Giving Compass' Take:
- Despite recent increases in India's female labor participation rate, it remains below the global average. Investing in women's potential will help them reach economic stability and gain employment opportunities.
- What role can donors play in supporting initiatives that boost female financial empowerment?
- Learn more about sparking women's financial inclusion.
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Labour force participation rate (LFPR) is defined as the percentage of people in the labour force (that is, working, seeking, or available for work) among the population. LFPR includes those who are self-employed (for instance, in agriculture, forestry, fishing, etc. for their own consumption), salaried employees or casual labour, and those who are unemployed.
India is home to approximately 663 million women, of which approximately 450 million women fall in the working age of 15–64 years. India’s FLFPR had been showing a sharp declining trend over the last three decades, from 30.2 percent in 1990 to hitting an all-time low of 17.5 percent in 2018, as per reports by World Bank, Centre for Monitoring Indian Economy (CMIE), and Periodic Labour Force Survey (PLFS). (The PLFS is India’s official labour force survey, and became an annual exercise only in 2017–18.)
Unlike the downward trend India has seen in the FLFPR since the 1990s, the 2020–21 PLFS1 for all ages shows a significant improvement in the last three years, going up from 17.5 percent to 24.8 percent (for women aged 15 and above, the rate increased from 23.3 percent in 2017–18 to 32.8 in 2020–21). A recent press release from the Ministry of Finance highlights that this improvement can be attributed to a range of factors, including progressive labour reform measures, better employment trends in the manufacturing sector, increasing share of self-employed people, and a rise in formal employment levels.
The global FLFPR is 52.4 percent (ages 15+), and has been at a similar level for the last three decades. However, in developing countries and emerging economies, there is a significant variation. In the Middle East, North Africa, and South Asia, this rate is approximately 25 percent, whereas it reaches up to approximately 66 percent in East Asia and sub-Saharan Africa. Interestingly, we don’t see such a trend variation in men’s LFPR, which stands at approximately 80 percent across economies.
Unlocking the full potential of women in our workforce would provide multiple times the return on initial investments made by the government and businesses. As per McKinsey Global Institute’s report, India could achieve an 18 percent increase over business-as-usual GDP (USD 770 billion) by 2025.
The real economic, business, and societal value of the participation of women in India’s labour force can only be achieved through the active involvement of women across the formal economic ecosystem. Studies have shown how, in advanced economies, women in professional occupations outsource their care work, which further results in employment and income generation for more people. Similarly, Indian women and the economy will immensely benefit from solutions that focus on improving the participation of women in the formal economy. This will include reducing, redistributing, and rewarding unpaid care work.
Read the full article about female labor force participation by Shruti Deora at India Development Review.