Overview

• Research conducted in Australia and other countries shows that most of the care provided to elders and disabled people is informal and unpaid.
• The majority of informal carers are of working age, but their labour force participation levels are considerably lower than those of non-carers.
• Despite this, the majority of carers are also in some form of paid employment. Among this group, relatively high levels of absenteeism, turnover, unplanned absence and other factors relating to their caring responsibilities are common.
• Although informal caring generates considerable economic and social value to society, the main costs are borne by the labour market and individual employers. This paper documents the quantitative and qualitative research evidence supporting this argument.

The Informal Carer Population and the Value of Informal Care

• The Legislated Review of Aged Care 2017 (Australian Government Department of Health) reports that informal carers and personal care workers account for almost 90% of all individuals providing care for the aged.
• The latest ABS Survey of Disability, Ageing and Carers (2015) found that 1 in 9 people in Australia, or 2.7 million individuals, were informal carers. Overall, there were an estimated 856 primary carers, or 3.7% of the population. More than half of all informal carers (56%) were women.
• Around 1.9 billion hours of unpaid care were provided in Australia in 2015, with the estimated cost of replacing this with formal care amounting to an estimated $60.3 billion.

Costs to the Labour Market

• Most informal carers are of working age: the ABS survey (2015) found that just 20% were aged 65 or over and 10% were aged under 25. The average age of a primary carer was reported to be 55.
• However, workforce participation rates are significantly lower for carers compared with non-carers, indicating that the labour market is being deprived of potentially valuable skills and experience.
• Data from the Disability, Ageing and Carers Survey (ABS, 2015) revealed that, among people aged 15 to 64 years, the labour force participation rate for primary carers was just 56.3%, and for other carers 77.2%, compared with a participation rate of 80.3% for non–carers.

There are also high levels of under-employment among informal carers:

• An earlier ABS survey (2003) found that, of those carers who are employed, a higher proportion were in part-time employment compared with non-carers.
• A Carers NSW 2016 survey of 41 informal carers aged 16-25 found that 19 were not employed, and most of those in employment were working only on a casual or part-time basis, or in jobs for which they were over-qualified.

The evidence from Australia and other countries (e.g. Kotsadam, 2011; Lee, Tang, Kim, & Albert, 2015) shows that many informal carers leave the labour force or reduce their working hours after taking on their caring responsibilities. This is often a choice imposed on them by circumstances rather than a preference. Many carers acknowledge the negative impacts of their caregiving responsibilities on their productive working lives.

• Data from the 2003 Survey of Disability, Ageing and Carers (ABS) showed that 23% of the sample of 178,700 employed primary carers had reduced their working hours, typically by 10 or more per week.
• The same survey found that 48,700 non-employed primary carers had left their jobs in order to take on or increase their care-giving responsibilities.
• Gray et al. (2008) examined data from the 2006 Families Caring for Persons with a Disability Survey and found that more than half of carers who are not in paid employment would ideally like to be in work.
• Of the 383 employed carers identified in the 2007 Taskforce on Care Costs survey, more than a third (34%) expressed the view that their careers had suffered due to the competing demands of caring and working, and more than two thirds (67%) said they would refuse a job or promotion which hindered them from carrying out their caring responsibilities.

Estimates of the productivity losses arising from reduced workforce participation among informal carers in Australia could not be located. However, research conducted in other developed countries indicates that these are likely to be significant. For example:

• A 2006 U.S. study calculated the annual losses to business that are due to changed working arrangements for the purpose of elder care. These were estimated as between $17.1 billion and $33.6 billion depending on the level of care being provided.

Costs to Employers

Individual employers also incur a wide range of costs relating to the caring responsibilities of their employees and the impacts of these on attendance, turnover, productivity and other factors.

Employee Turnover

As noted above, many informal carers leave their jobs or reduce their working hours to cope with their caring responsibilities. The high turnover among carers results in a loss of valuable skills and expertise from their organizations, which must also bear the costs of recruitment and training of replacement employees.

• Employer research by Carers UK showed that the average loss to an organization of a single employee is usually at least equivalent to a year’s salary.

Absenteeism

Relatively high rates of absence among carers are not just due to the needs of the person they are caring for: many carers suffer adverse effects on their own health due to the pressures of their competing roles.

• A 2013 Norwegian study found that employees who care for elderly parents are 6 percentage points more likely than other employees to report poor health, and are more likely to take sickeness absence from work.
• Informal carers often have to take time off work at short notice, to deal with unexpected crisis or emergency situations: when caring for elders, the likelihood of this generally increases rather than decreasing over time.
• The 2003 Survey of Disability, Ageing and Carers revealed that, of the estimated 178,700 primary carers in Australia at that time, roughly 10% (17,000) had had to leave work for at least three months, and 31% (56,000) had to take time off at least once a week because of their role as a carer.
• Using data from a sample of more than 2.5 million full time employed caregivers, U.S. researchers estimated that women who are informal caregivers miss an average of 24.7 working days per year, and male caregivers miss an average of 9 working days per year.

Workday Interruptions/Presenteeism

The research evidence also shows that, even when carers are attending work, their timekeeping, effectiveness or productivity are often negatively impacted by their caregiver responsibilities. “Presenteeism” has been shown in general to have a bigger impact on workplace productivity than absenteeism; studies of caregivers at work support this:

• In a 2010 survey of employed Norwegian caregivers, 16% reported that they often arrive late or leave work early; 13% said they often had to reschedule their working day and 10% reported problems of focus and concentration at work.
• A number of other studies investigating the experiences of informal caregivers have reported that these carers often experience problems of concentration at work.
• Several researchers have examined the experiences of “double-duty caregivers”, or nurses who also provide care to an elder at home. They found evidence that these carers were often fatigued and inattentive at work, likely to make mistakes, and to feel emotionally exhausted.

The Cost of Lost Productivity

• It has been calculated that American businesses lose a total of 2.8 billion working days per year as a result of unplanned for or unexpected events, and that this results in a total cost to the economy of US$74 billion. Of these lost working days, around 20% were estimated to be due to care-giving responsibilities.
• Based on 2012 data, caregiving in Canada reportedly resulted in more than 9.7 million days of absenteeism, a reduction of 4.9 million working hours, and a loss of 559,000 employees from the labour force.

Best Practice Solutions

Research shows that workplace solutions that support the needs of caregiver employees are also beneficial to their employers, enabling them to retain skilled workers and minimize productivity losses.

• Based on a review of the literature, one source lists these types of solutions as “flexible work schedules; paid and unpaid leaves; part-time or reduced hours of work; job sharing; working from home; compressed work weeks; counselling; support groups; workshops and seminars; and resource referral and information services”

• Australian data provides evidence that allowing paid leave for emergency and planned caring responsibilities can help reduce staff turnover and absence.
• Flexible working policies have been recommended by researchers because these recognize the diversity of employee’s circumstances and do not specifically target carers as “problem employees”.
• The European Commission evaluated the economic impact of introducing “carers leave” provisions in EC member states. Two alternative options were identified which were expected to have a neutral impact at company level and a high positive impact on central governments.

Significance

In line with demographic changes taking place in other developed countries, Australian’s population is ageing due to sustained levels of low fertility along with increasing life expectancy. According to projections, one in four Australians (23% to 25%) will be aged 65 or over by 2056, and people aged 85 or over will account for 5% to 7% of the population by that time. In contrast, numbers of young people in the population are steadily declining. The percentage of people aged below 15 is projected to decrease from 19% in 2007 to between 15% and 18% in 2056. This has several important implications with regard to the costs to employers of informal care.

• First, informal care for the elderly will gradually surpass childcare as a workplace issue and productivity cost. As fertility rates remain low and even decline, the demand for childcare will remain steady or decrease over time, while eldercare needs increase.
  • A 2006 Carers UK study estimated that 3 out of every 5 people will be informal carers in future. At the same time, employers and governments will need people to work longer to reduce the burden of supporting an older, non-productive population.
• Second, as fewer numbers of young people join the labour market each year, it is likely to become increasingly difficult to replace employees who leave work or reduce their hours due to informal care responsibilities.
  • A Deloitte Access Economics report (2009) shows that population growth among people aged over 65 will exceed growth in all other age groups by more than three times through to 2020. This will pose an increasing challenge for employers and the Australian labour market, unless older people can be encouraged to continue working beyond retirement age.
• Third, Australia will increasingly need to address the social issue of a rising need for care as the population ages. The relative number of available informal carers will decline over time with the demographic changes, yet without a significant increase in formal care provision there will be an increasing burden on those with caring responsibilities. This will in turn increase the costs to employers and society unless workplace initiatives to support informal carers become widespread.