Sharp fall in female labour force participation rate is not new, but is critical

Published: March 1, 2019 2:42:00 AM

Fewer women working is a big problem but if DeMo is cited as the reason for this, how do you explain an equally sharp fall in FLFPR over long periods in the past?

If demonetisation caused the second fall, a list of other significant determinants of the monotonic and persistent fall in FLFPR need an urgent attention of policymakers.

By Lekha Chakraborty & Namita Jain

The media attention has been focused, over the last few weeks, on the sharp decline in the female labour force participation rate (FLFPR) in India—from 31.2% in 2011-12 to 23.3% in 2017-18—and the fall has been used to explain the contraction in the country’s workforce. Although the FLFPR numbers thrown up by the private sector CMIE’s household survey are much lower at 11.7% for 2017-18, its MD and CEO Mahesh Vyas explains the fall in overall labour force participation rates (LFPR) as a result of demonetisation when economic activity across the country collapsed.

The reason for a falling FLFPR is not demonetisation alone. FLFPR fell from 42.7% in 2004-05 to 31.2% in 2011-12, a fall that is almost as sharp as the fall from 2011-12 to 2017-18. If demonetisation caused the second fall, a list of other significant determinants of the monotonic and persistent fall in FLFPR need an urgent attention of policymakers.

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Rethinking fiscal policy as “employer of last resort,” India designed a rights-based job guarantee programme for 100 days—Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Why ensuring job cards to women have not effectively translated into rise in employment? Are there any complimentary fiscal services needed other than just employment policies to get women in workforce? What constraints women from entering the labour force even when 100 days of jobs are guaranteed by the government? A study by NIPFP (Chakraborty and Singh, 2018; https://goo.gl/nRhaRG) revealed a new empirical perspective to the existing literature on FLFPR that the “care economy” burden of women (spending time on fetching of clean water, fuel collection, domestic chores) is one of the important determinants of FLFPR; and their “time poverty” can affect “income poverty” as the time burden of women in domestic chores hinder them from entering the workforce. The NIPFP study also found that joblessness among the poor who do not have MGNREGA job cards was severe than those having job cards. Another recent study by Ashwini Deshpande and Naila Kabeer of the London School of Economics, presented at the UN University (UNU-WIDER, Helsinki) on February 20, 2019, in the context of West Bengal, also argued for a shift in focus of analysis of low FLFPR in India from “religious conservatism” to labour demand constraints (lack of jobs in India), as well as specific labour supply constraints such as the burden of housework or domestic chores. This has significant policy implications, to design comprehensive “care economy” infrastructure policies in India.

Indeed, the decline in FLFPR is despite strong initiatives for “specifically targeted programmes” for women’s socio-economic empowerment taken by successive governments, as provided in the “Gender Budgeting” Statements in Expenditure Budget (Volume 1) every year, including the Support to Training and Employment Programme for Women (STEP) set up in 1986 and the “Beti Bachao, Beti Padhao” scheme launched in 2015. The insufficiency of budgetary allocations for such crucial schemes is a concern. Fiscal marksmanship of gender budgeting (the deviation between what is budgeted for these programmes and the real spending) is yet another issue when we talk about these programmes on women’s socio-economic empowerment.

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Indeed, the National Skill Development Council was set up in 2009 with the mandate of training 15 crore youth for jobs by 2022. The National Skills Mission launched in 2015 has had 1 crore youth join the Skill Mission each year (according to the Skill Mission website). However, the NSSO data shows LFPR for youth (15-29 years) saw a decline from 56.4% in 2004-05 to 38.2% in 2017-18, which is a drop of 18.2 percentage points. FLFPR in this age group dropped from 37.1% in 2004-05 to 16.4% in 2017-18, which is a 55.79% drop. The quantum is similar to the drop in the overall FLFPR (15-plus years), a decline of 45.4%. And while there has been a fall in LFPR for men, it is half that for women—that for men fell from 84% to 75.8%, versus 42.7% to 23.3% for women, over 2004-05 to 2017-18. Interestingly, while India’s FLFPR was falling, that for Bangladesh has been rising steadily, from 23.9% in 1990 to 36% in 2010. India’s FLFPR is the lowest among the emerging economies.

Also, from an economic growth perspective, a more logical answer for the fall is what is called the “Feminisation U” (Fem-U). An ILO paper by Sher Verick (https://goo.gl/wiL8AU) studied 2018 data for 172 countries to study the Fem-U and found evidence of a U-shaped relationship between FLFPR and GDP per capita. The hypothesis that growth lowers female participation rates in the early stages of development and increases it at later stages may actually apply in a broad sense to India, though it has far lower participation rates at the same income level compared to most countries on the curve. However, Fem-U is an empirical question, which needs further research in India.

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That India will benefit from moving up the second leg of the Fem-U is obvious given what it does to income levels across the country. According to the ILO, global LFPR for women was close to 49% in 2018 as compared to 75% for men. Reducing the gender gap in South Asia alone by 2025, the ILO estimates, can lead to a 7.2% increase in GDP for the region.

If the fastest and smartest way to increase economic growth is to increase FLFPR, investing in comprehensive “care economy” public infrastructure in India is crucial. It is high time the macroeconomic policymakers realise the significance of integrating “gender lens” in job creation, with explicit “care economy” public infrastructure policies—both physical and social infrastructure—to make the high growth sustainable in the long run.

-Chakraborty is associate professor, NIPFP, and visiting professor at American University. Jain is a management professional

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