IMF research says India could boost its economy by 27 percent, by raising women’s participation in the workforce.
Women are dropping out of India’s workforce in droves. According to Business Standard, the National Sample Survey Office’s (NSSO) latest job survey, which has led to much controversy as it is yet to be released by the government, shows a steep decline in female participation in the labour force.
The survey has found that only 23.3 percent of women aged 15 and above were part of the country’s workforce in 2017-18. That’s down from 31.2 per cent in the 2011-12 survey, while the proportion was as high as 42.7 percent in 2004-05. So the trend of women withdrawing from the Indian workforce has been around for quite some time.
Why are women dropping out? The Business Standard article says that the fall in female labour force participation has been in the rural areas. One reason could be more young women going in for education. But a 2017 paper by Niti Mehta and Smrutirekha Mohanty of the Sardar Patel Institute of Economic and Social Research found that the effect of education was not much.
They blame the trend on other factors and write, “Employment structure in India has led to the polarization of skills such that women predominate in low paid, low skill work, both in rural and urban areas.” They also found that “during 2011-12 the decline in work participation was sharper for the poorest rather than the affluent segments of rural women and distinctively points to loss of job opportunities in agriculture/labour and absence of alternative avenues for employment for the displaced workers.”
The 2011-12, the survey had found that in almost all the states the labour participation rate was higher among rural women than among urban. Since socio-cultural traditions are likely to be more repressive for women in rural areas, these factors can’t account for the low urban participation. It could be due to two factors -- the income effect, as women withdraw from work when household income goes up, or a lack of suitable employment in urban India for women. The Business Standard article says that female labour participation rates in urban India have remained more or less the same as in 2011-12.
Increasing mechanisation of farming could be one reason for the drop in the female rural workforce -- women’s participation in rural Punjab was one of the lowest in the 2011-12 survey.
But take a look at the accompanying chart, taken from World Bank indicators. The data has been obtained from model estimates of the International Labour Organisation (ILO) and so are different from the NSSO data. The figure for labour force participation in the ILO data for 2018, for example, is higher than the NSSO number. Nevertheless, what’s interesting is the ILO data show the female labour participation rate falling in India, while it has been going up in Bangladesh.
That is surprising, because Bangladesh is culturally no less conservative than India. It has, however, become a global hub of garment manufacturing in recent years and the workers in the garment factories are mostly women. Could it be that this boom in the garment manufacturing sector is what has led to the rise in the female workforce in Bangladesh?
Female labour participation is far higher in East Asian countries. In Vietnam, for instance, the female labour participation ratio is as high as 73 percent. In Malaysia it is 50 percent and in China it is 60 percent.
What is the effect of women dropping out of employment? The World Bank has said that “high and rising female employment contribute to greater productivity growth and have been critical in sustaining East Asia’s high economic growth rates.” At the World Economic Forum meet in Davos in 2018, IMF Chief Christine Lagarde had said that research indicated India could boost its economy by 27 per cent by raising women’s participation in the workforce to the level of men. Perhaps even more importantly, women are empowered by being able to earn a living and it enables them to change repressive social practices.Unless India is able to create decent work for women, it will be wasting half its labour power, to say nothing of the opportunities lost for millions of young women.