Tapping India’s demographic dividend is contingent upon improving the country’s female labour force participation rate (the number of women seeking employment or employed as a portion of the total population of working-age women). Therefore, the findings of a new IMF working paper, Women Workers in India: Why So Few Among So Many?—that India has one of the lowest female labour force participation (FLFP) rates among developing and emerging economies (33% in 2012) and that its FLFP has been declining since the mid-2000s—should raise concerns.
The study also finds that education and female labour participation exhibit a U-shaped relationship. At low (or nil) education levels, FLFP is high, with this employment being limited almost entirely to the informal sector. With increasing education, participation falls, only to pick up at the higher education (university) levels, given the pull factor of higher wages of white-collar jobs. The IMF research, read together with a recent OECD report—the latter found that significantly lesser numbers of women enter STEM (science, technology, engineering, mathematics) degree programmes, thereby limiting women’s participation in these fields that create some of the largest number of white-collar jobs—highlights how the gender gap in education could be an important driver of low FLFP. At the same time, the report says, the Indian labour market needs to be more flexible to create formal sector jobs for the “missing middle” (the women with middle-level education). One of the ways to do this could be to have skills training built on these women’s existing education levels, making them eligible for jobs that require greater competencies. At any rate, given how economic growth is strongly positively correlated with FLFP, India needs to move fast to address this aspect of gender inequality.