Invest in childcare to raise economic productivity levels

A Woman walks past a rupee symbol near the BSE (Hindustan Times)
A Woman walks past a rupee symbol near the BSE (Hindustan Times)


Enabling women to be able to work is critical for an inclusive workforce and to build a strong economy

Indra Nooyi, former chairperson, PepsiCo, while speaking recently on the future of work and women entrepreneurs in India, underscored the criticality of the care ecosystem to retain women workers, nurture kids and develop more inclusive, supportive and productive processes for the economy. Earlier, at a childcare symposium in the US, she rued that, even now as the world looks ahead, the talk is only of futuristic technologies, while family remains in the shadows.

As women across the world shoulder greater childcare responsibilities due to persistent gender norms, in 2020 alone, more than two million mothers were forced to leave the workforce. Many also had to quit jobs in the past 12 months, more than in 2020 and 2021 combined, mostly because of inflexible work hours, to prioritise their partners’ careers and take on household tasks. In 2022, women represented only 50% of the global workforce, as compared to men’s 80%. Now, in the trail of the pandemic’s devastating impact on household incomes, many women have been compelled to take up paid jobs, according to UNICEF, and a ‘child care crisis’ has arisen, with over 35 million under-five children sometimes being left without adult care. A 2021 World Bank report also raised concern that more than 40% of all children below primary school age (nearly 350 million) need childcare but do not have access.

While the ‘maternal role incompatibility’ theorists imply a conflict between motherhood and employment, and market analysts also corroborate that, many women workers indeed pay a ‘motherhood penalty’, leading to a gender gap of about 80% in pay, perceived competence and benefits. There is also a prevailing contention that motherhood is associated with informal work, with low wages and fewer social protections. In the Global South, where childcare services are limited, the highest concentration of women is in informal employment. A 31-country survey of the Global South revealed that most of the low-income working women care for their own children, while they work, only 1% of them, and 10% among the high-income working women could avail of childcare services. As the factor of childcare affordability divides parents of different income groups, weakens their chances of labour market entry, women suffer from much higher shares of joblessness. Even in the European OECD countries, children under three in low-income households are one-third less likely to participate in early childhood education and care. In almost all OECD countries, a low-paid single mother, who takes up full-time work, loses two-thirds of her in-work earnings to childcare costs, taxes and social benefits.

However, a growing body of research suggest that access to affordable early childhood education and care can boost maternal employment. Studies in some low and medium income economies disclosed that such initiatives helped in enhancing women’s productivity in their existing jobs/businesses or shifting to more desirable work that is not compatible with childcare responsibilities. In Chile, the free after-school care to school-aged children increased the probability of mothers working at least one month per year by 3.4 percentage points. Women in Kenya with vouchers for free childcare gained 8.5 percentage points more chances to be employed. However, additional barriers like patriarchal norms and/or limited employment opportunities could nullify effects of such services. In Uganda, childcare interventions lessened the father’s household burden for more paid work, rather than the mother’s. In Egypt, when childcare cost subsidies (from 25-75%) were offered, only 1.4 to 4.2% of women used them, believing that it was unacceptable for a woman to leave a child at a nursery and go for work.

In the Indian context, despite the high take up of integrated child development services, many social scientists feel that the day care centres run for about 3-4 hours, do not go according to the hours of poor working women, 94% in the informal economy, as the duration of childcare is a significant aspect for their employment.

Meanwhile, the World Bank’s recent appraisal of 95 global economies found that only 58 have laws regulating childcare measures, but none in sub-Saharan Africa or South Asia. Preferential tax regimes are also limited in most developing economies. The public expenditure on childcare also varies across the world; while the OECD countries spend on average over 0.8% of GDP, which goes up to more than 1.0% in France and the Nordic countries, and 1.6% in Sweden and 1.7% in Iceland. However, the World Bank’s launch of the childcare incentive fund has brought it up on the global policy agenda, and is expected to generate $180 million in new funding in the next five years.

Globally, women generate around $45.8 trillion in annual GDP, and given childcare facilities, it could add $3 trillion every year. An expanded childcare workforce to meet the existing needs can also add 43 million jobs annually.

As IMF policy analysts caution that an uneven playing field between women and men bears a huge economic cost, now, when the post-pandemic world steers to economic recovery, it must focus on young family builders, women in particular, reduce their care giving responsibilities by provisioning quality, affordable and need-based childcare facilities. In India, spending on a child’s early years will also help capitalise its huge demographic dividend for a stronger economy.

Archana Datta is a former director general, Doordarshan and All India Radio; and former press secretary to the President of India.

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