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OPINION March 8, 2018

Faster growth in female workforce participation requires equal opportunity

Increasing India's female workforce participation can boost GDP growth substantially. Indeed, the next chapter of the country's success story may well come from more women joining the workforce.

An astonishing 133 million Indians were lifted out of poverty between 1994 and 2012. This success could have been even more dramatic if the number of women in the formal workforce hadn’t dropped sharply from 2005. Despite evidence that empowered women workers are an untapped source of economic growth, across the world the gap between numbers of men and women in formal work has hardly budged since the mid-1990s. In India, in fact, the gap is particularly large, and widening.

In 2004-05, 37 per cent of India’s women worked in paying jobs. In 2011-12, only 27 per cent of Indian women over the age of 15 had a job, or were actively looking for one, compared to 79 per cent of men. This equates to 19.6 million women dropping out of the workforce in seven years.

In 2013, India’s female workforce participation was the second-lowest in South Asia. In Indonesia, for comparison, slightly more than 50 per cent of women are in work. The World Bank estimates that just reaching half that ratio within five years could boost India’s GDP growth by a full percentage point.

Much of women’s work in India is unpaid or has been in sectors that are now transitioning to jobs that have largely gone to men. For example, the number of farm jobs has reduced, along with the number of rural jobs traditionally seen as suitable for women. Further, as more of the population has moved to cities, urban jobs in fast-growing industries have largely gone to men, such as construction, industry, retail, and services including finance, real estate, and information technology.

One common explanation for the gender gap is that more young women are furthering their education rather than entering the job market. Between 2005 and 2011, girls’ enrolment in lower and upper secondary school increased markedly, and tertiary enrolment for young women more than doubled.

But this positive trend only accounts for a fraction of the observed decline. Workforce (formal and informal) participation rates are highest among illiterate women and those who have a university degree. Yet these two groups also experienced the largest drop in workforce participation between 1993-94 and 2011-12.

Increasing girls’ access to education is a critical component of empowerment in its own right, but is not by itself leading to a rise in workforce participation.

It appears that social norms and the gender division of labour may also play a role in this intriguing contradiction. About half of women report that their domestic responsibilities are a barrier to realising their job aspirations. For example, the care of young children is an increasingly important issue in women’s employment decisions, in a context where formal childcare is practically non-existent. According to an UNDP report, nearly 60 per cent of urban women say they don’t have enough information about employment opportunities, and many find it difficult to access training.

How have other countries brought more women into the workforce? In Bangladesh, where women make up 34.6 per cent of the workforce, the opening up of trade and the garment industry in the 1990s drew large numbers of young women into the labour market. This, in turn, helped change social norms from age of marriage to mobility. Women in Bangladesh not only form the backbone of the garment industry now, but are increasingly working in the country’s growing services sector.

In Bangladesh and other Asian countries such as Sri Lanka, Vietnam, Laos and Cambodia, the lesson is clear: Make the economic, structural and policy changes and, with the right aspirations and expectations in place, the social norms can follow. For instance, creating better jobs, providing support for child and elder care, and ensuring safe transportation to and from work, can remove significant structural barriers for women to seek out paid work.

It is also important to better understand the other side of the coin, which is low employer demand for female workers. Job creation is aided by the elimination of infrastructure and regulatory bottlenecks, and ensuring there is access to finance for entrepreneurs.

There are indications that India is acting to turn the trend around. Some promising signs are the government’s programme for skills development, subsidised loans for businesses led by women, and recent legislation doubling maternity leave and allowing female employees to work from home. If followed, these policies could remove some of the barriers women face and offer a significant boost to India’s economy.

Some employers are discovering that providing childcare access can improve the quality of job applicants and the speed at which vacancies can be filled.

For its part, the World Bank supported-$250 million Skill India Mission Operation is ensuring that training programmes are sensitive to women’s needs.

Some Indian businesses are also showing leadership. While few companies are led by women, in certain sectors Indian women are at the helm, including at one of the biggest banks.

Indeed, the next chapter of India’s success story may well come from more women joining the workforce.

This opinion piece was originally published in the Business Standard on 3rd February, 2018.