June 7, 2017    8 minute read

Indian Women: An Untapped Source of Economic Growth

Achieving Equality    June 7, 2017    8 minute read

Indian Women: An Untapped Source of Economic Growth

The first quarter of 2017 has seen India’s GDP figures take a tumble, marking an end to India’s status as the world’s fastest-growing major economy. Many have been quick to pin the blame on Narendra Modi’s demonetisation experiment, but a recent report published by the World Bank has a more interesting take. According to the report, India could achieve double-digit growth if female participation in the country’s workforce grew to the rate of Bangladesh, Indonesia or even Nepal.

The Female Workforce

Three out of every five prime working age Indian women are not economically active and, to make matters worse, India’s female labour participation rate (LFPR) has been on the decline. To put this in perspective, only a few countries, namely Afghanistan, Pakistan and Saudi Arabia rank lower than India in terms of  LFPR. For a country which prides itself on its recent strides in development, it must be somewhat demoralising to be compared to the war-torn and autocratic.

Working, and the control of assets it fosters can be revolutionary for the life of an Indian woman. Research shows how it is associated with greater decision-making power within their households, enabling them to choose to marry later, bear children later, ensure that their own children stay in school for longer and being less likely to suffer domestic abuse.

India is now in the phase of a ‘demographic dividend’, where the share of working-age people is particularly high, and therefore narrowing the LFPR could propel per capita growth. But the current female exclusion means the pool of talent is becoming shallower and labour shortages will soon be apparent in key sectors of the economy, hurting growth and efficiency. Therefore, a greater female presence in the workplace not only benefits India’s women, but also their men, children and society as a whole.

To understand how India’s LFPR can be improved, one must first appreciate why it is currently so low, and on the decline. Three main explanations have emerged: a larger share of young women in school, urbanisation, and the persistence of India’s traditional gender norms.

Higher Education

30% of the decline in the LFPR is due to more young women staying in school for longer. At first glance, this may seem to be good news, as college-educated women have a higher propensity to work and could enhance India’s human capital. However, this is not entirely the case.

Higher education levels may improve employment prospects, but simultaneously they tend to improve marriage prospects, and as these two options are often considered as mutually exclusive for Indian girls, the number of educated women entering the workplace isn’t rising.

On top of this, the LFPR, even for college graduates in India is only 40% compared to 59% in Bangladesh and over 75% of women in Indonesia and Brazil, suggesting barriers are imposed on India’s highly educated female population from entering the workforce. So, the expected linear relationship between increasing education and increasing female labour participation is not materialising.

Urbanisation

Likewise, urbanisation has played a pivotal role in the decline of the LFPR. As of 2011-12, 36% of women in rural areas, but only 20% of working age women in urban areas, were in the labour force, and as rural areas become less agricultural, the female LFPR is following a downward trend.

Urbanisation has brought with it a rise in household income, as men are finding jobs in industry or services. Consequently, women no longer need to work out of necessity and instead see the household as their rightful domain. Alongside this, women are leaving the labour force to concentrate on their care duties, especially since urbanisation has cultivated the growth of nuclear families, leaving them without family childcare support.

The decline in LFPR is also attributed to the fact that declining agricultural employment has left a gap in employment opportunities for women as non-agricultural jobs have not emerged at the required pace, especially since these urban jobs are still viewed as inherently suited for men.

Gender Norms

However, the greatest stumbling block is the persistence of outdated gender norms in India. Many Indian families still uphold the view that a life of domesticity is the most ‘pure’ route for their daughters, and is a route in which work does not hold priority.

This attitude towards the role of women ensures that if they do enter the labour force, they often end up in lower paid and less responsible positions than their abilities reflect, dissuading more and more girls from choosing to work.

A Tough Task

The picture may seem daunting. But even seemingly immutable norms can erode once labour markets adapt to value women’s labour. To understand how this can be done, a World Bank team conducted interviews with more than 400 women in two Indian cities, from different socio-economic backgrounds and education levels.

In line with their strong social norms, the women all wanted jobs that were well-paying, close to their homes, and with flexible hours. In addition, childcare was noted as a significant constraint. The dichotomy for mothers is that the regular, salaried jobs, which could provide stability and a sufficient income to afford some level of household help and childcare, are generally dominated by men and inaccessible to women due to unjust labour laws.

The government must amend labour laws regarding maternity benefits and the flexibility of regular wage jobs and the value of women’s work to draw more women into the labour force. Some of the women’s other concerns were particularly poignant.

Many of those who were interviewed wanted a job which was safe. This fear was driven by actual incidents of crime against women they knew, as well as the powerful imagery of violence against women presented in popular media. These concerns emphasise the areas which governments should focus on to ensure jobs are ‘suitable’ for women.

Other Variables

Aside from the nature of jobs, there are other variables affecting female labour participation rates. Limited mobility is a key challenge many women confront when they set out to find a job. Nationally, the IHDS survey shows that 51.7% of women think it is normal for a husband to beat his wife if she leaves the home without telling him and even when a woman does have the freedom to leave the home, distance is a constraint.

In a sample of “Skill India” participants, 62% of unemployed women reported that they were willing to migrate for work, but 70% said they would feel unsafe working away from home.

The answer to this issue is not just superior infrastructure but also projects like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which offers low-skilled, equal-pay community-based work for both men and women. It has been effective in changing attitudes to allow more rural women to step out of their homes.

MGNERA has also, often for the first time, given women control over the money they earn, by proving them with their own bank account and having their payments directly transferred there. It is schemes like this which unlock the potential of Indian women.

Bangladesh’s Example

The World Bank report urged India to follow the lead of its neighbour, Bangladesh, who has successfully raised its LFPR through the explosive growth of its garment industry, in which 80% of workers are women.

Indeed, India cannot and should not rely on a single low-paid sector, as Bangladesh has done, as this flooded Bangladeshi women into the informal sector or into unpaid work. However, India does needs policies that will create a rapid and widespread demand for women’s work like what happened in Bangladesh, and to direct its attempts on certain sectors could prove effective.

This can already be seen through the sharp expansion of female employment within professional sectors, like the financial sector. Although only one in ten Indian companies are led by women, more than half are in the financial sector. Quotas could prove to be imperative.

The success of quotas in India was shown through their successful deployment in local elections as seats with quotas had more women run for office, and more women win, even after the quotas were no longer in place. Quotas, in conjunction with job training and education schemes, can enable India to harness their young, educated female population within the workplace.

An Untapped Resource

Prime Minister Modi should not be disheartened by India’s recent GDP figures, as India’s has a large untapped source of economic growth: its women. His government should utilise policies, such as quotas and employment schemes, to make sure every Indian girl can undertake rewarding work, which is valued as equal to that of her male counterpart.

The greatest burden falls on the Indian population. It is for Indian mothers and fathers to no longer see their daughters as dainty soon-to-be wives, but as individuals who can lift their country into further economic prosperity.

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