Economy
The big threat to India’s demographic dividend
Summary
- Many economies have cracked the code of getting women to work in time. India must hurry up
Bengaluru: In a short press release, dated 13 October, the Ministry of Women and Child Development announced that the Female Labour Force Participation Rate (FLFPR) for 2022-23 had improved significantly over the previous year by 4.2 percentage points to 37%. The trend, over the last five years (24.5%, 30.0%, 32.5%, 32.8%, 37%) has been nothing short of a miracle.
Some states that were laggards have made significant progress and some of the leaders have slipped. The report shatters some long-standing myths and offers insights that can help shape policy interventions for each state.
In the context of work and employment, there are several terms that are tossed around, and it would be helpful to quickly understand what these are, how they are measured, and their uses and limitations.
LFPR is a ratio of the number of individuals who are part of the labour force to the number of individuals in the working age (greater than 15 years of age). A person is considered to be a part of the labour force if she/he is either employed or actively looking for work. Only those actively looking for work are considered ‘unemployed’ and those that are idle, under-employed or self-employed, but not looking for work, are not considered unemployed. The ‘unemployment rate’ is the ratio of the number of unemployed individuals to the sum of employed and unemployed individuals.
Measured this way, the unemployment rate would offer a false sense of comfort and hide the reality that there could be a large number of individuals who are either idle or underemployed. They could be so for various reasons, a loss of hope being one of them; they have simply given up looking out for a job.
And this percentage is far higher for women than men. The key highlights of the 2023 data at a national level have been captured in the accompanying chart.
The unemployment rates for both men and women are the same—3%—but the point to note is that as compared to men, three times the number of women are not looking for a job.
Not without flaws
FLFPR is a reasonably accurate but not a totally fool-proof indicator of the real participation of women in the workforce. For instance, whether a woman doing unpaid work chooses to say if she is actively looking for work or not would alter the FLFPR numbers. For a variety of reasons, in some states, more women doing unpaid work may say they are looking for work than in some other states, thus inflating the FLFPR percentage in the former. Further, those who are self-employed or underemployed (and not looking for a salaried job) are not considered part of the labour force and hence, increase in micro-entrepreneurship over a period could artificially depress FLFPR.
Further, the surveys to arrive at these statistics are conducted by temporary staff who may not be sufficiently trained to understand these fine distinctions and assure that the data they gather is not distorted by these subtleties. Fortunately, these vagaries are unlikely to alter either the overall trends or the underlying insights.
Non-obvious insights
The common belief has been that FLFPR numbers were higher in the south and the west in comparison to the north and the east. However, the government of India’s annual report of the periodic labour force survey (PLFS) for 2022-23 shatters this myth and throws up many surprises.
Despite higher literacy rates and women empowerment indices, the simple average of FLFPR for the five southern states is a whopping 13 percentage points lower than that of the five northern states of Himachal, Rajasthan, Chhattisgarh, Madhya Pradesh, and Jharkhand (41% versus 54%). The average for four of the seven north-eastern states is 57%. There are only four states with less than 25% and these are Assam, Bihar, Haryana and Delhi.
Delhi is the lowest at 14.8%. Quite obviously, there is no straightforward explanation and many factors are at play. In a research report, two young economists from St. Xavier’s College, Mumbai, have discovered an inverse correlation between per capita income and FLFPR, which means that as family incomes rise, women tend to drop off from the work force reinforcing the hypothesis that working women in India have mostly played the role of supplementing family incomes.
However, Bihar and Haryana run counter to this narrative and a possible explanation is the continued strong patriarchal culture in these two states while the other five northern states have probably made positive strides on this front, making it easier for women to work or at least actively seek work. In states with a strong culture of patriarchy, women stepping out of the home has traditionally been viewed as something undesirable and affecting the prospects of marriage. Decades of reinforcement of this attitude has resulted in public spaces and work places being totally dominated by men, and therefore unsafe for women.
The FLFPR numbers in almost all states are higher for the rural segment than for the corresponding urban segment. As per a recent article in The Hindu Business Line, across India, on an average, the agriculture sector employs almost 80% of all economically active women. One of the most under-reported trends is that agriculture, which is the least productive undertaking, is fast becoming women dominated in India. However, farms with infrastructure that makes agriculture productive, like irrigation and mechanization, continue to be run by men while women operate the least productive parcels of land that are small and dry. Large and well irrigated farms are far fewer than small and unproductive holdings. Men from families with such unproductive land holdings often migrate to towns in search of work leaving their womenfolk managing the farm.
Gender pay gap
Gender Pay gap may not be a very significant problem in the world of the public sector and progressive private companies, but it is a serious problem in most other enterprises. When the gender pay gap is stark, there is no incentive for women to come and join the labour force. This is probably one reason why in the five southern states, despite very high levels of literacy and women empowerment (on all other measures of women empowerment except gender pay gap), the FLFPR is very disappointing.
Missing manufacturing
Across the world, manufacturing has typically provided women steady income earning opportunities and a secure environment. Among the top 10 economies in the world, India is probably the only country that missed this bus and leapfrogged into services.
Agriculture has historically been a declining enterprise. As per a study by Deloitte, in 1800 in France, the share of the labour force working in agriculture was nearly 65%. In 2012, that number was under 5%. Mechanization of agriculture, combined with low population, resulted in a sharp decline of the labour force engaged in agriculture across the developed world. Increase in agricultural productivity and increased urbanization have had a strong correlation. The decline in the share of the labour force in agriculture hasn’t been as sharp in countries like India. Lack of alternative employment opportunities in manufacturing and the limited number of jobs in services has also played a role in continued underemployment and low productivity in agriculture.
In the absence of a robust manufacturing sector, construction has been one of the biggest employment-generating industries, but it has never been a good substitute for manufacturing in terms of providing steady and safe employment, especially for women. The jobs are mostly temporary, unsafe with no secure perimeter, weakly regulated, and the conditions and pay are highly discriminatory towards women.
Women in construction have almost been relegated to carrying loads on their heads that men refuse to. Visit any construction site and this deeply discriminatory and ubiquitous practice would become evident.
Can things get better?
Low FLFPR is an outcome of a myriad socio-economic factors, many of which are rooted in history and culture. No change of significance can be driven without first understanding the causal factors followed by sharply targeted interventions. It is evident that the levers for driving improvement are different for every state. The progress made by the five northern states is worthy of praise, and offers hope that change is possible even in short timelines. Clearly, something has been working well for them and probably that has got to do with good governance and continued social reform by successive governments. Probably, the five southern states need to address gender pay gaps seriously to draw more women into the labour force.
The history of women empowerment in other parts of the world also indicates that things can get better quickly. Cambridge did not grant degrees to women as late as in 1948 and Harvard Medical School admitted a woman for the first time in 1945. It was only during World War II that for the first time in the western world, women were pulled out of homes on a large scale and thrust into jobs that were originally exclusive to men. However, after the war came to an end and the men began returning home from the battlefront, this trend lost steam and women were back to being confined at home. But the feminist movement had picked up momentum and in 1964, after nearly 200 years of independence, America passed the civil rights bill by which any form of discrimination based on gender, race, colour, religion, or national origin was outlawed. In fact, even in 1964, the powers given to enforce the provisions of the Civil Rights Act were weak, though these were supplemented during later years. Passage of this Act was not easy and there was considerable opposition in both the Senate as well as the House of Representatives. From time to time, there were attempts to confine women to homes under the guise of family values.
Despite such a late start, and all the obstacles along the way for change, the progress in the western world on this has been rapid and deep.
Way forward for India
A lot has been said and written about India’s demographic dividend. If we quantify demographic dividend as the ratio of the population in the employable age (say 15-59 years of age) to the total population, it would become evident that time is running out and India would enjoy this dividend for at best two more decades after which we would be confronted with the problem of supporting a growing segment of senior citizens. It is inevitable that every country, with growing prosperity, would eventually get to this state at some point of time. Europe and Japan have grown old. The US and China are rapidly getting there. Fortunately for them, they had cracked the code of getting women to work in time. This problem would get exacerbated in countries where the FLFPR percentage continues to remain low. It is therefore important to address this issue with a sense of urgency.
Creating a steady stream of supply needs emphasis on education. The goal for every state in India should be to get to where Kerala is today in the next five years. Make in India is beginning to work finally through a combination of policy push around incentives and imposition of non-trade barriers on imports. A large pool of educated and skilled women would help accelerate the manufacturing sector. Laws regarding rights to property, safety at the workplace and in public spaces, gender pay equality, social reform are essential to move the needle. And finally, governments at the centre and the states should roll out the red carpet for women micro and small entrepreneurs.
T.N. Hari is an author and founder of Artha School of Entrepreneurship
