In today's Finshots we talk about women's role in the economy and why it's so important that we fix the gender gap precipitating in the labour market

The Story

Women aren’t treated fairly in India. They make up roughly half the population in the country and yet, haven’t benefited from the rapid development we’ve witnessed these past few decades.

Female literacy rates are lower than male literacy rates. Female labour participation rates have steadily declined — from 26% in 2005 to roughly 20% in 2019. Women also continue to do most of the unpaid work that helps prop up economies. They raise children, they shop, they cook, they tend to the old and sickly. In some ways, you could argue that they don’t always have the opportunity to participate in the labour force — formal or informal.

But what if they could change this? What if we could get women to actively participate in the labour force? How would that impact our economy?

Well, most people already know that including women in the workforce aids productivity. A larger workforce should impact economic output in a massive way and ideally, there ought to be a commensurate increase in the GDP. But the benefits go far beyond this simplistic assessment. In the US for instance, one study concluded that “for every 10% increase in women working, we see a 5% increase in wages.” Meaning not only do you see an aggregate benefit in real economic activity, but even men are likely to gain as they see their wages increase.

How does this happen?

Well, many ways. For starters, some women replace men with lower productivity, thereby impacting the overall pie. Even others bring complementary skills that help boost economic activity and through it, wages as well. More importantly, they are valuable assets that help expand the economy. And as economies expand in size and scope, some of the benefits do trickle down to everyone in the ecosystem — men and women alike.

So if it’s this beneficial, what’s holding women back?

Well, some will say it's simple— Patriarchy. Women aren’t afforded the same opportunities as men, and this obviously has an impact on their contribution. However, this is only partly true. If in fact, patriarchy alone could explain the difference in labour participation, then you should ideally see lower participation figures in rural areas (where patriarchy is a much larger concern), compared to urban centres. What we see instead is that women in the hinterlands continue to be employed in the informal labour force whereas urban women find it difficult to obtain employment opportunities that aid their wellbeing in a meaningful manner.

The point is — Patriarchy and systemic discrimination in the workforce do stunt progress, but there are other factors at play.

What other factors?

Well, one obvious factor is that women continue to do unpaid work that isn’t captured anywhere. For instance, a substantially high proportion of women report their activity status as tending to domestic duties, with one report citing — “The median woman was putting in a little under 5 hours of housework in a day, and the median man a little under 90 minutes a day.”

And considering this unpaid work isn’t included in official figures, you can see how women’s role in the economy gets distorted quite easily. Another reason is that India hasn’t created enough jobs to absorb the increasingly literate female population. Even when they do, women have to put up with the balancing act— tending to households while also working their jobs. Meanwhile, in the informal sector, women are often forced to work jobs that don’t pay well. And while they do this to sustain their livelihood, working conditions are often terrible here.

So what can we do about all this? How do we fix this problem?

Well, there is no easy solution. But we can make small adjustments so that women working in the labour force continue doing so. Simple things like — men sharing the load in the household, safer public transport, better working conditions, incentivizing girls to pursue higher education — all these things go a long way in improving labour participation rates.

And while the last two decades haven’t been kind to Indian women, hopefully, the next two decades will be better.

Happy women's day!

Until next time…

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