Nepal's care economy

Opportunity to create employment and close the gender gap


In the wake of the Covid-19 pandemic, there is renewed attention around the world on 'unpaid care’ work and ‘care economy’. Still, a care economy is not considered a ‘productive’ sector and care work is seen as a ‘non-economic’ activity mainly performed by women.

Unpaid care work is therefore excluded from mainstream development, undermining the value of unpaid care services provided within the households.

The pandemic underscored the critical importance of care work – paid and unpaid. Care work did not and cannot stop even when everything came to a standstill, the value of skills involved in care work such as empathy, creativity, patience, and resilience are valuable, but usually taken for granted.

The World Economic Forum in fact highlights these skills as some of the most important competencies for future business success in an increasingly automated and digitised world.

Uncertainty in the labour market and the global economic recession has brought unprecedented uncertainty for women in countries like Nepal, with its gender gap in education, digital skills, and strong sociocultural biases.

The pandemic heightened care needs for elderly persons, and health care services required for preventive and curative services, and it made women more vulnerable to violence at home.

Care economy figure 1

The household sphere consists of subsistence productive activities in which goods and services are produced mainly for household consumption, and reproductive activities for the next generation. Most of these activities are invariably performed by women and are unpaid.

Essentially, the ‘formal market economy’ cannot function without the foundation work provided by the ‘care economy’ with its social, emotional and physical investment within households.

Outside market activities in Nepal consist primarily of migration as a source of income for households. The modern industrial and commercial sector uses reproducible capital and services for profit. Migration provides a safety valve or an outlet for alternate sources of income that people embark upon at times of hardship, or for betterment depending on the pull and push factors.

We can estimate the size of the care sector in Nepal’s economy by calculating how much time people allocate for unpaid work within the household. Time use data shows that women participate to a high degree in the subsistence and household care sector spending on average 35.6 hours and 52.1 hours per week respectively.

Their contribution in subsistence work is 50.4% and household care is 72% compared to men. Women, on an average spend at least 7.5 hours per day on unpaid care work at home which is 2.5 times higher than men.

In addition, Nepali women are increasingly entering the labour market for wages/incomes. Women’s participation has jumped to 45.5 hours and 38.5 hrs. per week in formal and informal sectors respectively, contributing 47.3% and 42.2% share of the work respectively — almost at par with men.

Care economy table

All activities undertaken in the market sphere within the formal and informal sectors, are considered ‘productive' modern industrial sectors that would lead to economic growth with profit and setting in competition in the market and contribute to the country’s GNP.

The formal sector constitutes 17% of the total economy that represents market transactions providing a very narrow view of the visible economy, which is the formal market sector.

In the informal economy goods and services are marketed, but are not formally registered and go undocumented and unaccounted by official statistics. It makes up 24% of Nepal’s economy and can include professions as diverse as drivers, rickshaw pullers, street vendors, petty businesses, micro and small enterprises, home-based workers.

Beyond the informal is the household sector, constituting family farms providing subsistence, and care services providers. Family farm subsistence sector makes up 27 %, and the care sector makes up 32% of Nepal’s economy.

Reproductive work is typically excluded from economic analysis considered not important for planning, resource allocation or growth. There is a tendency to view it as a ‘natural’ aspect of women’s roles and as not ‘work’ because it is unpaid.

It is important to count the proportion of the population concentration in each of the sectors to see who is counted and excluded in the economy. Labour force data shows that only 16% of Nepal’s population is engaged in the market sphere (6% in formal and 10% in informal), and 84% of Nepalis engage themselves in the family farm and household care spheres.

Among these population groups only a small number of women interact in the market sector undertaking formal or informal activities – they constitute less than half of their male counterparts (33% versus 67%).

Women are concentrated at the bottom of the economy in the informal and unpaid care sector, but nevertheless provide basic production of goods and services essential for upkeep of families and the economy.

Care economy Pie chart

Using wage rates and number of hours worked by women and men are used to estimate formal and informal sectors by gender disaggregation shows that production of goods and services and unpaid care activities of women amount to Rs1.4 trillion and Rs1.3 billion respectively — making up 61% and 80% of women’s contribution respectively to those sectors (see table). The total value of unpaid care and domestic work is estimated to be between 6 % and 17 % of GDP, contributing more to Nepal’s economy than manufacturing.

Analysis of three generations of national labour force surveys show potential volume of the care sector in the Nepalese economy which is quite alarming that it has the capacity to support 84% of the population in sustaining their livelihoods.

The share of unpaid care work could equal 17% of Nepal’s GDP, which in 2017/8 amounts to Rs515 billion. This is nearly equal to the agricultural sector (21%) and above the industry (13%) in the gross product ranking. There is an opportunity to remove the care economy from a mere familial, social sector and transform it into a formal productive industry with these proposed measures:

  • Formalise the care economy to become a paid sector where the economy can create jobs from currently unpaid activities. Most women in Nepal cannot access the labour market as they are expected to spend their time as homemakers taking care of the children and elderly. Formalisation of the care economy will mean reparation of the labour done by women, which will help in the movement to eliminate gender bias, sharing of care responsibilities and closing gender gap.
  • Formalisation of the care economy will require the state to assume the cost of taking care and nursing the most vulnerable people - those who cannot pay the market rates.
  • Treat households as family farm enterprises by bringing them under the state planning process and allocation of resources enabling them to fill emerging demand for green economy jobs and green growth.
  • Address structural factors built into the macroeconomic framework that systematically excludes women, marginalised groups of population and sectors that constitute the majority and larger part of the society from the development process.

Bina Pradhan is a feminist economist with Federation of Business and Professional Women, Nepal. This article is based on larger research on Gender and Macroeconomics in Nepal, 2010/11 as a New Century Scholar.

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