Why housework should be taken into the accounts

ECONOMIC VIEW

Which of these activities is more like hard work: having a chat over a coffee with a colleague at the office or vacuuming under the bed at home? Another question: which of these activities counts in GDP, the standard measure of the size of the economy? The answers are, respectively, the second and the first.

It is pretty widely accepted that the conventional national accounts are not a comprehensive measure of economic well-being. The greatest advances have been made in taking the environment into account, but the Office for National Statistics is also researching the creation of "household accounts" which will measure unpaid work done in the home and the community.

Until the Industrial Revolution took firm hold, when more and more people switched from home-based work to waged work in factories, censuses classified unpaid work by women in the home as a productive activity. It was not paid but it was still a job. By the end of the 19th century, though, housewives were classed as unproductive dependants. It was not until the politically correct started to speak of them as "homemakers" that the notion that unpaid household work is valuable was revived.

The fact that the ONS has started to draw up household accounts, nearly a century since housework was last seen as valuable, does not mean it has been stormed by dungaree-wearing feminists. An article in the current issue of its Economic Trends explains that proper measurement of time used outside the marketed activities that are included in GDP is essential for many areas of economic policy.

Author Henry Neuburger writes: "How people spend their time is as good a measure of civilisation and social progress as any."

But the purpose of household accounts is more practical. It is impossible to assess the impact of tax and social security policies on decisions to enter the labour force, on childcare choices, on care for the elderly and disabled, without an estimate of the "productive potential" of households. And it is clearly large, as the drawing of women into the paid labour force during the Second World War and packing them back home afterwards demonstrated. Mr Neuburger comments of household accounts: "It is difficult to see how economic policy makers have got by without them."

Consider income tax. Two-earner couples in the UK are taxed as two separate people, although taxed a little less if married. They pay more tax than a couple with only one earner. Fair enough - they have higher money incomes. On the other hand, they also either pay somebody else to do their housework or work after "work" to do it themselves.

Time spent in paid employment is not completely equivalent to time spent in unpaid work, but the income tax system entirely ignores the need for work in the home and whether it is paid for or unpaid.

It is a gap that is becoming more pressing as people switch to more flexible patterns of employment. If the increasing numbers of people working part- time or for short periods of time or telecommuting intersperse their formal work with household responsibilities, volunteering or leisure, the conventional boundary between production included in GDP and other activities will become both harder to measure and decreasingly interesting.

The area where the shortcomings of the existing measurement of the economy has a huge impact on households is childcare and care for other dependants. The tax system takes almost no account of the number of dependants in the household and who does the work of looking after them. Children are either looked after by a parent or other family member staying at home or their parents pay somebody else to do so.

The fact that paid work is considered real work and taxed while unpaid work is not, tilts parents' choices dramatically. Either the family gives up a big chunk of income but does not pay for childcare, or the carer goes "out to work" but spends much of the income on childcare.

The dilemma is even starker for single parents, for whom the decision is weighted even further by the withdrawal of benefits as they start to earn, making the marginal tax rate on earned income prohibitively high.

It is hard to imagine that the tax system would have been constructed in such a welfare-reducing way if there had been an explicit set of accounts measuring the use of household time. It would have indicated the scale of the potential switch into paid work by women and identified the national need for childcare.

With household accounts making the amount of unpaid work in the home explicit it would be possible to design a tax system that would have both supported families better and made individuals' choices more palatable. The tax penalty on marriage for two-earner couples would have been removed long before Nigel Lawson thought of it, and parents would not be penalised for taking paid jobs.

The Economic Trends article points out that the existing national accounts have ignored changes in the quality of working life. Researchers at the University of Essex have confirmed that between 1960 and the mid-1980s the big change in the average person's use of time has been a switch from blue-collar to white-collar, and presumably less unpleasant, work. Similarly, there have been quality improvements in time spent on housework thanks to the spread of labour-saving equipment such as washing machines, and - perhaps more arguably - in leisure-time with televisions and stereos.

Mr Neuburger argues that welfare is increasingly likely to be measured in terms of the quality of people's time. Time will also be the important resource constraint on increased production - as any harassed and over- worked professional will confirm.

In a knowledge-based economy the key resource is not the number of workers as such but their quality, the length of time they spend contributing their brain-power.

Curiously, the computer-based industrial revolution that is taking place now is thus reverting towards the unit of measurement that was commonplace before the first Industrial Revolution.

A classic article by historian EP Thompson describes how the pre-industrial concept of work was replaced by clock-watching in the factories. Before industrialisation, effort was measured by a comparison of how long it took to do something - a few hours was a "sleeping-time" whereas something that could be done swiftly took only a "pissing-time". It was the advent of factories that standardised the unit of work into a fixed shift.

Meanwhile, the official statisticians are hard at work developing the "satellite" household accounts which will, within the next year or two, measure the effort the nation puts into housework. It will give new meaning to those chores to know that cleaning up or changing a nappy contributes as much to the economy as a gossip over the photocopying machine or a drink after work.

Economic Trends, July 96, HMSO pounds 21.