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As India advances, women’s workforce participation plummets

Many Indian women have stopped working, even though India’s GDP has grown. As COVID-19 brings the economy to a halt, India must critically examine its policies through a gender lens.

Conventional wisdom suggests that in a growing economy, as job opportunities increase and education levels rise, more women enter the paid workforce. The Indian experience, however, has been exactly the opposite. Since the liberalization of the economy, which began in 1991, Indian GDP has grown at about 6 or 7 percent per year. Education of Indian women has risen; fertility rates have fallen; and access to electricity, cooking gas, and water has improved. However, women’s labor force participation rate (LFPR) has fallen (pdf) from 42.7 percent in 2004­–05 to 23.3 percent in 2017–18.

This means that three out of four Indian women are neither working nor seeking paid work, putting India among the bottom 10 countries in the world in terms of women’s workforce participation. (The only countries that rank lower than India are Egypt, Morocco, Somalia, Iran, Algeria, Jordan, Iraq, Syria, and Yemen.) The low LFPR is even more puzzling when one considers that in neighboring Bangladesh, the country’s GDP grew at an average rate of 5.6 percent between 1991 and 2017, and women’s participation in the labor force increased from 24 percent to 36 percent.

It’s critical to understand what’s behind this paradox. If women are voluntarily dropping out of work, that’s one thing, but if it’s because of structural constraints or sociocultural factors, then the government must intervene on a policy level. Given that the novel coronavirus is likely to cause further job losses — and possibly an even steeper decline in female LFPR — the Indian government needs to quickly reimagine its strategy for reviving the economy, keeping the women of the nation in mind.

If barriers to women’s workforce participation were removed, India could gain a lot — one estimate suggests that the country could potentially increase its 2025 GDP by US$700 billion (with a best-case scenario of $2.9 trillion). There would be personal and social gains, too: Research suggests that women who are employed have greater bargaining power within their families, which positively affects their own and their household’s well-being.

What’s causing the decline in women’s workforce participation? We explore several factors below.

Cultural attitudes

Several empirical studies have concluded that Indian women’s participation in the workforce is a multidimensional phenomenon. Although economic and structural factors matter, societal attitudes toward women and work play a key role in determining women’s LFPR.

If women are voluntarily dropping out of work, that’s one thing, but if it’s because of structural constraints or other sociocultural factors, then the government must intervene on a policy level.

The women’s rights movement in India has made much progress, but deep-seated prejudices about working women remain entrenched. In 1977, noted anthropologist M.N. Srinivas, in his ethnographic study of rural south India, documented the widespread belief that when women work for wages, it’s an indicator of low family status. More recent studies have also concluded that families gain social status by encouraging women’s seclusion. LFPR data (pdf) supports this, showing that women from higher-status families are less likely to work outside the home. The widely held belief that a woman’s primary place should be in the home is helped along by stereotypical depictions of women, not just in Bollywood films (pdf) and mass media but also in school curricula. Other factors, such as early marriage and rising religious fundamentalism, also affect women’s participation in paid work.

A low LFPR persists even among educated women. Several studies have showed that Indian women with moderate levels of education (10 to 12 years of schooling) actually withdraw from the labor force. One explanation for this is that such women are able to marry into richer families and don’t need to engage in paid work to support the family. Also, women with moderate education are valued for their ability to manage domestic tasks that require literacy, such as schooling children, and many of these women feel more productive devoting themselves to these responsibilities than working outside the home.

Cultural norms also restrict the number of jobs that are considered acceptable for women. For example, men with 10 to 12 years of education can get a wide range of urban jobs. (They can be drivers, equipment servicers, tradespeople, sales agents, couriers, construction supervisors, shop assistants, police constables, and so on.) For similarly educated women, many of these jobs are often neither socially acceptable nor easily available because of widespread occupational segregation in India based on gender norms. Also, the nature of women’s education tends to be generalist, rather than technical, so many women lack specific vocational skills or adequate digital literacy. These problems are compounded by the lack of female-friendly public and private toilet facilities and public transport, fears of violence and harassment, poor enforcement of sexual harassment laws, and high mobility constraints imposed by families.

The socially acceptable employment options for women expand only when they complete a graduate or postgraduate degree (in which case they can get more “respectable” jobs in the formal sector, e.g., as government employees, corporate workers, teachers, doctors, and lawyers). However, even women with such degrees face many hurdles to joining and staying on in jobs.

Highly educated Indian women still bear the primary responsibility for raising children and managing the home. And the prevalence of patrilocal marriages — in which married couples live with the man’s parents — reduces women’s agency. The expectation is also on women to meet the special care needs of the elderly or sick in their families. The “second shift,” in which women come home from work to shoulder almost the entire burden of cooking, housework, and elder- and child care, is a depressing reality. These problems are worsened by inflexible working conditions, gender biases in hiring and promotions, wage differentials, the absence of child-care facilities at work, and low female representation at leadership levels. In 2016, India passed an amendment to the Maternity Benefit Act, providing 26 weeks of paid leave for mothers, but placed the entire cost burden on employers. This has further disincentivized the hiring of young women.

Jobless growth

Even as the GDP grows, the ability of the Indian economy to absorb the growing working-age population has been steadily decreasing, a trend termed “jobless growth.” And statistics show that this trend affects women more severely than men, and rural India more than urban India.

Between 2012 and 2018, the Indian working-age population grew by 128 million people (65 million men and 63 million women). The LFPR of men remained more or less stable in this period, at about 55 percent, indicating that the job market was able to absorb the growing number of male workers. But the size of the female labor force (actual workers, not potential workers) fell by an estimated 21.8 million. Rural India actually lost 24.7 million female workers, and the much smaller gain of 2.89 million female workers in urban India could not make up for it. Some researchers have questioned the validity of the LFPR data and recent changes in data collection methodology; but even so, there is no doubt that Indian women are exiting the workforce in large numbers.

The root cause of the reduction in rural India is the accelerating shift in the nation’s economy, away from agriculture and toward manufacturing and services. In 1995, economist Claudia Goldin analyzed (pdf) women’s LFPR data from more than 100 countries. She concluded that in societies in which household income levels are very low, women — mostly uneducated ones — have high participation rates in the labor force, typically in low-paid or unpaid agricultural work. This is definitely true in India, where despite negative social attitudes toward women’s work, more than 75 percent of women workers in rural areas are employed in agriculture (compared with 59 percent of men). As the Indian economy moves away from agriculture, women bear the brunt of the effects.

Even within agriculture, men are displacing women in the workforce. Mechanization (pdf) of agriculture has been increasing, particularly the use of small or midsized machines. These implements — such as seed and fertilizer drills, harvesters, and threshers — have replaced manual labor, which was traditionally done by women. And typically, the making, purchasing, and use of these machines is perceived as a male domain. Commercialization in areas such as poultry and animal husbandry, in which many women have traditionally held jobs, is also driving displacement.

India’s manufacturing sector hasn’t been able to create the sort of labor-intensive jobs that rural and semirural female residents who lack vocational skills are qualified for, so growth in that sector hasn’t made up for the displacement in agriculture. After the global economic crisis of 2008, India’s exports of manufactured or processed commodities such as textiles, leather, gems and jewelry, handicrafts, cashews, and other processed foods have fallen or remained stagnant as a percentage of GDP. These industries have traditionally been a major source (pdf) of employment for Indian women.

Unlike some countries that moved gradually from agriculture to manufacturing to services over time, India has leapfrogged into growth driven by the services sector. And service jobs are largely a phenomenon of urban areas, where cultural barriers to women participating in the workforce persist.

Increasing household incomes

Goldin found in her studies of many countries that when the economy grows and household incomes rise, women are freed from the necessity of working for poor returns. So they withdraw from the workforce. Goldin calls this the “income effect.” But as the economy becomes more highly developed, Goldin found that a “substitution effect” takes place. Women’s education levels rise, and ideological barriers to women’s work shrink. Women are able to command higher wages and join the paid workforce, thus creating a U-shaped curve for women’s LFPR over the course of economic development.

Between 1991 and 2018, India saw a fivefold increase in annual per capita household income, from $340 to $2,020. Agricultural wages have risen steadily since 2005. The rollout of the Mahatma Gandhi National Rural Employment Guarantee Scheme in 2006 has provided (pdf) significant income gains in rural India. The support prices of agricultural commodities have increased, too, bringing more income to farmers. Public spending on infrastructure and housing has led to more construction activity. And new jobs have been created in the services sector. Education levels have also risen sharply, enabling men (the traditional breadwinners) to access better-paying jobs. These factors have led to significant growth in both rural and urban household incomes.

Given the cultural issues affecting women’s participation in the workforce in India, it seems logical that as male incomes have increased, women have dropped out of jobs. Empirical research suggests that a rise in household income does, in fact, reduce the LFPR of Indian women, in both rural and urban India. However, the U-shaped curve that Goldin described is not visible (pdf) in India. Education levels of women have increased — and indeed, this is in part responsible for the drop in women’s LFPR — but there are not enough educated women workers to create the upward curve in the LFPR.

The weak substitution effect is especially apparent when we consider urban India, where the LFPR for women dropped from 24.4 percent in 2004–05 to 20.4 percent in 2017–18, despite new jobs being added. In rural India, where jobs have been lost, women’s LFPR has fallen drastically, from 49.4 percent in 2004–05 to 24.6 percent in 2017–18.

How COVID-19 will worsen women’s LFPR

Even before the novel coronavirus upended business as usual, the Indian economy’s growth was slowing, and unemployment, including men’s, was on the rise. Once things return to some sort of normal, it's likely some jobs won't come back.

Women’s LFPR is influenced by the large wage differential that exists between men and women. For example, among people with low literacy, Indian men earn almost twice as much as women. When jobs become scarce, families choose to send men out to earn, and women stay behind. In rural India, as jobs contract due to the economic effects of the novel coronavirus, we are likely to see this trend intensify. Rural India has already seen an influx of male migrants returning from urban centers. As densely populated urban centers and slums become concentrated with COVID-19 cases, this male labor force will probably choose to remain for longer durations in villages, further crowding out women from agricultural labor, including from the spike of jobs that will arrive in June with the summer planting season.

In urban India, women work mainly in the informal sector, without secure job tenure, social benefits such as pensions or maternity leave, or protection through trade unions. Also, the assumption that a woman is not the primary earner for a household makes it easier to fire women when the going gets tough. In the aftermath of the novel coronavirus, as the economy suffers, contract staff, such as women who work as cleaners, attendants at malls, security personnel, counter saleswomen, administrative staff in small enterprises, and workers in small manufacturing workshops, will lose jobs.

Finding a way forward

Having looked at a range of factors that affect women’s workforce participation, we need to ask whether women are dropping out voluntarily or they’re being forced out. The answer can provide ideas about how to move forward.

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A nationwide study (pdf) of women’s response to the Mahatma Gandhi National Rural Employment Guarantee Scheme concluded that women will take jobs if they are available near where they live, even if pay is low. The rural employment plan mandated that 30 percent of jobs be given to women, at pay equal to that of men, in locations close to their villages. The result was an increase in women’s participation in the workforce. About 45 percent of the women who enrolled for jobs in the program’s projects were not in the paid labor force before the initiative took effect. And more than two-thirds of the women surveyed reported that if work were available, they’d be willing to take it and their family members would support their decision.

India’s experience seems to suggest that we can’t depend solely on economic growth to improve women’s LFPR. The right kind of growth, that which is gender-inclusive in terms of job opportunities, is the way forward. To achieve this, India needs to critically examine the nature of its development, even as the COVID-19 crisis batters the economy. A country with high population levels — and a particularly high working-age population — can’t blindly pursue growth models imported from less-populated countries. The dropping LFPR of women is a clarion call for considering alternatives to the current model of urbanized, industrialized, service sector–led growth.

To increase women’s LFPR, Indian leaders need to begin by understanding what women actually want. The location of jobs plays a key role in a woman’s choice. Rural and urban women value regular, part-time jobs, close to home, which allow them to manage both workplace and family. India’s anganwadi program is a good example of an initiative that can create such jobs. There are more than 1.3 million of these village health centers, which cater to pregnant and breastfeeding women and children younger than 6, and they employ 2.4 million workers. They currently suffer from human resource and capacity constraints. Beefing up this program would be a great way to boost women’s LFPR and improve child nutrition and mortality rates. Similarly, given the shortage of schools in India and poor student–teacher ratios, the education sector offers large-scale opportunities for employing women close to their place of residence. Healthcare would be another area that could offer such possibilities.

Incentivizing and promoting India’s craft and handmade goods sector would also raise women’s employment significantly. This sector has a low ecological footprint and provides opportunities for large numbers of women to work from home. Encouraging women farmers through organic community farming initiatives, boosting the growth of women’s self-help groups in the food industry, enabling easy access to microcredit for women, and developing small local poultry and dairy businesses would provide new, deurbanized, deindustrialized, decentralized models for inclusive growth in a world grappling with ecological degradation. Research suggests that women-owned businesses hire more women, so the country must also increase the currently low numbers of female entrepreneurs in both urban and rural India.

In rural India, land is the major form of wealth. In 2005, an act was passed to give Hindu women the legal right to inherit and own land, but because of patriarchal belief systems, women actually hold very little land. While men go out to engage in paid work, women are left behind to tend to family farms — legally owned by their husbands or fathers-in-law. And they don’t get any decision-making agency or pay for this backbreaking work. On top of that, these jobs keep them out of the paid labor force and cripple their ability to raise credit for any entrepreneurial ventures. India needs further land reforms — particularly, to recognize the rights of women in marital property, to give Muslim women the rights to inheritance, and to give equal land rights to tribal women. As more women begin owning land, it will incentivize them to become active participants in the economic system, as farmers and entrepreneurs.

The manufacturing sector is also an important source of jobs. Upskilling both rural and urban women to become employable in rural and semirural manufacturing clusters is important. The increased workforce participation of women in Bangladesh, for instance, comes on the back of the garment manufacturing industry, which has provided labor-intensive jobs for urban women. In addition to such opportunities, Indian cities need to improve public transport, build toilets, provide good-quality and safe hostels for single women, and invest in facilities for child care.

To improve women’s participation in the services sector, India needs to expand secondary and higher education, offer vocational training and upskilling courses, improve public infrastructure, further modernize labor laws to ensure equal work opportunities for women, and better enforce gender-related laws.

Large Indian corporations and multinationals with Indian offices already have diversity targets that they’re working toward. Many have implemented flexible working policies and career paths for women returning to work after extended maternity breaks. But women in such organizations also face cultural pressure to drop out of the workforce. Much more has to be done to raise awareness in corporate India about gender biases.

The Indian government has been pursuing gender-responsive budgeting. Since 2001, India has established think tanks that examine government allocations through a gender lens and assess whether gender commitments are being met. There is a gender-responsive budgeting secretariat under the Ministry of Finance, and similar cells exist at the state level. Data is being collected and reported — however, the process lacks data integrity, and like all government efforts, focuses more on expenditures than outcome. India needs far more rigorous analysis of government plans, both before and after implementation, to ensure that the intended effects of gender-responsive budgeting are realized. The Comptroller and Auditor General authority of India publishes an annual report on gender-responsive budgeting, including an assessment of money spent on women. This report needs to be taken more seriously by the government and its budgetary bodies, and a stronger accountability mechanism needs to be established.

Removing the stigma attached to women working, and removing the burden of women’s second shift, requires attitudinal change. This can be effected only in the long term, beginning with gender sensitization in schools and colleges, positive depictions in mass media, and the presence of women role models in communities all over India. The battle for women’s rights is fought inside homes, and economic empowerment is a bargaining tool that will help women fight it with a better chance of success.

India has had several successful public communications campaigns, but none so far to promote the benefits of women in the workforce. A strong campaign needs to be conceived and executed by the Ministry of Women and Child Development. Breaking stereotypes and removing occupational segregation by gender is not as difficult as it sounds — witness the amazing story of female wrestlers from small towns in the highly patriarchal state of Haryana, or the fact that India has the highest number of female pilots in the world.

In 1992, India implemented a large-scale affirmative action program for women in politics. The federal structure was modified, and local gram panchayats (village councils) became responsible for public works and welfare programs; 33 percent of the council positions were reserved for women, and today, women account for 1.3 million of the 3 million panchayat members.  An analysis of the experiment proved that villages with female leaders showed decreases in gender bias. Parents in such villages had increased educational and career ambitions for their female children, and adolescent girls themselves reported higher aspirations.

Attitudinal and behavioral change on gender-related issues is not just possible but already visible in many aspects of Indian society, especially when it’s nudged along by rewarding opportunities and policy directives. The government must continue to provide that nudge if India stands any chance of bringing women back into the labor force.

Deepa Krishnan

Deepa Krishnan is an entrepreneur, educator, and social worker. She teaches at S.P. Jain Institute of Management and Research in Mumbai.

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