What does it mean for me?
Fewer women working is a symptom of the overall disease, which is lower economic activity and hence, fewer jobs going around. The labour participation rate among men has also fallen. According to the World Bank data, it fell from 84.7% in 1990 to 75.9% in 2019. CMIE data says it has fallen from 75.1% in January 2016 to 67.3% in September 2021. This means that people who do not find jobs drop out of the labour force.
Fewer jobs mean lower income for many households, and lower-income means lower spending. Lower spending means lower business opportunities. This explains the broader consumer spending slowdown over the last few years.
It also tells us about another trend. The fact that the labour participation rate has been dropping means many people who need jobs cannot find one. Despite this, the economy has been growing (except in 2020-21). This basically means that the economic growth has been limited to the well-to-do section of the population and it isn’t equally distributed across different sections of the population.
Let’s take a look at this specifically from the point of view of women working and earning more and the impact it will have on the future growth of unicorns in particular and businesses in general.
Most unicorns in India are in the service business. Take the case of Zomato or Swiggy, which primarily deliver food from restaurants. A household with a working woman is likely to see more value in ordering food. There are two reasons for it. One is that a working woman would have less time to cook regularly for her family and hence, is more likely to order (Most men in Indian homes don’t cook). Also, she would have the money to order and wouldn’t have to depend on her spouse or partner.
The same logic would work for a whole host of grocery delivery apps. A woman with less time would prefer to get stuff home-delivered than going to the local market.
A household with a double income is more likely to travel more. So, people are more likely to use an app like OYO (or other such apps).
Or take the case of Nykaa, the online beauty aggregator. It will clearly benefit if more and more women take up jobs and the female labour participation rate increases. Even the likes of Ola Electric will benefit as more women work and need a vehicle to move around.
Of course, as women work more and earn more, everyone from Amazon to JioMart to Flipkart will also benefit. So, will the likes of PhonePe and Paytm and Netflix, Amazon Prime and Hotstar.
All in all, it’s in the interest of these companies, many of which are unicorns, that more women work and spend. Of course, this is a classic long-term demographic trend that cannot be easily quantified. Given this, we don’t hear these companies talking much about this trend.
Having said that, in July 2018, the Economist had pointed out that “a rise in female employment rates to the male level would provide India with an extra 235 million workers.” This would lead to the country being 27% richer.
On the flip side, if fewer women work, as they currently are, things will not turn out well for many businesses, unicorns or otherwise. And this is a risk that unicorns and other entrepreneurs at least need to be aware of.
Now given that many of them are in the middle of raising capital through venture capitalists/private equity firms or initial public offerings, they are not going to admit to the same. Also, rarely do entrepreneurs forecast a risky future about their business.
As Olivier Sibony writes in You’re About to Make a Terrible Mistake: “The project may be risky, but the forecast associated with it is subject to overconfidence. Invariably, projections for sales, profits, time to completion, and so on will be overoptimistic. Just as importantly, overprecision will lead the decision-makers to overstate the degree of confidence they have in these plans. The goal, for the plan’s author, is to present the project as almost certain to produce a satisfactory outcome.” Also, projection of confidence leads to less scrutiny.
This is as applicable to Indian unicorns as it is to other businesses. The trouble is that the female labour participation rate puts a big if on what these businesses will eventually become. This is India’s so-called demographic dividend, which was supposed to go out there and work and earn and spend, and put India on a path of fast economic growth.
Or so we have been told for the past two decades. But that, as we are seeing, isn’t turning out to be the case. That’s the trouble with life.
Many things we think are true and take for granted don’t turn out to be like that. Take the case of the superhit Bryan Adams song, Summer of ’69; it turns out even that is not about the summer of 1969.
To conclude, business performance can’t be unrelated to the economy all the time, as it currently is. Ultimately, like it is in life, things do tend to catch up. And they eventually will.
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