In today’s Finshots, we’re breaking down how India’s care economy could be the game-changer for getting more women into the workforce.

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The Story

You’ve seen it – nurses tending to the elderly, nannies watching over toddlers, and domestic helpers managing the daily grind of household chores. These roles, which are paid and recognized, form the visible side of what’s known as the “care economy”.

But there’s another side to this economy that often flies under the radar: unpaid care work. This includes everything from cooking and cleaning to care of family members— crucial labour that keeps families and communities functioning but doesn’t show up in the formal economy.

So, why are we talking about this today? Because a recent report highlights how investing in and formalizing India’s care economy could do wonders for women’s participation in the workforce.

But how exactly would that work? And to answer that, it’s important to first understand why women’s involvement in the economic workforce is critical.

The World Economic Forum (WEF) states that closing the gender gap in the workforce could boost a country’s gross domestic product (GDP) by up to 35%. And for a country like India, where the female labour force participation rate (FLFPR) is far below the global average, this is a huge deal. In simple terms, FLFPR is the percentage of women aged 15-59 who earn wages by working outside their households. And right now, only about a third of Indian women are part of the workforce—compared to the global average of 47.8%.

For a country with India’s demographic and economic ambitions, that’s a gap worth closing, no? So how do we bridge this gap?

This is where the care economy comes into play. It could be the key to closing the gender gap and increasing the FLFPR. In economic terms, "care economy" might sound niche, but it covers both paid and unpaid care work— from professional caregiving to the household tasks and the help in local businesses that keep things running.

But all of that work doesn’t get accounted for. Because although the FLFPR in India has increased from 23.3% in 2017-18 to 37% in 2022-23, a whopping 37.5% of this total share is “unpaid help in household enterprises” - which is simply the rate of women who are not paid for the work they do. And that doesn’t even include the domestic work.

On average, Indian women spend 5.6 hours a day on unpaid care work, while men chip in just 30 minutes. This ‘time poverty’ leaves many women with little energy or opportunity to pursue paid employment. And that explains the low labour force participation rate for women in India.

If we put a monetary value on this unpaid care work, it would account for about 15% to 17% of India’s GDP. But since it happens outside the formal economy, it often goes unnoticed and unmeasured.

But here’s where things get interesting. Looking ahead, by 2050, nearly 350 million people in India will be over the age of 60, and millions of children will still need care. This demographic shift will shoot up the demand for childcare, eldercare, and other care services. And that’s where the care economy could make a massive impact.

According to the International Labour Organisation (ILO), with the right public investment, India’s care economy is a treasure trove waiting to be unlocked, and the nation could create 11 million new jobs by 2030. And nearly 70% of these jobs could likely go to women! And this isn’t just a pipe dream. Scandinavian countries have already shown us what’s possible when you invest in the care economy.

Take Finland, for example. Most women there do paid work, but the government understands the challenge of balancing a job and family. So, families with preschool children have the option to receive financial support for raising their kids at home, and there’s also paid paternity leave to encourage dads to take on caregiving duties. And Finland doesn’t stop at kids - they also support people who care for their elderly or disabled relatives with a monthly stipend. Other Scandinavian countries offer similar programs, proving everyone wins when you formalise and invest in care.

Now, we get it—replicating this kind of support in India is no small feat, given our vast population, wealth imbalances, and other factors at play. But let’s take a closer look at what’s already happening in India’s care industry.

India’s public spending on the care economy is currently less than 1% of its GDP. Increasing this could bridge gender gaps and unlock a new economic sector, creating more jobs in care services.

The Federation of Indian Chambers of Commerce and Industry Ladies Organisation (FICCI FLO) is already pushing for this. They’ve got a plan covering everything from better leave policies to subsidies for caregivers. They’re talking about market-based financing for parental leave, gender-neutral leave options, flexible work setups, and more investment in care infrastructure, like Public-Private Partnerships (PPPs).

But it’s not just about money. India also needs to invest in the people doing the work. Formalizing care jobs and providing skill training could lift millions of women out of low-paying, informal work and improve the quality of care services across the board.

And it’s not just the government that needs to step up - businesses can play a role, too. In Vietnam, for example, a footwear company reduced employee turnover and saved $537,000 annually by setting up an onsite kindergarten.

And we’ve got success stories in India too. The Self-Employed Women’s Association (SEWA) has been running childcare services for 2.1 million informal workers across 18 states. Parents cover just 10-15% of the costs, with the rest coming from private donors, SEWA ventures, and government funding. It’s a shining example of how community-driven support can make a huge difference for working mothers.

So, can the care economy boost workforce participation in India? Well, on the face of it, yes. With the right investments and policies, India could create millions of jobs, close gender gaps, and boost economic growth.

The question is, are we ready to seize this opportunity?

Until then…

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