FISCAL REVIEW 2011 - Unpaid family work: making it count

'If you cannot measure it, you cannot manage it', goes an old saying which seems to fully apply to unpaid work. If we cannot clearly conceptualise, measure and analyse unpaid labour, we cannot gauge its impact on economic growth and hence on poverty reduction.
Despite recognising the importance of unpaid work, there is still a lack of consensus on measuring and valuing it. It is probably the diverse nature of activities that are categorised under this heading that makes the task a tough one.
These difficulties notwithstanding, the fact remains that unpaid family work accounts for a major share in the employed work force and economic output -- not only in developing countries but also in the developed ones -- and has important labour market implications.
If we use the term 'unpaid work', then by implication it can be replaced by paid services and therefore a monetary value can be imputed to it like any other 'work' -- an idea that was formalised as the "Third Person Criterion" by Marga Bruyn-Hundt, the famed Dutch economist.
This criterion makes clear that there is nothing inherent in work itself to make any work unpaid, as all work can be done by a third person for money. For a long time, however, economists equated work with paid employment, an idea that began to be questioned by the sixties. The skewed distribution of work, paid and unpaid, between the two sexes was the major reason behind the spotlight treatment it received as women took a much larger burden of unpaid work than men.
A 1995, a UNDP study noted, "Most of women's work remains unpaid, unrecognised and undervalued," and it was in this backdrop that the United Nations System of National Accounts (SNA) was formulated to provide a system capable of international comparisons of important economic activities, including unpaid work. The SNA includes all unpaid work that is within the economic realm, thus considering those involved in such work as 'employed' is technically correct.
Unpaid work is a global phenomenon, with the level varying with development and the social milieu. With increasing development level, there is a visible increase in formal sector employment, which, in turn, lowers vulnerable employment comprising primarily of unpaid workers (see table).
COMPARATIVE EMPLOYMENT STRUCTURE
The asymmetric distribution of unpaid work between men and women globally is linked to sex-segregated labour market, also reflected in the table. It also shows that females fare better in highly developed countries which, characterised by higher formal employment, have a higher female-to-male ratio for formal employment and a lower ratio for vulnerable employment.
The impact of the socio-cultural environment on unpaid work is also quite visible. Turkey and Iran, with their comparatively conservative settings, albeit higher development level, have females in a disadvantageous position. Most countries in South Asia, with their medium to low development level and conservative societies, show a labour market with a clear male advantage with females having a much higher share in vulnerable employment.
Looking at the local context we see that in Pakistan, the proportion of employed population working unpaid has increased over the years, increasing from 21 percent in 1999-2000 to 29 percent in 2009-2010 (see graph). The striking feature of this trend, however, is a much rapid increase of unpaid labour among women (from 50% to 66%) as compared to men (from 17% to 19%) over these years. This conforms to the global pattern of a higher female rate of unpaid labour that led to the term sex-gender system in the labour market.
A further insight into the issue tells us that rural workers have double the rate of unpaid employment than that of their urban counterparts and, not surprisingly, we see the agricultural sector employing a major chunk of these workers in the country. Unpaid employment is argued by some as a means for obscuring the unemployment rate, and, if we look at the graph, the trends seem to support this argument, where, with decreasing unemployment rate, the rate of unpaid work, especially for women, appears to be increasing.
Another question raised in Pakistan regarding the authenticity of unemployment rate is when analysts relate it to the country's GDP growth rate, observing that in several surveys the two rates have shown a negative relationship, which, according to them, is not logical. Data inadequacies, notwithstanding, there can be several reasons for such perceived contradictions.
The latter could be a typical case of job-less growth that has characterised so many developing countries, including Pakistan. Such growth does not lead to job creation, so reducing unemployment is not a possibility. It is not a contradiction but a logical consequence of the inherent nature of growth. Relating Pakistan's declining unemployment rate with the increasing rate of unpaid employment is rather tricky in the absence of any focussed study on the phenomenon. But it would not be wrong to say that the prevalence of unpaid labour in Pakistan is due to many social and economic reasons and that it is not just a category to plug in the missing numbers in the labour force.
Unpaid work is, of course, a reality! Uncertainty over task completion time, working in groups (where some members are paid and some are not as they function as a team) and reciprocal work are some of the factors that can lead to unpaid work. All these factors could be found widespread in the rural areas of Pakistan, so unsurprisingly, the agriculture sector, as mentioned earlier, has the largest share of unpaid workers in Pakistan.
If we look at the age-sex specific unemployment and unpaid employment rates we see a peculiar pattern. Both the rates are highest at the poles, that is the younger and the older population, and for the females. It would not be wrong to categorise them as vulnerable segments of the population and that their high rate for unemployment and unpaid employment indicates this vulnerability.
These segments not only have higher unemployment and unpaid employment rates, but also constitute higher proportions of 'hidden unemployment' and underemployment in Pakistan. They, specifically women, may not actively seek work due to the lack of feasible opportunities and remain out of the labour market. These 'discouraged workers' should ideally be included in the estimation of unemployment to give a more robust measure. Unpaid employment is, thus, a buffer among being employed, unemployed and underemployed.
Despite the socio-economic relevance of unpaid work, it lacks the credit it deserves. There is a need to recognise unpaid work and make it count. Some of the unpaid work is included in the SNA, while some remains excluded due to the production boundary that divides economic work and non-economic work.
Many argue that such work should be included in the Extended System of National Accounts (ESNA) in Pakistan as well. Following the 'Third Party Criterion' would be a convenient and practical choice for this. ESNA could more appropriately mirror the macroeconomic reality, including that of the labour force and the GDP, which in turn can help devise improved policies.
Studies have shown that unpaid work, defined and measured correctly, can account for more than 50 percent of a country's GDP. Measuring and imputing the value of unpaid work is a prerequisite for making it count. There are several methods used for the purpose. The use of Time Use Surveys (TUS), also conducted for the first time, now, in Pakistan by the Ministry of Finance, can be a handy starting point in this regard. Since the TUS measures the time spent by an individual on various activities it can be utilised to classify and quantify the magnitude and value of unpaid work done by a population.
Any of the methods, like the 'opportunity cost method' or the 'market replacement method', could then be used to impute a value for the measured unpaid work. The opportunity cost method values unpaid family work done by an individual at the wage rate that task is entitled to in the labour market. The market replacement method covers the other side of the coin by valuing unpaid work at the price that work could be bought in the labour market.
Using any of these methods, the Labour Force Survey and the TUS could, thus, be harmonised for a better estimation of economic activity. The ultimate aim of this exercise should be to integrate gender perspective and family production in national accounts and decent work policies. The writer is Chief of Research, Demography, and Head, Department of Populations Sciences at Pakistan Institute of Development Economics (PIDE), Islamabad. She can be reached at nayab@pide.org.pk.

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COMPARATIVE EMPLOYMENT STRUCTURE

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Formal employment                              Vulnerable  employment (a)

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                 % of total       Ratio of     % of total        Ratio of

                 employment  female -to-male   employment  female-to-male

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Norway 1               94.3           1.05            5.7            0.42

Australia 1            90.7           1.05            9.3            0.61

Turkey 2               64.6           0.73           35.3            1.61

Iran 2                 56.8           0.72           42.7            1.41

Sri Lanka 3            59.3           0.91           40.7            1.14

Maldives 3             27.2           1.16           50.3            0.69

Pakistan 3             38.2           0.59           61.8            1.29

Bangladesh 4           14.2            0.8             85            1.02

Nepal 4                28.4           0.44           71.6            1.34

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