Millennium Post

Key to equitable development

An inclusive and equitable development with gender diversity at the workplace is essential for India to realise its full growth potential.

India has experienced rapid economic growth, institutional reforms, and urbanisation. However, this has not translated into the greater participation of women in the workforce. The female labour force participation rate (LFPR) in India aged 15 and above remains considerably low at around 27.4 per cent and is far behind its neighbours – China, Bangladesh and Nepal.
The contribution of the female workforce in conducting economic activity is vital for attaining an inclusive and sustainable growth path. An estimation by UN Economic and Social Commission for Asia and Pacific (UNESCAP) shows that a 10 per cent increase in the female labour force participation rate in India can increase its growth rate by 0.3 per cent. Many studies have manifested a positive correlation between equal gender representation at the workplace and financial performance of the firm in terms of greater value creation and higher operating margin. A recent study by McKinsey & Company found that companies in the top quartile for gender diversity on their executive teams were 21 per cent more likely to experience above-average profitability. In addition, female employment also improves the standard of living of the household which is the basic unit of the society and the country at large.
Present status
Women comprise almost half of the population of the country (49.6 per cent) and, therefore, it is crucial that the country harnesses the potential of the better-half. The female workforce participation rate in India is one of the lowest in the world, which has declined further in the last fifteen years. Because of low LFPR among women, the share of women's contribution to GDP is only 17 per cent which is much lower than the global average of 37 per cent. The labour force participation rate of women (as per Usual Principal Subsidiary Status) has declined from 42.7 per cent in 2004-05 to 27.4 per cent in 2015-16. The report on Global Gender Gap 2017 by World Economic Forum recorded a fall of 21 places in India's position (ranked 108 out of 140 countries) from the previous year. The sizable gender gap is because of less female participation in the economy and low wages. This is further exacerbated by a poor gender diversity ratio (male to female ratio) of 77:23 in the organised workplace despite very similar employability rates. There are also inter-regional and inter-state variations in the LFPR, for example, the decline in female LFPR is more pronounced in the northern states compared to the states in southern India and is reversed in the Northeast states.
Lower female labour participation
Despite the rising GDP in the country, the workforce participation rate of females has been plummeting. This is indicated by the popular 'U-shaped' female labour force participation function, according to which, the female LFPR first falls and then rises with the economic development, level of education and schooling. To put it in simpler terms, female participation in the labour force is highest in the low-income countries where women are engaged in subsistence activities with low qualifications or skills. The trend declines for the middle-income countries due to the transition from farm to industrial activities. Female workers quit their job due to the rise in job security and wages earned by male counterparts. In high-income countries, due to better schooling and education levels, the female LFPR increases. Based on this hypothesis, one can derive that the female workforce rate is higher for the illiterates and college-going women as is also supported by the NSSO data.
India is going through a similar transitional phase with variability in growth and economic development across states, complemented by the government's intervention which has led to an increase in the enrollment of girls in school and colleges resulting in a decline in LFPR.
However, in India's context, the answer to the falling LFPR is more complex than it seems on the surface. It is not just the transition in income and education level but it is a bias against women in society and at the workplace, both conscious as well as unconscious, that has kept the participation rate from rising. One must not overlook the social and religious stigma that exists in our society contributing to the persistent gender gap. Many families in India are often reluctant to send their girl child to school or allow them to pursue a college degree that results in lower productivity and makes them a poor fit for the job market. There is also a social stigma attached to women's paid work. It is the woman who has to undergo work life changes after marriage and child-rearing. They have no other option but to stay out of the job market during their peak age of productivity due to the existing household dynamics.
In rural India, the movement of production from farm activities to the market has resulted in the dropout of female workers from the workforce as they lack the required skill set. In urban areas, factors like low gender diversity in the public and private organisations across industries, a disparity in wages, skewed representation of women at the top management level and concerns around women's safety at the workplace, have been identified as the drivers of low Female LFPR by many studies.
The way forward
Higher participation of women in economic activities can change the course of India's development path. An inclusive and equitable development with gender diversity at the workplace is essential for India to realise its full growth potential. The reformative measures of the current government like Beti Bachao Beti Padhao Yojana, free LPG connections for poor (Ujjwala), electrifying households under SAUBHAGYA, MUDRA Yojana, Skill India, increase in maternity leave, mandatory appointment of one-woman member in the board, etc. have empowered women and encouraged them to participate in the development of the economy. Still, the female LFPR continues to stagger in both rural and urban areas.
Stranded around the trough of the U-curve, India needs greater policy intervention at the Centre and state levels to push through the corner. Quality education, improved healthcare alongside investment in upskilling, formalisation of jobs with higher wages and job security and investment in woman-centric industries would encourage more females in the working age group (15-64) to enter the job market. The medium and small-scale industries must be developed around the villages to train and absorb the female workers withdrawing from the agriculture sector. The organisations in the urban areas should focus on attaining greater gender diversity by increasing their female hiring targets. There should be a training process for the women labour force who try to re-enter the job market so that they do not lose their productivity and competitiveness. Educated and working women can improve the standard of living in the households and change the household dynamics that regulate the division of responsibilities between males and females.
(The author is Young Professional, EAC-PM, New Delhi. The views expressed are strictly personal)

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