Why India’s Growing Female Workforce Is Actually A Bad Sign

Labor participation rates among women have recorded dramatic increases in recent years, especially as flexible work options create paths for more working mothers to achieve a better work-life balance. However, new research finds that women in India are choosing to enter the workforce as self-employed, and it seems to be out of necessity.  

According to a report titled “State of Working 2023” by the Bangalore-based Azim Premji University, self-employment among women increased by 14 percentage points to nearly 65% between June 2018 and December 2022.  

At first glance of the figures, as reported by Reuters, the participation rates among women seem to be on the rise in India, albeit at a much slower pace when compared to Indian men. However, researchers believe that this is likely not due to positive economic factors.  

The rise in self-employment is concerning for experts, especially when it’s seen in the economic context of falling household incomes pushing women into self-employment, as opposed to genuine economic growth and rising labor demand. 

The study also revealed that while more women ventured into self-employment, their earnings from such endeavors were only 85% of what they were in June 2019. The wage gap also remains significant, with women earning only 76% of what men did in 2021-22. 

This study raises questions about the future of work in India. If the increase in women’s participation in the workforce is driven by distress rather than genuine opportunities, it could indicate a lack of quality job opportunities and a potential for economic instability. This has caused the Narendra Modi-led government to propose reserving a third of the seats in the lower house of the parliament and state assemblies for women — which might be a step in the right direction to addressing gender disparities, according to Reuters.  

The broader issue of job creation remains. Despite India being one of the fastest-growing major economies globally, it faces criticism for not generating enough jobs for its workforce. The country added nearly 57 million jobs in the five years leading up to June 2022, but 35 million people are reported to have remained unemployed. The report also emphasized that policies focusing solely on GDP growth might not necessarily accelerate job creation. 

While the rise in women’s participation in the workforce is usually seen as a positive sign, the underlying reasons and the nature of their employment are important when analyzing progress. If distress-driven self-employment continues to be the primary driver for women in India, it could have long-term implications for the quality of India’s workforce in the coming years.