Tuesday's Talking Points
Greater Female Workforce Participation could raise India’s Demographic Dividend!
India’s structural growth story has elevated it to a unique position in today’s financial markets. It is expected to deliver the highest growth among major economies as per IMF (International Monetary Fund) estimates. According to labour market indicators, women currently have significantly lower labour force participation rates (LFPR) versus men. While societal change is in place where more women are opting to have long term careers, there are all round efforts to improve share of women in the workforce. This is expected to boost the human capital available in the country available for productive work, and could provide a fillip to India’s economic growth and boost overall well-being. With that, on this Women’s Day, we would like to discuss the significance of greater female workforce participation raising India’s demographic dividend.
According to data published by the Sample Registration System, General Fertility Rate (GFR) – number of children born per 1,000 women in a year in the reproductive age group of 15-49 years, has declined in India by 20% over the past decade. Due to lower fertility rates, India is entering a unique phase where the working age population ratio is expected to peak in 2032, and stay reasonably high (> 65%) till 2060. Rising median age, higher disposable incomes, and better overall economic profile – this phase of ‘demographic dividend’ is expected to reap India significant economic benefits.
What is Demographic Dividend?
According to the Unites Nations Population Fund, countries with the greatest demographic opportunity for development are those entering a period in which the working-age population has good health, quality education, decent employment and a lower proportion of young dependents. Smaller numbers of children per household generally lead to larger investments per child, more freedom for women to enter the formal workforce and more household savings for old age. When this happens, the national economic payoff can be substantial. This phase of high working population and linked benefits is called “demographic dividend”.
What are the Signals of Rising Demographic Dividend from Women?
- Changing Workplace Environment for Women
The Indian workplace has traditionally been male-dominated. For a working Indian woman, the workplace has been riddled with multiple challenges. However, the situation is gradually changing, with more women joining the workforce since the past few decades, and breaking the barriers that previously prevented them from getting employment across different sectors. As a matter of fact, percentage contribution of women in corporates have seen a rise, as a result of corporates taking active measures to make workplace environments more conducive for working women.
The Government has taken various steps to improve women’s participation in the labour force and quality of their employment. A number of protective provisions have been incorporated in the labour laws for equal opportunity and congenial work environment for women workers. Some of these include enhancement in paid maternity leave from 12 weeks to 26 weeks, provision for mandatory crèche facility in the establishments having 50 or more employees, and permitting women workers in the night shifts with adequate safety measures.
- Improving Female Labour Market Indicators
As per Current Weekly Status (CWS) published in the Economic Survey 2022-23, labour market indicators for females have recovered swiftly from 2019-20 (July-June) to 2020-21.
Region-wise, while the urban labour market is slightly behind pre-COVID levels in 2020-21 (July-June), rural labour market indicators have been improving for females.
| Particulars | Rural | Urban | Rural + Urban | ||||||
| 2018-19 | 2019-20 | 2020-21 | 2018-19 | 2019-20 | 2020-21 | 2018-19 | 2019-20 | 2020-21 | |
| Male LFPR | 55.10% | 56.30% | 57.10% | 56.10% | 57.80% | 58.40% | 55.60% | 56.80% | 57.50% |
| Female LFPR | 19.70% | 24.70% | 27.70% | 16.10% | 18.50% | 18.60% | 18.60% | 22.80% | 25.10% |
| Worker Population Ratio (WPR) | 19.00% | 24.00% | 27.10% | 14.50% | 16.80% | 17.00% | 17.60% | 21.80% | 24.20% |
| Unemployment Rate (UR) | 3.50% | 2.60% | 2.10% | 9.90% | 8.90% | 8.60% | 5.20% | 4.20% | 3.50% |
Source: Annual PLFS 2017-18 to 2020-21, Ministry of Statistics and Programme Implementation (MoSPI)
- Organization” of Women in the Unorganized WorkforceThe Government has been working on improving life and dignity of labour force of country by protecting and safeguarding the interest of workers, promoting their welfare and providing social security both in organised and unorganised sectors.
Accordingly, Ministry of Labour and Employment has developed eShram portal – the first ever national database of unorganised workers which includes migrant workers, construction workers, gig and platform workers among others, which is verified with Aadhaar. It captures various details of workers for the optimum realisation of their employability, and extend the benefits of the social security schemes to them.
As on December 31, 2022, total over 28.5 crore unorganised workers have been registered on eShram portal. Female registrations stood at 52.8% of the total and 61.7% of total registrations belonged to the age group 18-40 years.
Conclusion
India is an outlier when it comes to women’s labour force participation rates – defined as percentage of working age women who are economically active – even within lower-middle-income countries. According to the World Bank, the gap in labour force participation rates between Indian men and women was a whopping 32% in 2021.
While there has been a decline in discrimination within the labour market in India over the past decade, the journey ahead is going to be a challenging one. Against that backdrop, the Government should make appropriate policy interventions, and more importantly, workplaces should ensure effective implementation of policy interventions, in order to raise the gender equity, and ultimately raise India’s demographic dividend.
Sources: Economic Survey 2022-23, Press Information Bureau, CFA Institute, and other publicly available information
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