Why The Most Populous Country Needs More Women

According to World Bank estimates, closing the gender gap (the difference between the percentage of men and woman in formal employment) could boost global GDP by over 20%. As such, countries with big gender gaps, like India, could benefit greatly from employing more women.    

The Indian economy has grown at an average of roughly 6% per annum for much of the 70 years and is forecast to continue growing at a faster rate than every other major economy. India surpassed the UK in total economic size in 2021 and remains the fastest growing country in the G20.

Modi has stated that India will rise to become the world’s third largest economy by 2028, and in terms of GDP by PPP, the sub-continental giant has already achieved this goal. Yet, despite this success, India’s female labour market participation rate remains among the lowest in the world. 

According to the International Labor Organization, the global average difference between male and female labor participation rates has remained relatively stable over the past 50 years at around 30%. Countries in North America, Western Europe and Sub-Saharan Africa have maintained the smallest gaps while the largest gaps are found in the Middle East, North Africa, and South Asia. While Brazil’s gap has halved since 1990 from 40% to 20%, India’s gap remains close to 50%.

That female labor participation rates are lowest in Arab States suggests a cultural dimension, with India among a very small group of non-Islamic countries where the labor participation rate of the female population is below 40%. That said, according to S&P Global, Saudi Arabia has increased its rate of female participation to nearly 40%, while India has been trending in the opposite direction.   

According to World Bank estimates, India’s female labour market participation rate was over 30% in 2005. But recent estimates from the International Labor Organization put India’s female participation rate at a worryingly low 20% compared with a 70% labor market participation rate for Indian males. With last year’s Nobel Prize for Economics being awarded to Claudia Goldin for her studies on female labour dynamics, this is an area of economics attracting increased attention.  

Africa Leads The Way

Besides cultural factors, female labor market participation correlates with national income. As such, poorer countries tend to have fewer female workers in the workforce. This suggests that when there are fewer jobs available these jobs are reserved for males, including in the West, which experienced a noticeable decline in the female labor participation rate during coronavirus lockdowns as women were more likely to be laid off and take on the burden of unpaid care work.

The correlation with national income also suggests that countries which employ more females have a higher national income as economies with higher labor participation rates are more productive. This makes the figures from Sub-Saharan Africa even more impressive. Despite low national incomes and high unemployment, African countries have relatively high female workforce participation rates.

Some of the highest female participation rates in the world can be found in Sub-Saharan Africa with Tanzania and Mozambique approaching 80%. This trend is also evident in politics where countries like South Africa (44%) and Rwanda (61%) have a higher percentage of female representatives in parliament than ostensibly model democracies such as the UK (34%) and the US (28%). Meanwhile, India only recently passed a bill reserving one third of the seats in its parliament for women.

India Lags Peers Despite Strong Service Sector

While women and children worked in factories throughout the industrial revolution, the Western world did not embrace a high degree of female labor market participation until WWII when men were sent to the front and women took up jobs in factories. The increase in clerical work in the post-war period and technological innovation in the 21st century saw service industries increase as a share of the economy in wealthy nations, all of which increased levels of female employment in the West.

However, despite a strong service sector, India remains a long way behind both the West and its BRICS peers in terms of female labour force participation rates. Services make up the lion’s share of India’s economy with multiple estimates putting the sector at around 50% of GDP. This suggests India’s low female employment rate is not derived from the makeup of the economy and can be addressed with public policy interventions.

While India ensured all women could vote in 1950 (forty years before Switzerland and decades earlier than many of the Islamic states it compares with on gender-based labour metrics), Indian women are still not afforded the same working opportunities as women in other BRICS countries. Female labor market participation rates within the other founding BRICS member states are all in excess of 50%, which is double the highest estimates for women in India.

According to the World Economic Forum's Gender Gap Report 2023, India ranked a lowly 127 out of 146 countries. This is not due to an unwillingness to work on the part of Indian women. Surveys have shown that a majority of women in India would prefer paid work. But the right to maternity leave is not universal across the countries diverse regions, while Indian women undertake a high volume of unpaid domestic work, making their equal participation in the formal economy almost impossible.

In contrast, China’s female market participation rate is the highest among the BRICS countries at 60%, with potential to increase further as Xi’s government welcomes more females into the workforce to counteract the effects of a demographic decline. Considering India’s desire to compete economically with China and raise the living standards of its 1.44 billion citizens, increasing the share of females in the Indian workforce could prove decisive to achieving these aims.

Although traditional gender roles may allow India to maintain a stable population over the long run, implementing policies that help bring more women into the workforce could prove decisive in seeing an already booming India realize its true economic potential.