[RESEARCH] YourStory’s deep-dive analysis of the decline in participation of Indian women in workforce and its resulting economic impact

In the wake of International Women’s Day, there has been much rhetoric around what organisations and governments can and must do to increase the participation of Indian women in workforce and ensure gender equality. And yet, about 77 percent of working age women in India, the world’s second-most populous country, continue to be locked out of the job markets.

In an attempt to quantify India’s lost demographic dividend, YourStory Research, the research arm of YourStory Media, has conducted a deep-dive analysis of India’s female Labour Force Participation Rate (LFPR) over the years and in comparison with other nations across the globe.

The report also outlines the factors impacting India’s relatively lower LFPR and analyses the economic impact of the lost potential of millions of women who have been locked out of the job market.

Download YourStory Research report titled India's Missing Demographic Dividend

Why study the rate of participation of women in workforce?

Over the years, YourStory has been asked time and again for data on the number of women entrepreneurs and women working in startups, as well as women-led or co-founded enterprises. We’ve also been asked time and again why these numbers continue to be so insignificant.

But women working in startups make up a fraction of the total number of working age women in India, of which only 23 percent are currently part of the workforce. In reality, this points to larger systemic, socio-cultural factors that impact the participation of women in workforce, prompting us at YourStory to analyse the numbers and unravel what it means for India.

“For those of us who believe that demography is destiny, this missing dividend – which is equivalent to the entire workforce of western Europe today – should highlight the enormity of a lost opportunity,” writes YourStory Research analyst Shailesh Jha in a report titled ‘India’s Missing Demographic Dividend’.

Sizing up the cost of lower LFPR

According to YourStory Research, if India’s female LFPR was similar to that of South Asia today, we would have had 78 million more workers, which is equivalent to the population of Germany. The analysis also reveals that if India had a female LFPR similar to that of G-8, we would have 150 million more workers today. 

Indeed, the costs of lower LFPR are significant for India’s economic growth. To put this into perspective, YourStory Research analysts note that India in 2018 lost around $ 1.4-2.8 trillion in GDP (PPP, constant 2016 prices) due to a lower LFPR. This foregone opportunity is equivalent to the entire economy of France and Spain, with the costs of lower LFPR over the coming decade set to be even heavier, they add.

Source: ILO

What has been a trend in India’s case is that, as the country has become more prosperous, the female LFPR rate has fallen. Female LFPR in India is down from 37.7 percent at the time of the 2001 census to 23.4 percent today.

This implies a significant loss of economic opportunity due to the sheer wastage of human resources, not just on a national level, but also at a global scale. While India has made great strides in improving its ranking in other key growth metrics, the declining participation of Indian women in the workforce continues to be a red mark in the country’s otherwise laudable economic reform report card.

Download YourStory Research report titled India's Missing Demographic Dividend

Looking ahead: India’s lost demographic dividend

Looking ahead, even if India’s LFPR remains at the current levels, we could have anywhere between 90 million and 170 million missing workers in the economy as the country’s youth population expands.

To be clear, the need to boost female LFPR has more to it than economic pragmatism. Work that is gainful and remunerative has a positive psychological impact on people. It enhances their confidence in themselves, pushes them to discover more of their abilities, and allows them to strive for their ambitions.

“This is why, its absence, whether enforced by cultural or institutional norms, is a gross denial of human rights. No amount of agency, wealth, and prosperity transferred to women within their households today can be an excuse to deny them a choice of a career,” write YourStory Research analysts.

Also read: HerStory report on state of women entrepreneurship in India

(For any queries, feedback, and suggestions, write to us at [email protected])