Women could boost GDP by $700 bn: report

The report finds that women in India represent only 24% of the paid labour force, as against a global average of 40%


India’s female labour force participation rate (based on data for the population aged 15 and above) is 21% in urban areas and 36% in rural areas. For men, it is 76% and 81%, respectively. Photo: Priyanka Parashar/Mint
India’s female labour force participation rate (based on data for the population aged 15 and above) is 21% in urban areas and 36% in rural areas. For men, it is 76% and 81%, respectively. Photo: Priyanka Parashar/Mint

New Delhi: If 68 million more women are added to the non-farm labour force over the next decade, India’s gross domestic product (GDP) could be boosted by $700 billion in 2025, according to a new country-specific study by the McKinsey Global Institute (MGI).

The report takes forward an earlier MGI report on the impact on global GDP if women were to participate on par with men in the paid workforce.

The second report finds that women in India represent only 24% of the paid labour force, as against a global average of 40%. At 17%, women’s contribution to GDP in India is also below the global average of 37%. Not only are countries like China (at 41%) doing better, even Sub-Saharan Africa is at 39%.

“India’s economy would have the highest relative boost among all regions of the world if its women participated in paid work in the market economy on a similar basis to men, erasing the current gaps in labour-force participation rates, hours worked and representation within each sector,” states the report, The Power of Parity: Advancing Women’s Equality in India.

“Among all regions in the world, India has the largest relative economic upside from advancing women’s equality,” said Anu Madgavkar, senior fellow, MGI, the business and economics research arm of McKinsey and Co., and one of the authors of the report. “We felt it was important to put the spotlight on India. We intend to do more regional papers like this, but were keen to start with India, because the country represents both huge challenges and opportunities from a gender equality perspective.”

The latest MGI report uses a new score, the India Female Empowerment Index, or Femdex, to understand where each state stands on gender parity.

Based on a subset of 10 indicators (pertaining to gender equality in work and in society, in terms of essential services and enablers of economic opportunity, legal protection and political voice, and physical security and autonomy), Mizoram, Kerala, Meghalaya, Goa and Sikkim come closest to gender parity. Bihar, Madhya Pradesh, Assam, Jharkhand and Uttar Pradesh are the bottom five states.

However, the top five states account for just 4% of India’s female working-age population, while the bottom five make up 32%. State-level female labour force participation rates range from 63% in Himachal Pradesh to 9% in Bihar (which means that except for these 9% who have jobs of any kind that pay a wage either low or high, the rest do only domestic or other unpaid work).

To boost the economy, the report states that 70% of the potential incremental workers could specifically come from nine states: Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Madhya Pradesh, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal.

India’s female labour force participation rate (based on data for the population aged 15 and above) is 21% in urban areas and 36% in rural areas. For men, it is 76% and 81%, respectively.

Indian women face inequality on all five indicators related to work: labour force participation rate, professional and technical jobs, unpaid care work, wage gap and leadership positions.

“Patriarchy runs so deep in the system that it makes sure even if women and men do the same work, men are paid more,” said Vibhuti Patel, a professor who teaches women’s rights at SNDT Women’s University in Mumbai.

“It’s not like women have chosen to stay away. There is no option. Where are the jobs?” asked Indu Agnihotri, director and professor at the Centre for Women’s Development Studies. “There is increasing pressure on the agricultural sector or the informal sector because there are no jobs. Even for the jobs available, there are problems with the working hours, conditions, kind of work. When there are no basic amenities available, no childcare system in place, what will the woman do?”

The National Sample Survey Office (NSSO)’s wage data by occupation for India appears to support this trend. Regardless of their professional status, women on average get paid 30% less than their male counterparts, the report states.

To bridge the gender gap, the report suggests that policymakers, business leaders and social-sector leaders focus on eight areas:

1. Close gender gaps in secondary and tertiary education in India’s large states—which is a work in progress.

2. Lower barriers to job creation. Even though many reforms to increase the rate of investment and job creation are gender-neutral, the report says some reforms could be tailored to industries that have a higher propensity to hire women, such as manufacturing, community services, education and health care.

3. Expand skills training for women in key sectors.

4. Expand the reach of financial and digital services to enable women entrepreneurs.

5. Step up gender diversity policies and practices in private sector organizations.

6. Further strengthen legal provisions for women and the enforcement of laws (legal protection against gender discrimination in hiring and remuneration, the right to do the same kind of work as men and legal provisions for parental leave).

7. Improve infrastructure and services to address the high burden on women of routine domestic work, childcare and elder care. Globally, women spend roughly three times the amount of time spent by men on unpaid work. In India, the situation is worse, with women performing 9.8 times the amount of unpaid care work that men do. If that work were to be valued and compensated, it would contribute $300 billion to India’s economic output, the MGI report states.

8. Reshape deep-rooted attitudes about the role of women in work and in society.

Seventy-five per cent of female employment in rural areas is in agriculture, compared with 59% for men. Women are also disproportionately employed in low-productivity jobs. Only 7% of tertiary-educated women have jobs as senior officials, compared with 14% of men. Women account for only 38% of all professional technical jobs, the report said.

From friendly human resources policies to flexible work schedules and childcare services, several companies are framing policies to help retain women by supporting them to balance their family and professional responsibilities.

In business processing organization (BPO) Genpact, 37% of employees are women and the figure for women in senior management is 22%. From crèches and a programme for creating a safe working environment to hiring women who have taken a mid-career break, the BPO aspires to strengthen women employees at senior management levels as well, said senior vice-president and chief learning officer Amit Aggarwal.

Despite these individual efforts, the role of women in the workplace cannot be viewed in isolation from their role in society. As the report states, “Achieving the economic potential of women requires gender gaps in both work and in society to be narrowed—equality in one goes hand-in-hand with equality in the other.”

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