Declining women's participation in a growing economy

Over the last few decades, women’s economic participation has declined in Jammu and Kashmir despite rising female literacy rates and positive GDP growth rate. The withdrawal of females from the labour force is a serious concern as it can hurt our long-run growth trajectory. This article presents several dimensions of the issue and suggests what the government can do to achieve gender balance in the workforce.    

The women’s availability for work is measured by female labour force participation rate (FLFPR). Labour force refers to persons who are either working or looking for work. The LFPR is defined by the National Sample Survey (NSS) as the number of persons in labour force per thousand persons. The female LFPR in rural areas of J&K has declined from 98 (per 1000 person) in 1993-94 to 49 (per 1000 persons) in 1999-2000. The 68th NSS survey (2011-12) shows the FLFPR stagnating at 50 per 1000 persons. The FLFPR in the urban areas, too, had declined from 96 per 1000 persons in 1993-94 to 48, but it bounced back to 108 through the period 2011-12. A similar situation was witnessed at the all India level during these periods. The declining trend has triggered interest among policy makers in New Delhi and academic researchers across the country because it is affecting the economy from both demand and supply sides.

In the discourse on FLFPR, social factors such as marital responsibilities, social stigma, and employer’s negative attitude towards female employment are unanimously held as major impediments to women’s economic participation. However, over the last few decades, social factors might not have become less strict, but they have not become stricter either. Therefore, while we may argue that the low level of the FLFPR in India is due to social factors, we cannot hold them solely responsible for its sustained decline over the past few decades.

In the recent years, economists have advanced two more reasons to explain the trend. First, it is found that there is a negative income effect of male earnings on FLFPR. In other words, as the income of a husband goes up, the chances of his wife pulling herself out of the labour market also increase, thereby causing a fall in the FLFPR. Second, it is argued that the rise in the enrolment of females in higher education delays their entrance in the labour force, thereby reducing the FLFPR. These two explanations may sound theoretically plausible, but they are not consistent with the experiences of the developed economies.  Then what may explain the decline in women’s willingness to work in J&K or at all India level?

To seek the answer to the question, we must investigate it in the backdrop of the changing nature of the job market across Indian states. In the post-reform period, the industrial labour market has seen a sharp rise in informal jobs even in the formal sector. The share of regular jobs in the formal industrial sector has gone down from 87 per cent in 1993 to below 65 per cent in 2011, and it continues to be on the downward spiral. The rising trend in the use of informal employment has affected real wages of workers. According to the ‘State of Working in India Report’ published in 2018, the gap between wages and labour productivity has widened over the past few decades. The finding is indicative of a rampant unfair exploitation of the working class. Besides, Indian states are increasingly pushing for pro-employer labour market flexibility by amending the pro-worker provisions in their labour law regimes. Labour unions and some economists have argued that the deregulation of labour is tilting the bargaining-equation in favour of producers, leaving workers at the mercy of their employers.

A report recently published by Oxfam India stresses that the lack of quality of jobs and the increasing wage disparity are the key impediments to gender equality in Indian labour market. The Report also draws attention to the rising informalization of employment and wage discrimination against non-regular workers, especially in the formal sector. As per the Annual Surveys of Industries (ASI), the share of contract workers in total workforce in the formal sector has increased from 13 per cent in 1993-94 to over 35 per cent in 2011-12. As non-regular workers are excluded from most of the labour laws, they face discrimination on several fronts including wages, working conditions, and career advancement.

Amidst the rising trend towards unregulated job market and non-standard forms of employment, women are more vulnerable as compared to their male counterparts. According to the Global Wage Report, published by the International Labour Organization (ILO) in 2018-19, women in India are paid 34 per cent less than that of their male counterparts. This gender wage gap is highest among the 73 countries studied in the report.

To encourage women’s participation in the labour market, the Central government in 2017 has implemented an amendment in the Maternity Benefits Act (MBA), 1961, thereby increasing the paid maternity leave to 26 weeks from 12 weeks. The Act is applicable to Jammu and Kashmir also. However, it applies to the formal sector only, i.e. organisations employing more than nine workers. Given that 95 per cent of the female workforce is engaged in informal sector, the benefit of the Act is restricted to a small percentage of the female workforce.  Thus, any pro-worker change in the labour law regime is unlikely to make a major dent in the problem unless accompanied by a push towards formalization of the business organization.

It is pertinent to mention that since the Maternity Benefits (Amendment) Act, 2017 creates an additional financial cost of hiring a woman, employers in the private sector may choose to replace female workers by male workers. Considering such a possibility, the central labour ministry has recently proposed to bear the employer’s financial burden of seven days of paid maternity leave – a welcome move. Two things remain to be seen in this respect. First, whether the labour ministry’s proposal translates into action. Second, whether the cost sharing proves to be optimal enough to discourage the possible loss of women employment in private sectors in the wake of the amendment.

The central and the state government must set up a long-term concerted action plan to induce small enterprises to expand their size of employment and enter in the formal sector. Besides, it is high time that the government aims at enhancing job quality and ensuring equal pay for equal work. This approach will not only propel growth in women’s economic participation, but also increase their productivity.

Dr Irfan Ahmad Sofi works as Assistant Professor at Department of Economics, BGSBU, Rajouri and Dr Jaya Shrivastava works as Assistant Professor, Department of HSS, NIT Srinagar