Description and meaning of the component

Household work is indeed a part of a country’s economic value creation (keyword “care economy”). However, in GDP labor is solely captured if it takes the form of paid work because only then it has a market price and is therefore part of the “formal market economy”. The separation is based on a normative decision in the course of standardization of national accounts.

Not covering household activities – mostly undertaken by women – leads to a systematic undervaluation of such work in national accounting.  Therefore, this aspect of societal welfare is positively included in the calculation of the National Welfare Index.


Description of Indicator trends

The development of household work between 1991 and 2014 shows a decline of 88 billion euro (12%) from 725 billion to 637 billion euro.  This reduction was caused by a reduction of time spent for household production, which was identified in the time-budget surveys of 1991/92, 2001/02 and 2012/13. According to these studies the time invested in household work has decreased by 15% between 1992 and 2013 (32 minutes per day, from 215 minutes to 183 minutes per day).

One possible explanation would be a shift from former unpaid work to work on a formal market (thus paid work). One example would be the hiring of a domestic help instead of own house work or to employ craftsmen instead of repairing things or renovation the house oneself.

GDP regards such changes only from one perspective: the additional paid work (of the domestic help as well as the additional formal work time of the person relieved from house work). This positively adds to GDP. The other side, the decline of household production, is not considered in GDP.

Increases in household production are generally considered as welfare enhancing.  However, as with every production activity there could also be a “too much” of such work. The question whether to limit consumption and production levels beyond which a positive assessment of additional growth seems at least questionable and requires further debate and research, although this debate is going one now for quite a long period of time.