The population of the US is a little under 326 million. Its “civilian non-institutional population", as defined by its Bureau of Labour Statistics, is around 257 million. These are people aged above 16 who are not in the army (hence, civilian) and who are not confined to any institution (old age, mental health institutions, etc.) and hence, theoretically capable of working. Out of these, 161.5 million constitute the labour force—willing to, able to, and looking for work.
To the best of my knowledge, we do not have an estimate of the “civilian non-institutional population" for India. According to the 2011 census, India had 1.21 billion people. Out of which, a little over 800 million were aged 16 years and above. Of course, not all of them are fit for work as some of them might be institutionalized.
The International Labour Organisation’s (ILO’s) Indian Labour Market Update of July 2017 puts the Indian labour force at 472 million. The World Bank estimates the number to be a little over 520 million as of 2017. That is about 40% of the population. In the US, the labour force is about 50% of the population. There is scope for expansion of the labour force in India. But if people join the labour force and are willing to work, they should also be qualified and able to work, and find work too, and those jobs should pay well. There are big gaps in all these areas in India.
In theory, economic growth is a sum of labour force growth and labour productivity growth. Growth in the labour force should lead to economic growth, regardless of whether it is men or women. In the short run, we take the capital stock as fixed. Into this simple equation has entered the discussion on women in the workforce in India. The International Monetary Fund (IMF) found that the labour force participation rate for women in India had declined in recent years or decades and wrote that increasing the labour force participation rate for women would increase India’s economic growth rate. As they always do, they may be confusing correlation and association with causation.
India’s experience negates the point that the IMF was trying to make. ILO’s India Labour Market Update (July 2017) makes the point that women’s participation rate in the Indian labour market has seen a declining trend since 2004-05—the years during which India’s economic growth went into higher gear. More interestingly, women’s participation rate has been lower among urban and educated women. It looks like these are conscious decisions rather than forced choices.
Elevating the question of women in the workforce to the status of a public policy goal is fraught with danger as it fails to reckon with two eternal features of public policy: The law of unintended consequences is always in force and the road to hell is paved with good intentions. Hence, policies that deliberately target a higher proportion of women in the workplace can turn out to be as socially counterproductive as it is wrong for men in patriarchal societies to deny women the right choose their career—whether to be at the workplace or stay at home.
Regardless of the number of women working, there can be no arguments about the duty of governments in ensuring safety on the streets and safety in the workplace for women, although the latter is the responsibility of employers too.
Any other policy-induced or policy-driven positive discrimination in favour of getting more women into the workforce will not only be problematic but will also be non-evidence based judgement on the superior economic outcomes of having women at the workplace rather than at home as a mother and a spouse.
The “World Happiness Report" (2013) put out by the Earth Institute notes that life satisfaction in adults is determined by their mental health as children and that, in turn, is determined by the mothers’ emotional health.
Therefore, it is quite possible that an educated mother with emotional and intellectual stability bringing up children as physically, mentally and emotionally healthy humans contributes more to economic growth and social stability than she would by spending time at work. In other words, there is a fairly significant opportunity cost to having women in the workplace and it is a conscious and careful choice that they have to make. Public policy has a role—if at all—to help them make that choice in an informed manner. Otherwise, none.
Plenty of things in the Indian labour market are crying out for attention from policymakers. For example, to the extent public policy is interested in intervening in the labour market to improve economic growth, it has to start paying attention to executive compensation in India and the far bigger gap that exists between pay for senior executives and for the rest.
Bloomberg, in an article in December, noted: “CEOs (chief executive officers) of companies listed in India’s Sensex Index still earn 229 times more than the average worker there, the second-biggest gap worldwide after the US’s ratio of 265, according to a separate Bloomberg ranking."
Attracting more people to the labour force must start with fair compensation. Choosing what to concern oneself with is the first and most important public policy decision.
V. Anantha Nageswaran is an independent consultant based in Singapore. He blogs regularly at Thegoldstandardsite.wordpress.com. Read Anantha’s Mint columns at www.livemint.com/baretalk
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