Despite slowdown, India could achieve double-digit growth with more jobs for women

Malathi Raghu, 29 owns a tailoring shop in the Attavar locality of Mangalore. (Credit: Asian Development Bank / Flickr)

The numbers just came in today, and India’s economic growth rate is the lowest it’s been in two years. But according to a new report by the World Bank, it could achieve double-digit growth if it brings large numbers of women into the workforce with “safe, flexible and well-paying jobs.”

According to the report, published Monday, India has one of the lowest rates of female labor force participation in the world – ranked 120 out of 131 countries in 2013 by the International Labor Organization. Worse, it’s been in decline.

In 2004-05, 37 percent of working age women (15 years and older) were working or actively looking for a job. That was already 10 to 15 percentage points lower than the expected rate for India’s income level. But by 2011-12, that rate dropped to 27 percent.

It’s low compared to countries with similar income levels, and it’s low compared to its neighbors such as Bangladesh, Sri Lanka and Nepal. And despite the fact that 42 percent of India’s science and technology graduates are women, the declining trend of labor force participation is sadly consistent.

“India’s female labor force participation rate is uniquely low for all levels of education,” Frederico Gil Sander, lead author of the report and the World Bank’s senior country economist for India, said in a press release. “Sixty-five percent of Indian women with college degrees are not working whereas in Bangladesh 41 percent and in Indonesia and Brazil only 25 percent of women graduates are not working.”

That’s significant “brain drain” for modern services sectors. But according to the report, if India just closed half the participation rate gap with Nepal – which boasts 83 percent women’s labor force participation – it could boost the gross domestic product (GDP) growth rate to more than 9 percent by 2020. Just closing half the gap with the level of participation expected for India’s income level could increase potential GDP growth by up to a full percentage point.

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These estimates are based on projections of India as the fastest growing major economy – a title it proudly held until the Central Statistics Office announced this morning that India’s GDP growth during the January to March quarter was a mere 6.1 percent, falling behind China’s 6.9 percent growth during the same period.

However, “the [2016-17] growth rate was 7.1 percent, which is in line with our estimates and would not affect the estimates of potential growth of 7.5 percent,” a World Bank expert wrote Humanosphere.

But to sustain that growth, India needs to revive private investment and increasing women’s participation in the workforce can contribute significantly, as well. In addition, putting more women to work can reduce poverty and generate more equitable prosperity. It also has important social benefits, such as increasing the bargaining and decision-making power of women in households, creating greater mobility for women and improving the health and nutrition of women and children.

“Women benefit from their economic empowerment, and so too can their men, children and society as a whole,” the report said. “The case for India getting more of its women in the labor force is thus not only ‘the right thing to do’ but also ‘smart economics.'”

So what is keeping women in India from finding jobs? Although about 30 percent of the decline in participation is because young women are staying in school longer, large numbers of educated women are still staying out of the workforce, as described earlier.

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The main issue, according to the report, is limited job creation overall. Between 2005 and 2012, India only created as many jobs as 0.9 percent of the adult population. And because of social norms and “other gender-specific constraints,” those regular wage jobs usually went to men.

In rural areas, women participate mostly in the agricultural sector, but as more and more families move to urban areas, women must have access to industry and service jobs. In Bangladesh, for example, with its vibrant garment and textile industries, 33 percent of its labor force in industry are women. In India, on the other hand, the sectors that draw in women most have expanded the least. Therefore, only 17 percent of India’s industry labor force are women.

“If the overall lack of jobs, especially regular salaried jobs, plays a large role in India’s female labor force participation rate, only a combination of gender-targeted and broader policies towards formal job creation can sustainably raise female labor force participation rates and accelerate India’s GDP growth and broader social development,” the report said.

Because of social expectations for women to maintain responsibility for household duties, these jobs need to be flexible, close to home and well-paying. Child care also needs to be available, and the jobs need to be safe.

One great way to create safe, flexible jobs jobs for women? Invest in women entrepreneurs who tend to hire more women.

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About Author

Joanne Lu

Joanne Lu is a South Carolina-based writer and editor dedicated to global development, poverty alleviation and social justice. After a year in Rwanda, she now covers the Asia-Pacific and economics. Find her on Twitter @joannelu or email joanne@humanosphere.com.