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India Can Earn $700 Billion Extra If 10% More Women Join The Workforce By 2025

It’s 2018. But, it will take another 217 years to close the global gender gap! And India will take even longer – because its gender gap is actually widening. We dropped 21 places in the World Economic Forum’s Gender Gap rankings in 2017. And that’s reason enough to take some big actions pretty fast!

2018’s pink-coloured Economic Survey noted that “Just as India has committed to moving up the ranks in the ease of doing business indicators, it should perhaps do so on gender outcomes as well.”  And their prescription is bang on. When India improved just one spot in the World Bank’s Doing Business Ranking in 2017 from 131 to 130, the Modi Government took it to heart and mobilised all resources to work towards making visible improvements – and India jumped 30 places within a year to rank 100 in 2018.  But it didn’t seem to hurt anyone as much when India’s rank dropped 21 places in the World Economic Forum’s Gender Gap rankings in 2017 – it didn’t create the same emotional response this time around.

However, the status of women can’t be ignored for too long. India cannot reap its demographic dividend if women are left out of the labour force. There are proven benefits of increasing female labour force participation for the country – IMF suggests that India’s GDP can rise by 27% if women’s participation in workforce equals men’s and Mckinsey research shows India can earn US$700 billion extra in 2025 by raising women’s workforce participation by 10% – a larger economic impact there than in any other region in the world.

And it’s not that we are saying that Government hasn’t done anything – they have done a lot! Successive governments have poured huge resources into increasing literacy, thanks to which female literacy rate has grown to 65% in 2011 from 40% in 1991. The Maternity Benefit Act provides for paid maternity leave, recently extended from 13 to 26 weeks, now makes it mandatory for establishments with 50 or more employees to provide for creche facilities within or close to their campus. Even The Factories Act of 1947 establishes that employers with 30 or more women employees must provide childcare services in factory premises.  The revised Companies Act in 2013 made it mandatory for all listed companies and other large public limited companies to appoint at least one woman director to their boards.

The practice of Gender budgeting is being followed since 2005, where all ministries make allocations to “address the development needs of women” and there are 57 state-level “Gender Budgeting Cells” to facilitate gender-fairness in budget allocations. To promote women’s entrepreneurship, the Government has initiated funding programs like The Stand-Up India Scheme for Women and Mudra Yojana Scheme For Women. Initiatives such as ‘Skill India’ and ‘Make in India’ include quotas to ensure a certain proportion of trainees are women.

But things haven’t worked out yet and these initiatives haven’t translated into increased Female Labour Force Participation. As the World Bank study suggests, “Conventional approaches to increasing female labour force participation such as education and skills and legal provisions will be insufficient. Policies should canter on promoting the acceptability of female employment and investing in growing economic sectors that are more attractive for female employment.”

Therefore, the Government needs to implement some really big ideas and implement big scale measures towards the agenda of advancing women. Here are some suggestions –

At the largest scale, we probably require a revolution – a program like “Swachh Bharat” or “Make in India”. Maybe even bigger. The Government can take inspiration from the Rosie the Riveter campaign that ran during 2nd World War in America to attract women to work while men were at war. Images of women workers were widely used by the government in posters and commercial advertising – resulting in women’s workforce participation rising by 57% in just 4 years.     

Secondly, the government needs to create a strong partnership with the Private Sector and get them on board, on the same page. Businesses need to be shown the big benefits of hiring more women – by publicising facts like for every 1% increase in gender diversity, company revenue increases by 3% and an even gender split increases a company’s revenue by 41%. And the Government needs to invite suggestions from the businesses on what all policy measures and concessions that can be provided to facilitate them.

For instance, the government must address the perceived high costs of employing and retaining women that businesses have to incur. Especially, it is crucial to find an alternative model of financing the (26 weeks) maternity leave, since currently, the exclusive burden of financing the pay-out to women during the maternity leave is entirely on the employer. This places cost-burdens that may lead SMEs, start-ups and smaller companies to be biased towards not hiring women. Therefore, the Government thinks about introducing financing of maternity benefits through social security schemes or public funds to reduce employers’ liability, as is done by nearly 100 other countries. Many governments use employment-related social insurance (similar to pension schemes), public or government funds-finances or a combination of employer-liability plus social insurance (“mixed system”) to finance such benefits.

Different Sources of Funding of Maternity Benefits (ILO)

Next, implementing a systematic and whole-of-government approach to promoting gender equality is needed. This would include embedding gender perspectives in all stages of government decision-making, from design to implementation and evaluation of laws and policies. And this also needs a slight change in the mindset of policymakers – for instance, budget allocations on social infrastructure such as providing subsidised child care facilities should not be treated as a “cost” but as an “investment” that increases productivity and growth of the economy.

To address the biggest stumbling block – that is the deeply embedded social norms and ingrained mindsets, the government will need smarter policy options. Like innovative tax incentives – income tax breaks to women returning after a career break; corporate tax breaks for daycares; deduction for money spent on day-care for dependent children; tax waivers for investments into women-owned businesses. Or the HRD Ministry could play a role in adding a “gender neutrality” element to curriculums of educational institutions, right from schools, colleges, MBA and all professional degree colleges could consider, to prevent any biases from developing in students right from a nascent stage.

The government, could also consider establishing gender diversity targets in all public institutions such as the government (parliament), courts and public-sector bodies, given that these institutions make decisions and create rules that affect people’s rights, behaviours and life choices; influence the distribution of goods and services in society; and determine access to public and private resources. Research suggests that gender diversity in decision making contributes to improved trust in public institutions and favours more informed and inclusive policy-making. Data shows there are lower levels of inequality in countries with a greater share of women in legislatures.

End of the day, the government must realise the scale of impact that its policies have on many decisions that women make. Conducive policy measures can go a long way in alleviating the constraints on women’s freedom to choose whether or not to enter the labour market and the barriers they face once they are in the workplace. It is with this emotion that the government, in partnership with businesses must pledge to take invigorated actions towards advancing Indian women. Only then can we change the story of Indian women, who are pretty much struggling to find a happy balance between fulfilling their professional and personal aspirations.