- The female labor force participation in India has fallen to 26% in 2018 from 36.7% in 2005, amid lack of access to quality education and underlying social, economic barriers limiting the opportunities for women.
- Labor force participation rate (LFPR) is a measure of the number of persons in the labour force per 1,000 persons.
Female LFPR in India
- India’s female Labour Force Participation Rate (LFPR)—the share of working-age women who report either being employed, or being available for work—has fallen to a historic low of 23.3% in 2017-18, meaning that over three out of four women over the age of 15 in India are neither working nor seeking work. (The age of 15 is the cut-off used for global comparisons by the International Labour Organization.) This would imply that they are most likely running the house and taking care of children.
- While the LFPR for women aged 15-29 fell by eight percentage points between 2011-12 and 2017-18 to 16.4%, the LFPR for women fell by at least seven percentage points for every age bracket between 30-50 as well.
- The decline was highest among women aged 35-39 years (LFPR for this age bracket fell 9 percentage points to 33.5%).
- India’s low LFPR was already a matter of concern in 2011-12, and placed India 12th from the bottom globally. The further fall since then comes mainly from rural areas—female LFPR crashed by seven percentage points, while male LFPR remained roughly the same.
- Just nine countries around the world, including Syria and Iraq, now have a fewer proportion of working women than India, new official data confirms. And if Bihar were a country, it would have the lowest share of working women in the world.
Employment nature of Indian women
- Among urban women who do work, domestic cleaning work is the second most common profession after textile-related jobs, the periodic labour force survey (PLFS) data published by the NSSO show.
- The most common jobs for urban women are of garment workers, domestic cleaners and ‘directors and chief executives’. That last one is also the most common job for urban men. Sounds high-skilled and well-paying? Not so much, labor economists find: it might just be a fancy-sounding way of describing women who run their own small enterprises.
- “Such women were mainly engaged within the self-help groups and co-operatives as partners and had thus been recorded as directors or working proprietors, even as their activities, for the most part, remained confined to food processing and garment manufacturing.
- A large proportion of self-employed women workers were also engaged in outsourced manufacturing work, typically characterized by low earnings, long hours of work and lack of any form of social protection.”
- The high-skilled, white collar jobs that young women desire are rare. Instead, domestic work, house cleaning and salespeople dominate the urban sector for women. The only exception is the teaching profession, which makes it to the top 10 most common jobs for women.
- Among those in the workforce, rural women work overwhelmingly in agriculture, which could offer a clue to understanding the falling rates of rural workforce participation. It is likely that non-farm jobs are rare, especially for women.
- It is interesting to note that significant proportion of women usually engaged in domestic duties reported their willingness to accept work if the work was made available at their household premises. Of the total women usually engaged in domestic duties, 34 per cent in rural areas and about 28 per cent in urban areas reported their willingness to accept work and tailoring was the most preferred work in both rural and urban areas.
- Finally, though most women in India work and contribute to the economy in one form or another, much of their work is not documented or accounted for in official statistics, and thus women’s work tends to be under-reported.
Reasons of lower share of working women
- Among women in the prime working ages of 30-50, more than two in three women are not in the workforce, with the majority of them reporting that they are “attending to domestic duties only”.
- Women continue to face many barriers to enter labor market and to access decent work and disproportionately face a range of multiple challenges relating to access to employment, choice of work, working conditions, employment security, wage parity, discrimination, and balancing the competing burdens of work and family responsibilities.
- Among men, caste and religion make no real difference to workforce participation rates. But among women, Muslim women have the lowest LFPR while among Hindu women; forward caste women have the lowest LFPR, implying that social norms and religious conservatism might play a role in women being “allowed” to work.
- The range of challenges for women and girls echoes across Asia and India – lack of education, access to quality education, digital divide, which limits them from gaining employable skill sets and entering the workforce or establishing an enterprise. It further added that a set of underlying social, economic and political barriers limits opportunities for women.
- While some of the fall in women’s workforce participation is explained by higher rates of higher education enrolment, indicating that more young women are in higher education rather than working or looking for jobs. The high-skilled, white collar jobs that young women desire are rare.
- The unadjusted gender wage gap—the gap in the earnings of men and women in regular, salaried jobs, without accounting for differences in hours worked and educational qualifications—was significant. In rural areas, a male salaried employee earned nearly 1.4 to 1.7 times a female salaried employee, while in urban areas, salaried men earned 1.2 to 1.3 times a salaried woman.
- Nonetheless, the nature of economic growth in the country has meant that jobs were not created in large numbers in sectors that could readily absorb women, especially for those in rural areas.
- Despite inadequate job creation, household incomes did raise, which potentially reduced women’s participation, especially in subsidiary activities (“income effect”) due to change in preferences.
Why female labor force participation is important?
- Women make up almost half of the world’s working-age population of nearly 5 billion people. But only about 50 percent of those women participate in the labor force, compared with 80 percent of men.
- Female labor force participation is a driver of growth and therefore, participation rates indicate the potential for a country to grow more rapidly.
- It’s worth considering the reasons women work. Working allows women to have economic independence and freedom. It enables choices and options. At the most basic level, working enables them to fulfill their financial obligations. The traditional breadwinner/caregiver family model has been replaced by the dual income family model, and we have many more single adults in our community than we ever did before.Most families today require both adults in the relationship to work in order to pay the mortgage and other expenses.
- Early IMF studies on the economic impact of gender gaps assumed that men and women were likely to be born with the same potential, but those disparities in access to education, health care, and finance and technology; legal rights; and social and cultural factors prevented women from realizing that potential.
- In turn, these barriers facing women shrank the pool of talent available to employers. The result was lower productivity and lower economic growth. The losses to an economy from economic disempowerment of women were estimated to range from 10 percent of GDP in advanced economies to more than 30 percent in South Asia and in the Middle East and North Africa.
- More recent research suggests that the economic benefits of bringing more women into the labor force exceed previous estimates. This is because women and men may have the same potential, but they bring different skills and ideas—that are economically valuable—to the table.
- Women’s greater caution has benefits: gender-balanced corporate boards improve firm performance, especially in high-tech manufacturing and knowledge-intensive services. Gender diversity on boards of banking supervision agencies is also associated with greater financial stability.
- Similarly, banks with higher shares of women board members have thicker capital buffers, a lower proportion of nonperforming loans, and greater resistance to stress, possibly because having more women in executive positions contributes to diversity and complementarily of thought, leading to better decision-making.
- Drawing on macroeconomic, sectoral, and firm-level data, a recent IMF study suggests that men and women complement each other in the workplace in terms of different skills and perspectives, including different attitudes toward risk and collaboration.
- As a result, increasing women’s employment boosts growth and incomes more than previously estimated, exceeding the improvement that comes simply from adding workers.
- Among countries where gaps in participation rates are the largest, closing them adds 35 percent to GDP, on average. Four-fifths of the gains come from adding workers to the labor force, but fully one-fifth arises from the boost to productivity brought by greater gender diversity.
Closing the Gender Gap
- The need to empower women in India through quality education and re-skilling. The education ecosystem needs to go through a set of system strengthening initiatives, including the introduction of digital and STEM (science, technology, engineering and mathematics) education in schools, which in turn will introduce girls to various career choices.
- In addition, mentoring adolescent girls on vocational training and apprenticeship avenues can build a strong linkage towards considering technology linked training and employment options.
- Comprehensive approaches are needed. Women’s labor force participation and access to decent work are important and necessary elements of an inclusive and sustainable development process.
- Flexibility in work timings and proximity to their households are an important factor for females. A study suggested that ensuring better facilities for the female employees in terms of flexible working hours, transport facility, child-care centers, reduced work load etc., would help them in achieving work and family balance in their lives.
- Combating the long-run decline in female LFPRs requires concerted policy effort. The most obvious policy measures are by making the workspace more inclusive for women, through introducing measures to increase the period of paid maternity leave, strengthening sexual harassment laws, providing for crèches at the workplace, safe transport, etc.
Emerging market and developing economies should :
- Invest in infrastructure. In rural South Africa, for example, electrification increased female labor force participation by 9 percent. In India, building adequate sanitation facilities narrowed gender gaps in education and in female labor force participation. Mexico introduced public buses exclusively for women to ensure that they could travel safely.
- Support female entrepreneurs by increasing their access to finance. Women often face more restrictive collateral requirements, shorter maturity of loans, and higher interest rates than men (see “Banking on the Future of Women” in this issue of F&D). Initiatives such as Malaysia’s Women Entrepreneur Financing Programme and Chile’s simplified deposit accounts have helped close the gender gap in borrowing rates.
- Promote equal rights for women. Measures include addressing laws governing inheritance and property rights. Malawi, Namibia, and Peru revised their legal frameworks to reduce gender discrimination; in the decade that followed, female labor force participation rates increased substantially in all three countries.
- Indian working women are beset by a range of problems, structural and long-term as well as short-term. The reduction in labor force participation by women may be due to social pressures keeping them out of the labor market or because the economy has been unable to generate enough jobs commensurate with rapid economic growth.
- In addition, women are heavily represented in the informal economy where their exposure to risk of exploitation is usually greatest and they have the least formal protection.
- Considering these insights, policy makers in India and throughout the region should take a comprehensive approach to improving labor market outcomes for women through improving access to and relevance of education and training programs, skills development, access to child care, maternity protection, and provision of safe and accessible transport, along with the promotion of a pattern of growth that creates job opportunities.
- Beyond standard lab our force participation rates, policy-makers should be more concerned about whether women are able to access better jobs or start up a business, and take advantage of new labor market opportunities as a country grows.
- A policy framework encouraging and enabling women’s participation should be constructed with active awareness of the “gender-specific” constraints that face most women.
- Gender responsive policies need to be contextually developed. Ultimately, the goal is not merely to increase female labor force participation, but to provide opportunities for decent work that will, in turn, contribute to the economic empowerment of women.