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Last Updated : Nov 03, 2015 10:11 PM IST | Source:

Larger female workforce can add Rs 46lk cr to GDP: McKinsey

This economic boost, the report states, translates into 1.4 percent per year incremental GDP growth.

The socio-political consequences of gender bias for society's progress have been well documented. What is not so widely known is that the discrimination against women has an economic cost--or opportunity cost, depending on how you look at it--as well.

A report by McKinsey Global Institute estimates that bridging the gender gap in India could add Rs 46 lakh crore (or abour USD 0.7 trillion) to the country's gross domestic product (GDP) in 2025.

This economic boost, the report states, translates into 1.4 percent per year incremental GDP growth.


"About 70 percent of the increase would come from raising India's female labour-force participation rate from 31 percent at present to 41 percent in 2025. This would bring 68 million more women into the economy over this period," says the report.

India's share of women's contribution to GDP is at 17 percent, much lower than the global average of 37 percent, and the lowest among all ten regions in the world analyzed by Mckinsey Global.

Twenty six countries in McKinsey dataset of 95 have a lower per capita GDP and Human Development Index than India. However, many of these countries have higher levels of gender parity.

In the India Labour Organization's Global Employment Trends 2013 report, out of 131 countries with available data, India ranked 11th from the bottom in female labour force participation.

"The Indian economy will obviously gain if we bridge the gender gap in the workplace, but this gap cannot be plugged if we don't consider gender equality in society and change our social attitudes and unconscious bias towards women," says Rajat Gupta, Director, McKinsey & Company India.

Gender inequality in India is high or extremely high on three dimensions in MGI's framework-gender equality in work, legal protection and political voice, and physical security and autonomy-and medium to high on the fourth dimension of essential services and enablers of economic opportunity.

MGI believes India's policy makers, business leaders, and social-sector leaders need to focus concerted action in these eight areas:

(1) Closing gender gaps in secondary and tertiary education in India's large states;
(2) Lowering barriers to job creation;
(3) Expanding skills training for women in key sectors;
(4) Expanding the reach of financial and digital services to enable women entrepreneurs;
(5) Stepping up gender diversity policies and practices in private-sector organisations;
(6) Further strengthening legal provisions for women and the enforcement of laws;
(7) Improving infrastructure and services to address the high burden of routine domestic work, childcare and elder care; and
(8) Reshaping deep-rooted attitudes about the role of women in work and in society.

A working paper by the Indian Labour Organization in 2014 says that one of the main reason for the low participation of women in the labour force is that much of their work is not documented or accounted for in official statistics.

"Women's role in reproduction and in a range of activities within households, such as caring for the young and old, cooking and other household chores, do not find recognition in the system of national accounts or other economic statistics," the ILO paper said.

In 2011-12, 35.3 percent of all rural females and 46.1 percent of all urban females in India were attending to domestic duties, according to ILO data.

On related lines, ICICI Bank chief Chanda Kochhar on Monday said at a public event that excessive focus on quantitative aptitude (QA) in entrance tests was to blame for lower representation of girls in business schools, and said the exams needed to be well rounded.

"The MBA entrance exams are so quantitative-oriented that it keeps out more and more women from joining the MBA classes. If we were to make the entrance exams more all-rounded you could see more participation," Kochhar said, adding that girls constituted only 10-15 percent of the B-school students at present.

Kochhar agrees with the need to do more for gender equality and says the equality initiatives for corporate sector should begin at home.

"We have to ensure that all women get responsibilities, positions and jobs that they are capable of and based on their performance, and not based on biases that women cannot manage their home and work together. This only allows them to grow in the organisation. We have to ask our corporates to give importance to merit, and at the same time increase their intake of women. After taking them in, it is also important to provide an environment for them to grow. Very important ingredient of this (growth) is to create merit based, gender neutral work environment," Kochhar said, as reported by Economic Times.

The report also highlights the high presence of women workforce in low-productivity jobs. About seventy-five percent females are employed in rural areas in agriculture vis a vis 59 percent males.

The situation in otherwise highly developed urban areas is not far too different. MGI has identified a gender gap in leadership among Indian women.

"Only 7 percent of tertiary-educated women have jobs as senior officials compared with 14 percent of men. Similarly, women account for only 38 percent of all professional technical jobs. Survey data from the World Economic Forum in 2014 reveals a widespread perception that women are paid lower wages compared with men for the same work," adds the report.

Citing NSSO data, MGI reports irrespective of the professional level, women on average get paid 30 percent less than their male counterparts.

The case, however, is similar abroad with respect to disparity among men and women's salaries. The Wall Street Journal reported that men's earnings in the US were growing at twice the rate of women's earnings. According to latest statistics, women working full-time were earning 81 cents to every dollar earned by a man.

This disparity in earnings is aggravated by the fact that India's women engage much more in unpaid work than men. MGI notes that women in India do almost ten times the amount of unpaid care work that men do. "Three-quarters of unpaid work is routine household chores exacerbated by poor access to basic services such as sanitation, clean water, and clean sources of cooking fuel."

Future outlook

According to the MGI's "best-in-region" scenario, in which all countries match the progress towards gender parity of the fastest-improving country in their region, the world could add USD 12 trillion to GDP in 2025, doubling the contribution of women to global growth in business-as-usual scenario in the coming decade.

India could boost its GDP by USD 0.7 trillion in 2025 or 16 percent of the business-as-usual level, the largest relative boost of all ten regions analysed by MGI.

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First Published on Nov 3, 2015 11:20 am
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