened. What is missing is the market transaction.

The economy behind the economy

This is where the idea of the care economy becomes important.

The Victorian Government describes the care economy as one of the largest segments of the state's economy, encompassing industries including healthcare, community services, early childhood education and allied health. It accounts for around 15 per cent of Victoria's workforce and has the highest proportion of women of any industry.

But these figures only capture the paid side of care. Behind the formal care economy is an enormous amount of unpaid work happening inside Australian households. According to the Australian Bureau of Statistics, Australians performed approximately 9.7 billion hours of unpaid care in September 2024. The ABS estimated that replacing this labour with paid workers would cost around $308.4 billion. Women accounted for approximately $202.9 billion of this value, compared with $105.5 billion for men.

That is a substantial amount of economic activity happening outside the market.

So, where does it go?

It doesn’t simply get added to GDP. GDP is designed to measure the value of goods and services produced within the economy's defined production boundary. Unpaid household services, such as cooking, cleaning and caring for family members, generally fall outside this boundary.

This does not mean the ABS thinks unpaid care is worthless. In fact, the ABS has developed alternative measures to estimate its value precisely because conventional economic statistics do not capture it.

Think about two identical meals. One is prepared by a chef and sold for $30. The transaction is recorded as market activity. The other is prepared by someone for their family at home. It might take the same amount of time, require the same skills and provide the same basic function, but because no money changes hands, it does not enter GDP in the same way.

The difference is not the usefulness of the meal. It is the existence of a market transaction.

The unemployment problem

This distinction becomes even more interesting when we look at unemployment. It is easy to assume that someone without a paid job is unemployed. But that is not how unemployment is defined.

To be classified as unemployed, a person must generally be without a job, available for work and actively seeking employment. Someone who leaves paid employment to care for children or another family member and stops looking for work may instead be classified as outside the labour force.

This creates an important statistical distinction. Someone can leave paid employment to provide full-time unpaid care without causing the unemployment rate to rise. Instead, they move from employed to not in the labour force.

The work has not stopped. The person has simply stopped participating in the part of the economy that our employment statistics are designed to measure.

The numbers don't tell the whole story

This matters particularly when we look at women. If women are disproportionately responsible for unpaid care, then decisions about who stays home to provide that care can influence female labour-force participation, hours worked and career progression.

A woman who reduces her working hours to care for a child may still be employed, but working fewer hours. Another who leaves paid employment altogether may disappear from the labour force statistics. Neither outcome necessarily appears as an increase in unemployment.

This means that the unemployment rate alone cannot tell us everything about how much available labour is actually being used. It also means that economic statistics can make women's contribution look smaller than it really is.

The work that keeps work going

Arguably, the biggest irony is that the formal economy depends on unpaid care. Workers need to be fed, children need to be raised, and elderly family members need to be cared for. Someone must do the work that allows everyone else to go to work.

Yet much of this activity sits outside the statistics we use to describe the economy.

The care economy therefore presents us with a strange contradiction. Some of the work that makes paid employment possible is itself unpaid and statistically invisible.

And because unpaid work is disproportionately performed by women, the numbers we use to describe the economy can also obscure an important part of the gendered division of labour.

The question is not simply whether unpaid care should be counted in GDP. It is whether an economy can really be understood by looking only at the work that is paid.