XX factor is at work

XX factor is at work
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First Published: Mon, Feb 05 2007. 11 47 PM IST
Updated: Mon, Feb 05 2007. 11 47 PM IST
More women are at work. Set against the myriad social and cultural shifts occurring on the ground—be it urbanization, the shift from saving to spending, rising home ownership, increased travel and mobility and the reverse brain drain—this one incipient trend stands out in its ability to boost India’s economy and consumption in the long term.
(or The number of women working as a share of the total number of working-age women is on the rise, according to the latest employment survey by the National Sample Survey Organization (NSSO). Women’s employment participation grew from 26% in 2000 to 31% in 2005, the first rise seen in decades.
Low participation rates largely go unnoticed in the discussion of India’s demographics and dependency ratios (the number of workers per retiree). They shouldn’t, since they drive home the discrepancy between potential and reality in a dramatic way. Low participation substantially cuts into dependency ratios, so that today’s lofty figure of 7.6 potential workers per retiree sinks closer to 4.9 actually employed people per retiree. Focusing on women’s employment—given the low starting base coupled with the higher projected population growth for working women compared with working men—could go a long way towards improving real demographic ratios.
Within the recent employment data, here are some of the most interesting trends we find: The greatest scope for improving women’s work participation exists at the younger end of the age spectrum. In developed economies, women’s participation rates in the key age group of 20-30 range between 50% and 80%; in India, this figure is less than 30%. Women’s participation peaks 10 years earlier than men, who show the strongest work participation in the 45-49 age group.
Surprisingly, the labour force is missing out on a significant source of educated women. At just 19.3%, the participation rate for female high-school graduates is 3.3%, points lower than for women who are illiterate. This is compared with participation rates of 70-85% for female high-school graduates in most developed economies. In the past five years, women’s participation has grown faster than men’s participation across all levels of educational attainment, particularly in higher-education categories.
Rural women work far more than urban women. The vast difference occurs in the category of the self-employed, where 32% of rural women work, compared with just 11% for urban women. Across all categories, the growth in participation between 2000 and 2005 has been more rapid for rural women than for urban women.
Using Korea’s experience as a guide, we simulated a path for India’s economy that incorporates higher female work participation into a baseline trend. We find that the boost to GDP per capita stemming from rises in female employment is palpable. Incomes could rise by 5% above baseline in the next decade, and by more than 12% in 2025. The lift to incremental demand is even dramatic: in the next five years, incremental demand could grow by 10% more than anticipated. The XX trend translates into an additional $35 billion in GDP over the next five years alone, and $110 billion over the next decade.
Clearly, a large consumption opportunity exists if this trend plays out on the ground. But where exactly could future spending be channeled? We recently surveyed 2,000 households in four metros to find out where the differences in spending and saving occur between households with working women (WW) and households with non-working women (NWW).
The study shows that consumption gains could be felt most in financial services, domestic help, educational services, retail, fuel,transport and entertainment. Working women save and invest 25% more than non-working women. Spending on basic groceries, delivery services, utilities, interior furnishing and traditional forms of entertainment show little to no difference across the two panels.
WW households show a higher penetration of mobile phones (60% for WW, compared with 34% for NWW). Some 20% of WW own credit cards, double the penetration of 10% for NWW. Penetration rates for durables such as cars and air-conditioners are higher and branded goods are more prevalent among working-women households.
Working women tend to read English magazines more than non-working women. Interestingly, between both the panels, women consider themselves to be the only decision-maker for groceries, and in other categories, they consider themselves to be the primary decision-maker, though other members play a role, too. When it comes to larger organized retail formats, non-working women care about prices, while working women care more about variety. Who women shop with, or for which product women shop alone, is determined more by geography, rather than whether she works or not.
Roopa Purushothaman is chief economist and strategist at the Future Group. We welcome readers’ comments at theirview@livemint.com
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First Published: Mon, Feb 05 2007. 11 47 PM IST
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