To realise the better half dividend

Updated: May 26 2007, 05:30am hrs
Finally, the Karnataka government relented, and let women work at night if they should so want. A few weeks earlier, Unescap released estimates that sex discrimination at work costs the region between $42 billion and $47 billion, and that the gap between women and men work participation rates is 30-40 percentage points. In addition, the costs of violence on women and poor access to education and health are heavy. However, a local Goldman Sachs representative, presumably echoing the Brics work done earlier by Roopa Purushothamam, recently told Assocham that the Brics countries would quadruple their income by 2020. Since improved work participation by women is an important part of the economic growth story, these contrary sounding outlooks can be rather confusing.

Lets take a closer look. Projection models, particularly of the Brics variety, typically operate by deriving demographic dividends from inevitable consequences of savings, fertility patterns, age structure of populations and labour force numbers. The results are striking, and it is important to understand which of the results are robustand why. Some of these studies may turn out correct, for example, but for the wrong reasons. The future is not inevitable. And dividends will only be garnered by the brave who have a strategic vision of human development in operation.

By the projections for 2050, differences between, say, India and Japan or Spain are large. India will have far fewer retired people. Consequently, 4.4 workers would support a retiree in India, but only 1.4 in Japan/Spain. This is good for India. Some years ago, we had done work on this for the United Nations Universitywhich was published later by The Indian Econometric Society. What it showed, in retrospect, is the frailty of grand long-term projections.

Studies tend to be like that. Some of the outcomes come about by definitions, and these are robust, but others are based on assumptions and therefore need scrutiny. The robust fact that even if output per worker does not change, output per capita would grow if the growth rate of workers exceeds the growth rate of the total population (the difference between the two growth rates being critical), comes from definitions. This is a demographic dividend and its robustness comes from the fact that it takes place even if worker productivity growth does not rise. The size of the difference could vary, though, depending on the numbers you predict based on what the demographers are sayingso, be careful of the Greeks who bring gifts. They were wrong earlier, and could be so again.

During demographic transition, another kind of bonus can accrue which I once called the sweetest bonus. The time spent by women in bearing and raising children falls while mortality decline lengthens the life span remaining after the cessation of childbearing. In India, the age at first-birth could be 22 years or more (less than 20 now), and the age at last-birth could be around 28 years (38 now). Women could then be expected to enter the labour force in large numbers. Consequently, the growth rate of the labour force would remain higher than the growth rate of total population for an extended period. The significance of this deferred bonus could be higher than the immediate bonus resulting from age structure changes. But this dividend would be intertwined with structural changes in the economy like agricultural diversification and rural-urban migration.

The future is not inevitable. And dividends will only be garnered by the brave who have a strategic vision of human development in operation. In a country where artistic portrayal of the female form leads to violence, we should be careful about projecting high dividends without any change in mindset
Some of the data on this, however, is depressing. The overall employment story for a country can improve, even as women are left behind. I once chaired a session at a Seminar on China-India and Asian agriculture in Seoul. From 1997 onwards, the Asian meltdown had led to a fall in agricultural growth and diversification, both within and away from agriculture. This happened not only in the smaller economies, but also in fast-growing and reforming economies like Vietnam and large ones like India and China. With such trends, it can be shown that dividends are not automatic, but need policy alertness to be garnered. For example, in parts of rural India, the subsidiary employment of women in agriculture in diversifying activities like animal husbandry went down in the 1990s as compared to the 1980s. Canadian economist Dipak Mazumdar has, in a World Bank-sponsored study, estimated the upsurge in the demand for labour early in the 80s due to the second wave of the green revolution in paddy cultivation. This increase in demand was met in the short-run by a lift in the participation rates of SS females (SS here means subsidiary status). However, the employment loss in subsidiary employment for females between 1993-94 and 2000-01 is 4.88 million just in cereal growing. There were further losses in milk production. This would be a negative dividend, with women withdrawing from the labour force.

Attitudinal change is important. This is not easy in a paternalistic society, as the Karnataka case showed. In a country where artistic portrayal of the female form leads to violence, we should be careful about projecting high dividends without any change in mindset. Economic and social change are not for the fainthearted. The good things of life will take effort todayfor us to envisage a brighter tomorrow.

The author is a former union minister for power, planning and science, and was vice-chancellor of JNU. Write to alagh@icenet.net