The 2026 State of the Union set out an ambitious agenda for Europe in response to rapid AI development, demographic change and climate disruption, alongside fiscal pressures and the need to strengthen European competitiveness while protecting its social model. Delivering on these priorities requires understanding what is happening to Europe’s productive capacity. But these structural transitions share an important and largely overlooked economic consequence: they can shift productive activity across the boundary between market and non-market production.

Europe’s national accounts provide an indispensable measure of market production. But they provide much less visibility over productive activity outside the market, including unpaid care of children and older or disabled people, volunteering, civic participation, informal mentoring and skills transfer, contributions to open knowledge, ecological restoration and building community infrastructure.

Social production is an established macroeconomic measure of the monetary value of these unpaid contributions. It makes visible a productive capacity that sustains families and communities, supports formal systems, contributes to resilience and underpins the market economy itself.

Why social production is important now

Europe needs to understand whether this structural transition is expanding productive capacity overall, redistributing it between market and non-market activity or eroding it.

Consider AI. The State of the Union calls for AI to move “from the screen to the real economy and society” and to create greater value while preserving human agency. If AI enables the same market output to be produced with fewer hours of paid labour, what happens to the time released?

It might support volunteering, care, education, mentoring, community participation or other socially productive activity. Alternatively, technological displacement could contribute to unemployment, inactivity and depleted social participation. These represent very different trajectories for Europe’s productive capacity, resilience and social model.

Yet conventional economic measures provide only partial visibility over that distinction.

The same issue arises with demographic change. Older people can simultaneously draw on health, pension and care systems while providing care, volunteering, mentoring and civic contribution themselves. Treating ageing principally through labour-force participation and fiscal dependency therefore provides an incomplete picture of productive contribution across the life course.

And it arises again with climate resilience. The “whole of society” preparedness envisaged in the State of the Union depends not only on physical infrastructure and formal emergency services, but also on the capacity of people and communities to care, volunteer, share knowledge, respond locally and absorb shocks.

A practical measurement response

The European Union cannot fully manage structural transition while a critical part of its productive capacity remains invisible to economic policy. To bring this part of productive capacity into economic policy, Europe needs measurement infrastructure for social production alongside the core national accounts. At national level, social production satellite accounts provide one route; the same framework can also support analysis across populations and places. This would give EU member states consistent visibility over the scale, value and distribution of non-market productive activity, creating visibility on both sides of the production boundary.

This would strengthen the evidence available to the European Union in five key areas:

• AI and structural change: Track how AI and other structural changes alter the allocation of human time between paid work, non-market productive activity and inactivity, providing an evidence base for labour-market, skills and participation policies that seek to preserve or expand total productive capacity.
• Demographic contribution: Reveal productive contribution across the life course as well as dependency, allowing healthy longevity, carer support and participation policies to sustain productive contribution as populations age.
• Care and community capacity: Incorporate the whole-of-community social production of care into service planning and fiscal analysis, enabling investment in the social infrastructure that sustains distributed care capacity and reduces pressure on formal systems, with the European Care Deal providing one immediate policy application.
• Distribution and place: Map how social production and its enabling conditions are distributed across populations and territories, allowing place-based social infrastructure investment to be directed to areas of depletion and its effect on productive capacity to be evaluated.
• Systemic resilience: Identify where communities have strong or weak capacity to mobilise and absorb shocks, including across the 100 vulnerable territories identified through the new climate resilience framework, allowing resilience and preparedness investment to be targeted before crises occur and community capacity to be incorporated into surge planning.

From research to statistical practice

The approach is already moving from research to statistical implementation. Research-based estimates have demonstrated feasibility in several countries, and an MOU is now in place between the Swiss Federal Statistical Office, the University of Zurich’s Healthy Longevity Center and the University of Sydney’s Mental Wealth Initiative to establish the world’s first Social Production Satellite Account for Switzerland. This work will be aligned with national accounting conventions and the System of National Accounts.

Bringing social production into the economic policy frame would give Europe a stronger basis for delivering the priorities set out in the 2026 State of the Union. It would show how AI, demographic change and climate disruption are reshaping the use of human time across market and non-market production. That visibility would help Europe shape its structural transition in ways that strengthen productive capacity, resilience and shared prosperity.

Jo-An Occhipinti and Ante Prodan are researchers working on the measurement of social production at the University of Sydney. Paweł Świeboda and Elizabeth Kuiper are, respectively, Senior Visiting Fellow and Associate Director at the European Policy Centre.

The Statistical Manual for Social Production is available on request from: jo-an.occhipinti@sydney.edu.au

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