Caring: the informal economy

Written by: Reema Patel on 28 November, 2012
Filed under Economy, Health

There is some feature of an economy that means it regulates the way in which goods and services of value move around a market: are exchanged and traded. This immediately presents us with a challenge. There are services of value that are performed every day – sometimes throughout our lives, for which individuals receive nothing. The primary example of that is something traditionally (but not exclusively) done by women in society; caring.

Some people have challenged the idea that care is something of financial value. It is not suggested in this article that care is exclusively of financial value and does not offer, say, social or personal satisfaction to the caregiver. Indeed, that it does offer non-financial satisfaction is a key factor in what makes care an informal economy; barely recognised, invisible, and rarely financially compensated.

After all, how do we place a monetary value on care? One straightforward answer to this is to look at how much it would cost to provide that care without the informal provider there. The unpaid adult carer contributes an estimated £87bn a year to the British economy. For childcare, that provision can cost upwards of £1800 a month. For adult social care, that provision could cost upwards of £1500 a month and can reach as high as £50-60,000 a year.

There is a narrative (very popular in the Labour Party) which argues that women – particularly those on low incomes, are spending a disproportionate amount of time providing care. It says that this is having a stultifying effect on incentives to access work, jobs, and on incentives to stay in work. The narrative then jumps to the conclusion that therefore, universal childcare must be provided.

As someone who has worked in social care, I am delighted that this narrative and discourse is finally reaching public and political life. It has long been ignored. However, we must return to define what the problem is properly before we construct the solution to it.

Universal childcare, is one solution out of many to a problem which, as yet, has been ill-defined and which reaches across the informal economy not just to the issue of childcare itself. The problem reaches across the question of why it is that British society does not value care – the invisible good and service, at all.

The problem is two-fold.

The first is that caring for a partner, a friend, a parent or a child is not recognised as being of monetary value. This needs to change. This creates an economy where we have a twin-track – where unpaid care is not recompensed financially at all, and where paid care on the other hand is projected to reach unsustainable rates as a consequence of social care regulation and supply-shortage.

The second is the high cost of formal, paid care – whether that is child care, or adult social care. Families on low-to-middle incomes are presented with some difficult choices where there is this twin-track and where those families cannot afford the cost of taking the higher, more expensive road.

Once we recognise that the real problem is two-fold, we can get on with constructing a nuanced solution that is tailored to finding a sustainable cost to care, and tailored to meeting the needs of some very diverse families who have very different attitudes to the care/work balance.

It is increasingly apparent that we need a much more forward looking and flexible care system – where a combination of paid and ‘unpaid’ care might be provided, subsidised by the state, or recompensed in voucher or in trust form by the state for the future of those families’ children or to enable carers to return to work quickly. This care system would recognise both the financial and the non-financial value that care contributes to the British economy.

The real problem is this twin-track which is having the effect of distorting prices and value in the care market. Paid care costs too much, and unpaid care costs nothing at all. Before jumping to an assumption as to what the solution might be, we must try to design a welfare state that is both able to recognise that unpaid care plays a valid and an important role in the British economy whilst controlling the spiralling cost of paid care.