India would be US$550 billion richer if it just increased its share of women in the labor force by 10%

India would be US$550 billion richer if it just increased its share of women in the labor force by 10%

I take the Delhi Metro to work every morning. The subway system allocates one out of six or eight carriages exclusively for the use of women, in the interest of safety. The remaining carriages are mostly occupied by men - I would venture to say anywhere between 80% and 90%, based on rudimentary calculations. This is usually the case all the time.

It’s a stark and daily reminder of just how far India has to go in terms of solving its gender inequality problem.

A recent report on gender equality by the Mckinsey Global Institute (MGI), the consultancy’s research division, shows that India is one of the lowest-ranked countries in the Asia-Pacific in terms of labour force participation by females and the contribution of women to GDP, based on figures from 2016. Around 18% of India’s GDP is accounted for by women, while the share of females in the country’s labour force is 25%. Only Pakistan ranks lower than India on both counts- with women contributing a mere 11% to GDP and comprising 22% of its labour force.

It has a lot to gain by unleashing the productive potential of its women- who have, up until this point, been a underused resource. MGI estimates that India’s GDP, if everything were to carry on as usual, could increase by $770 billion, or 18%, by 2025 by giving women access to equal work opportunities as men. Around $550bn, or 70% of this increase, would come by just increasing the share of females in the workforce by 10%.

The remaining portion of the increase in GDP would be achieved by improving the quality of work given to women and the hours worked. Too often, the report notes, women are engaged in unpaid care work or low-quality, low-paying work like cleaning. A staggering 97% of all female workers are engaged in informal sector work that isn’t regulated and doesn’t offer adequate remuneration based on hours put in. Additionally, the amount of time spent doing unpaid, household chores is lengthened by a lack of easy access to amenities such as cooking fuel and clean water.

A lot of women find themselves unable to enter the formal sector due to a low level of education. A report last year in the Wire showed that despite achieving strong enrolment rates for females in primary schools, as a result of the Right to Education Act, the government was not able to translate this into improved rates for secondary and tertiary enrolment. A girl’s higher education is looked at as an opportunity cost. Why send her to school when she can start helping her mother take care of the house or drawing an income from manual work?

Inequality in formal sector

The lack of female representation in the formal sector also has a lot to do with how upper classes in Indian society function. The MGI report explained that women’s workforce participation follows a “U-shaped curve”. While women from low-income families are forced to work out of necessity, the level of female employment gets progressively lower the wealthier a family gets, owing to the fact that there is a lower need for a woman to work for pay.

MGI says that this effect can be reversed if companies step up their hiring of women and give women more leadership opportunities. In most cases, the hiring practices of Indian companies reinforce the labour participation gap. According to a working paper by the World Bank, an analysis of over 800,000 Indian job postings showed that there was an explicit bias towards men, especially in blue-collar sectors. Further still, professions that have greater representation by women - such as teaching, health and business process outsourcing - actually paid men significantly more.

A lack of legal protection and political representation

India does not have any laws in place to ensure equal pay for men and women. While the government passed a law mandating 26 months paid maternity leave in April last year, it made no provision for financial support to small-and-medium sized businesses. At the time, experts felt that the law would only serve to exacerbate discriminatory hiring practices against women. The government also excluded the unorganised sector from the purview of the law, thereby offering no protection to women in temporary, self-employed or contractual roles. Worse still, the law did not make any mention of paternity leave, deciding once and for all that child-rearing was the sole responsibility of the mother.

The percentage of women in India’s lower house of Parliament is tragically low, at 11%. The Women’s Reservation Bill, which reserves 33% of the seats in both houses of Parliament and state legislatures for women, has been languishing for 22 years, despite being passed in the upper house in 2010. No surprise there. Why would the leaders of a male-dominated legislature be okay with ceding their seat to a woman?

The Northern states fare a lot worse

There seems to be a regional aspect to India’s gender equality problem. While states in the northeast and south of India, like Andhra Pradesh, Kerala and Sikkim, report strong female workforce participation rates, Northern states like Bihar, Uttar Pradesh and Jammu & Kashmir, fall significantly behind. Unsurprisingly, the level of female workforce participation was lowest in states with lower levels of adult literacy. This highlights the problem as primarily one of access to good education. In mapping out a strategy to improve gender equality in India, the government would do well to focus on states in the North first.

Some progress has been made, however

This is not to say that India hasn’t made any progress in curbing gender inequality. Over the past decade, it has reduced maternal mortality rates from 280 for every 100,000 births to 174. The female-to-male adult literacy ratio has also increased by 0.10 points to 0.87 while the prevalence of child marriage has declined.

Financial inclusion is also being achieved, gradually, through the Jan Dhan Yojana Scheme, which has given around 300 million women access to bank accounts and savings schemes, and the Mudra Yojana microcredit programme, under which more than 6 million female entrepreneurs have received loans.

But a lot more needs to be done

So what does that India needs to do to unlock the potential of its women and achieve the aforementioned increase in GDP?

Firstly, according to the MGI, the government needs to leverage the digital inclusion and internet penetration wave. Greater access to computer skilling and by extension, to the internet means greater access to information - educational courses, learning resources, job postings and networking opportunities. It also means access to online banking, which in turn, means access to credit and savings instruments.

Secondly, there need to be skilling and vocational training programmes tailored to industries where women have the highest potential for greater participation- healthcare, hospitality, textiles and electronics assembly. Thirdly, the government needs to encourage gender diversity-focused hiring policies in the companies.

Fourth, given that women do ten times more unpaid work than men, the government can help reduce the time spent on unpaid work by providing households in rural area with electricity, closer access to clean water and subsidised childcare services. Fifth, increasing the level of women in legislative bodies in India will set a good example for other industries and could kickstart a shift in societal norms. Women are an increasingly influential electoral group and deserve adequate representation.

Last, but most important, it needs to stimulate private investment and create enough jobs in the economy to accommodate the increase in female workers - an issue that merits its own feature story.

The increase in the female labour participation rate is not low-hanging fruit that the government can pluck and qualify as a win. It transcends election cycles and requires long-term, structural reform and a broad shift in societal attitudes. It’s a massive undertaking, but with a worthy payoff.

Wouldn’t it be great if there were two compartments for women in the Delhi subway? Or better yet, each compartment was equally comprised of men and women?