Apart from course altering economic trends of globalization, the rise of China and decline of manufacturing, the most important trend of last half century has been the rise of working women. Women have been instrumental in taking the GDP growth rates higher than they used to be, bringing new values to the business world and help the world realize its full economic and human resource potential.
“Countries with higher levels of gender equality have higher economic growth.
Companies with more women on their boards have higher returns.
Peace agreements that include women are more successful.
Parliaments with more women take up a wider range of issues – including health, education, anti-discrimination, and child support”
Female Labour Force Participation
Let us start with female labour force participation. As expected, the trends are different for the western industrial nations and the economies of the global south, including India. Women now make up almost half of American workers (49.9% in October). They run some of the world’s best companies, such as PepsiCo, Archer Daniels Midland and W.L. Gore. They earn almost 60% of university degrees in America and Europe. In 1978, just 43 per cent of Australian women participated in the labour force. Today, it’s 59 percent – closing in on men’s 70 percent participation rate. In India, although women participation in labour force has declined in recent times, especially after the economic downturn of 2007-09 and stands at only 25%, a part of this may be attributed to more women spending time on higher education, and therefore, it is expected to rise in future.
The Rise of Working Women in India
India has seen the best of its economic growth rate periods after liberalization, the same has been the time where women participation in documented workforce has been the highest. Placing definitive value to increased women participation at work, a McKinsey study has said that India could increase its 2015 GDP by up to 60% by using the full potential of women workers. The same figure for the world stands at 26%.
If the full potential of the women workers is tapped, India could increase its GDP by a staggering 60%.
When Malthus had predicted that the population growth of the world would take over the growth in production unless some ’positive’ checks of nature like famine, floods etc. take place, he did not take into account participation of women in production and the contribution they could make to the economy. His theory has been largely proved incorrect as we have been able to provide for our growing population until now by increasing production proportionately.
Rise of Working Women: The Challenges
The challenges of growth, job creation, and inclusion are closely intertwined. Women’s participation in the labor market is also a part of the growth and stability equation. In particular, in rapidly aging economies, higher female labor force participation can and has boosted growth by mitigating the impact of a shrinking workforce. For example, in Japan, the annual potential growth rate could rise by about ¼ percentage point if the female labor participation rate were to reach the average for the G7 countries, resulting in a permanent rise in per capita GDP of 4 percent. Higher female workforce participation would also result in a more skilled labor force, in view of women’s higher education levels in the country.
Women are more likely than men to invest a large proportion of their household income in the education of their children.
Women also contribute to broader economic development in developing economies, for instance through higher levels of school enrolment for girls. These women are more likely than men to invest a large proportion of their household income in the education of their children. According to the ILO, women’s work, both paid and unpaid, may be the single most important poverty-reducing factor in developing economies. Accordingly, higher FLFP and greater earnings by women could result in higher expenditure on school enrolment for children, including girls, potentially triggering a virtuous cycle, when educated women become female role models. Women’s relative lack of opportunities in developing countries inhibits economic growth, while at the same time, economic growth leads to improvements in their disadvantaged conditions.
The employment of women on an equal basis allows companies to make better use of the available talent pool, with potential growth implications. While not uncontroversial, there is evidence of a positive impact of women’s presence on boards and in senior management on companies’ performance. Companies employing female managers are better positioned to serve consumer markets dominated by women and more gender-diverse boards can enhance corporate governance by offering a wider range of perspectives. Moreover, a larger share of women in decision-making positions is said to reduce the share of high-risk financial transactions that are normally conducted by male traders.
Greater earnings by women could result in higher expenditure on school enrolment for children, including girls, potentially triggering a virtuous cycle, when educated women become female role models.
The Care Economy and Gender Parity
Women contribute substantially to economic welfare through large amounts of unpaid work, such as child-rearing and household tasks, which often remains unseen and unaccounted for in GDP. Women’s ability to participate in the labour market is constrained by their higher allocation of time to unpaid work. On average, women spend twice as much time on household work as men and four times as much time on childcare, thereby freeing up time for male household members to participate in the formal labor force.
In the OECD countries, women spend about 2½ hours more than men on unpaid work (including care work) each day, regardless of the employment status of their spouses. As a result, the gender difference in total working time—the sum of paid and unpaid work—is close to zero in many countries. The unpaid care work of women could be valued at $10 trillion of output per year—an amount that is roughly equivalent to 13% of global GDP. A lot of work done by women is invisible, unquantified, unrecognized and unrecognizable. The labor of women in the house, certainly, enables men to produce more wealth than they otherwise could. The gender division between market and household work, in combination with women’s lower earnings potential, tends to reinforce established gender dynamics at the household level.
In spite of their contribution, gender differences in paid working hours and participation in part-time work remain significant. While often a prerequisite for women’s labor market participation, part-time work arrangements can perpetuate gender roles, resulting in disadvantages in career development. Moreover, there is a significant wage gap associated with gender, even for the same occupations and even when controlling for individual characteristics, such as education.
In spite of their contribution, gender differences in paid working hours and participation in part-time work remain significant.
Potential and Way Forward
In many countries, the lack of basic necessities and rights inhibits women’s potential to join the formal labor market or become entrepreneurs. Across countries, female representation in senior positions and in entrepreneurship remains low. During the economic downturn of 2007-09, gender-based employment gaps shrank in most OECD countries. In many developing countries, women and girls were particularly vulnerable to the effects of the economic crisis.
In the next decade, nearly 1 billion women are likely to enter the global labour force. But their economic potential is largely unrealised. The world needs to focus on the creation of opportunities for these women who, in turn, will propel economic growth further and lead to creation of more and better jobs for all. There cannot be two standards of work and wages for any trade without constant menace to the higher standard. Policies that would help women include regulations to foster greater flexibility in hours, mandatory paid family and medical leave, and mandatory paid sick days that could be used to care for a child. The invisibility of such women workers is appalling. Because such work is essential to the survival of society and provides a huge and unnoticed subsidy to the ‘formal’ economy.