Encouraging women’s participation in the workforce could mean huge economic benefits for India and the world
Phalasha Nagpal | July 10, 2018
The world over, the labour force has proportionately far more men than women. What does this mean in real, quantifiable terms? Here’s one way of looking at it that is quite astounding: according to the McKinsey Global Institute report for 2015, gender parity in labour force participation (LFP) alone could yield global growth of $12 trillion, or about 11 percent of the world’s estimated GDP in 2025. In India, the world’s second most populous nation, female LFP is around 27 percent, and female unemployment as a percentage of the female labour force is 3.8 percent, according to a World Bank report of 2017.
It would be naive to exclude women’s contribution as strong drivers of economic and social growth. The World Economic Forum’s Global Gender Gap Report for 2014 establishes a positive correlation between gender parity and human development indicators. India, which is striving to achieve ambitious growth targets, must embrace significant economic, social and political change to improve female LFP.
India is experiencing a youth bulge, with over 18 million youth entering the working force population in 2017, according to the International Labour Organisation. In order to reap the demographic dividend, and to sustain the growth momentum, women must be brought on board. Traditionally, the reason for low LFP in India are social. They are seen as home-makers, birth-givers and largely absorbed in work not accounted for in our GDP. While these reasons may seem the prima facie causes of low female LFP, the problem has a different facet as well.
All these factors have created a puzzling education-unemployment paradox in India. One would expect higher female literacy rates to lead to higher employment, but that is not happening. India is moving up in the educational attainment index but falling down in ranks in the female LFP rates. India has achieved higher enrolment rates and expanded the secondary education intake for females The National Family Health Survey 4 (NFHS) 2015-16 shows an improvement in total female literacy to 68.4 percent from 55.1 percent in NFHS 3 (2005-06). Despite the improvement in education and a fall in dropout rates, women’s participation has been witnessing a decline since the mid-2000s, as revealed by the graph.
What explains this education-unemployment paradox? First, in rural India, agriculture employs a majority of women. Dwindling agricultural incomes, mechanisation, and access to better education has kept women out of labour force and forced them to look for better work opportunities in the manufacturing and service sectors. However, with India’s manufacturing sector operating below its potential, there is a dearth of commensurate job opportunities. Secondly, inadequate transportation system, low rate of urbanisation and problems in housing and child care infrastructure further creates impediments of mobility, connectivity and safety. Consequently, rural women often tend to get absorbed in the informal sector with high level of gender disparity in pay. Besides, the education delays a women’s decision to join the work force.
Apart from GDP losses, the paradox creates greater repercussions for the economy. The hefty investments in encouraging women education and skill development, greater inclusion would be all for nothing if they are not productively employed and economically empowered. In the long run, this growing population of unemployed women would mean socially and economically insecure and dependable people as they enter old age.
How to resolve the paradox
An important aspect of female LFP is promoting financial independence. India still continues to subscribe to the norm that the man is the bread earner of the family and women are expected to stay at home. As household incomes rise, women are often told to work at home, leading to declining female LFP. Thus, there needs to be a major shift in mindset. There’s a need to encourage women, especially in the rural areas, to form self-help groups, directing funds into small businesses and creating self-employment opportunities. The power of technology can play a vital role in achieving this.
At the ground level, in order to have women join the workforce calls for a significant change in mindset. While the flagship Beti Bachao, Beti Padhao scheme by the current government has helped in transforming the perception of people towards the girl child, there is a long way to go. Even today, girls are raised believing and witnessing men in their families and around them assuming more powerful, leadership roles and being the primary bread-earners. In fact, the representation of women in leadership roles is highly disproportionate given the female population. For example, India is 148th when it comes to female representation in the parliament and the executive, with women holding just around 11 percent of the seats in Lok Sabha and Rajya Sabha. Corresponding figures for women occupying leadership positions in the corporate sector, judiciary and entrepreneurial space are equally dismal.
To bring about a change in mindset, it might help to highlight how the freedom movement and post-independence social struggles mobilised poor and uneducated women in large numbers to have their voices heard and bring about positive change. Against that, it is quite discouraging to see only a few women in leadership positions in politics. Society must recognise the contribution of women in the aforementioned struggles. Young girls should start looking at these women as role models and mentors and develop the conviction that they too are equal to men and can assume leadership roles. This requires targeted investments in leadership programmes and workshops for young girls in schools, colleges and universities, complementing their educational qualifications and making them more employable. Governmental efforts like Support to Training and Employment for Women and Mahila Shakti Kendra are path-breaking initiatives in this direction.
As we slowly usher in a new decade, policymakers must recognise these gender-specific constraints and the consequent macroeconomic implications that the Indian economy has been experiencing. Structural reforms and measures are required to bring radical change and achieve an inclusive and sustainable growth process. Primarily, the government must focus on creating employment opportunities in the manufacturing and service sectors for women. In order to facilitate this, strengthening infrastructure development, particularly in terms of creating a system of safe, reliable and convenient public transport, housing and electricity would be essential. Historically, economies like China, with a huge demographic dividend, have boosted employment by strongly propelling its manufacturing sector, through multiplier effect. Such efforts may be supplemented with skill development and training programmes for women, more lucrative tax incentives, access to soft loans, high-return saving schemes, and impetus to ensure greater ease of doing business.
Social implications of gender disparity form only the tip of the iceberg, low female LFP also translates as tremendous GDP losses. Next time one hears the term gender disparity, one should realise that majority of around half of our total work force stands unemployed and wasted. So, having our better halves not just educated, but also productively employed is the boost India needs to shine in the global environment.
Nagpal is a Young Professional with the Economic Advisory Council to the Prime Minister. The views expressed here are personal.
(The article appears in the July 15, 2018 issue)
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