One of the most worrying aspects of the Indian economy of late has been the unemployment rate. Even before the pandemic had begun, the rate reached its highest level since records began during the early 70s. Considering that jobs were being promised almost as though their guarantee was a foregone conclusion during 2014, the failure to fulfil this objective must be addressed. This of course has been done in articles and reports published here at BCL and across the media and the think tanks of this country. The scope of this article is to focus on something that is potentially even more worrying – which is the Labour Participation Rate (LPR).
The Center for Monitoring the Indian Economy (CMIE) recently published data about India’s declining LPR. As of November 2021, only 40.15% of all the employable people in the country were looking for work. This number has been in decline for well over a decade. During the mid to late 2000s, the LPR was around 63% which means that over the next decade and a half it has fallen by more than a third.
Some might make the argument that comparisons such as these are not entirely fair given the size of the Indian population, but a figure of 40.15% still warrants investigation. Why is it so bad? And why is getting worse?
India fares poorly in comparison to other countries in the region, falling behind Pakistan, Sri Lanka, Bangladesh, etc. In fact, we are only slightly better than Somalia, a country that is considered to be one of the poorest not only in the world but also in the Sub-Saharan African region, making it one of the poorest of the poor.
One of the main factors has to do with female participation in the labour force. This too has been declining when fifteen or twenty years ago it was expected to start going up right around now. The reasoning was that more and more girls were completing their education and even seeking out higher studies and as such, they would eventually begin entering the labour force. In spite of this, their participation has fallen, especially in rural India, where it is still higher than in the urban parts of the country.
The reasons revolve around many of the attitudes that unfortunately still exist towards women in this country. One survey found that married women were less likely to enter the workforce even if they had the qualifications to do. The average age of when a woman gets married has gradually increased over time, but this has done little to tackle existing norms of what a woman’s role in the household should be. Women are still expected to be homemakers as their number one priority and as such their careers are often sacrificed.
Another big deterrent to women’s participation in the labour force is crime. A study conducted by the Initiative for What Works to Advance Women and Girls in the Economy (IWWAGE) found that in places where the incidence of crime against women was high, their labour force participation rates were also low. Between 2011 and 2017, crimes against women and girls had tripled while labour participation declined by 8% across the country. The analysis conducted found a negative relationship between the two, confirming the hypothesis.
The Global Gender Gap Index ranks India an abysmal 140th out of 156 countries that were surveyed in 2021. What’s more disappointing is that in 2006, the country ranked 96th, so we have actually been moving backwards. The global average for female labour force participation is around 45%, in India it is just above 24%. The male average in the country is around 55.6%. Closing this gap would not only increase the overall LPR but would also greatly benefit the economy. Studies have shown how the economic empowerment of women leads to a reduction in poverty, income inequality, and enhances overall economic productivity. There are only gains to be made with little to no downside.
The worrying aspect is the reversing trend that the country has seen in this regard. Progress was being made during the end of the last century and the beginning of this one but that has been undone over the last 15 years. This is something that economic planners need to address immediately and perhaps a task force should be set up by the government to outline a plan of action that sees us move towards certain goals.