Two overlooked ways to boost economy

Enhanced investment in care industries like education and health will simultaneously help women and the economy, Associate Professor Elizabeth Hill finds.

A new analysis has revealed two policy levers that could be pulled to aid Australia’s flailing economy: investment in social infrastructure such as education, health and care, and greater subsidies for early childhood education and care. If implemented, these policies would boost employment and improve gender inequalities in the labour market.

Undertaken by Associate Professor Elizabeth Hill from the University of Sydney’s Department of Political Economy, the analysis notes that women have been disproportionately economically affected by the pandemic, as they are over-represented in lower-paid, insecure and casual jobs.

“Women’s employment has been hardest hit, contracting by 7.4 percent between February and May 2020, compared with 5.6 percent for men. This equates to 457,000 jobs lost by women,” Associate Professor Hill said.

“We expect this pattern to deepen amid the prolonged economic downturn.

“Implementing policies that address circumstances predominantly faced by women will therefore benefit the economy at large.”

As part of the analysis, published by the Committee for Economic Development of Australia (CEDA), Associate Professor Hill proposes two strategies for economic recovery that reflect the contemporary structure of the economy; generate maximum employment outcomes per investment dollar, and include women.

Nearly five care profession employees created for every construction worker

While economic stimulus has traditionally focused on large-scale physical infrastructure projects (which largely employ men), new research shows that there are more employment-intensive and gender equitable forms of stimulus. For example, a study of seven OECD countries shows that public investment equal to 1 percent of GDP in labour intensive care industries generates more total employment than investment in construction. If applied to the Australian market, it is estimated that this employment ratio would be nearly five to one.

“This is not to suggest that stimulus should not be made in construction; only that government should take a more balanced approach to fiscal policy,” Associate Professor Hill said.

More investment in early childhood education and care a ‘triple win’

“Affordable early childhood education and care (ECEC) is critical for the economy at all times, but especially now. This was demonstrated by the government’s free childcare package – introduced in April, but now prematurely ended,” Associate Professor Hill said.

“There is particular concern that where the out-of-pocket cost of ECEC for families facing unemployment or significant economic insecurity remains high, it will be women who forgo employment and undertake child and other care duties.”

“Results from initial surveys by the sector confirm this possibility and suggest current ECEC policy will not support a dynamic and gender inclusive economic recovery.”

Associate Professor Hill argues that greater investment in ECEC is a “triple-win” strategy that will:

  • generate billions of dollars in national wealth and boost GDP while supporting women’s employment;
  • increase demand for the sector’s services, creating more jobs; and
  • allow for universal access, promoting all children’s education, wellbeing and life chances.

Where to from here

“These strategies do not stand alone,” Associate Professor Hill said.

“They must be supported by two further measures: women’s inclusion in recovery planning leadership, and gendered employment analyses of all recovery policy options, including the impact of policy on unpaid work.”

“Unpaid work must be included given its massive contribution to economic growth and productivity. Failure to do so will distort policy making.”

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