Frailty, Thy Name is Public Policy

Women’s choices to enter the workforce are forced or limited. As India is already facing a job crisis, public policy can play an important role in increasing female employment.

In a recent article by V. Anantha Nageswaran titled ‘Women in the workforce—no role for public policy‘, he argues that policy has a limited role to play in driving women into the workforce. The article supports its claim based on two broad arguments – joining the workforce is a conscious decision rather than a forced choice and there are ‘superior economic outcomes’ in store if women stay at home rather than join the labour markets. The article ends by explaining how other policy issues like the wage-differential between senior executives and the rest is a bigger concern and needs more policy attention than women.

For some perspective on women employment, look at the female labour force participation rate (FLFPR) which refers to the section of working women population (above the age of 15) who are currently employed or seeking employment. According to the World Bank, the FLFPR in India dropped by 8% from 1990 to 2017. The National Sample Survey (NSS) data for India shows that, between 1987 and 2011, FLPFR for women aged 25 to 54 stagnated at about 26% to 28% in urban areas, and fell substantially from 57% to 44% in rural areas. With the decline in the overall LFPR by 7 percent from 1990 to 2017, it is important to prioritise female employment in the country.

The decline in the FLPFR has been acknowledged on all platforms, including the previously mentioned article. However, the reasoning is not that women choose to stay at home but can be attributed to being forced to stay at home or have accessing to limited job profiles. In both the cases, policies as well as the society have a strong role to play.

To grapple with this problem of the decline of women in the labour force, it is important to recognise that the participation of women in the labour force does not respond to the regular market mechanism. The general economic principle is that an increase in productivity would increase employment. However, the female labour participation tends to decline with the increase in productivity and income. This was discussed detail by Claudia Goldin in her paper The U-Shaped Female Labour Force Function in Economic Development and Economic History which was published in 1994.

Labour Force Participation rates across GDP per capita

According to Goldin, FLFPR follows a U-curve, i.e. at first, the rate declines with an increase in economic development, and eventually starts increasing with the growth. According to the paper, there are two reasons for the decline:  one is the income effect, i.e. with the increase in income, people need to work less. The second is the result of the decrease in demand for female labour. The association between the decline in female labour employment and the increase in household income and development has also been substantiated by other papers. For instance, a paper assessing patterns of FLFPR studied the U-shaped relation between level of education and employment amongst women. It concludes that there is higher participation amongst illiterate and college educated women as compared to women who have only studied till secondary and post secondary (10+2) level.

On the point of education and employment amongst women, Nageswaran suggests that

It is quite possible that an educated mother with emotional and intellectual stability bringing up children as physically, mentally and emotionally healthy humans contributes more to economic growth and social stability than she would by spending time at work. In other words, there is a fairly significant opportunity cost to having women in the workplace and it is a conscious and careful choice that they have to make. Public policy has a role—if at all—to help them make that choice in an informed manner. Otherwise, none.

Studies, however, show that decline in FLFPR is higher amongst the unmarried young women from rural areas than married women. Hence, it is evident that reasons beyond the opportunity cost of becoming a mother are leading to the reduction in female labour force. Besides, it would also be a pretty grim reality if only one of the parents is assumed to possess the emotional and intellectual stability to bring up a child.

The female labour employment problem runs deeper as even the women who do enter the labour force end up being restricted to women oriented jobs or “Pink Collar Jobs”. The occupational segregation based on gender tends to gives rise to various discriminations like reduced wages, limited career growth etc. In the paper Occupational Segregation, Wage and Job Discrimination against Women across Social Groups in the Indian Labor Market: 1983–2010, Malathy and P Duraisamy highlight that occupational segregation is either caused due to an underlying preference for women in certain occupations or exclusion of women from certain occupations.

The segregation increases the concentration of women in jobs associated with skilled agriculture and fishing, and elementary occupations. This concentration ends up increasing the competition for employment in the confined fields driving down the wages and affecting career growth.

In all of these situations, policy can play a vital role by increasing female employment in generally male dominated sectors. Providing tax benefits to the employer, creating women specific training centres where they are trained to do jobs that go beyond the “Pink Collar Jobs”, and making education a lucrative option are just a few policy steps that can be taken to improve the situation.

A policy push towards employing a substantial part of our human resource pool should be a part of the priority for the government that is facing a job crisis while 12 million new people entering the workforce every year. To be able to do any of this, we would first have to create workspaces where women can take conscious decisions regarding their career prospects rather than being forced into unemployment or limited job profiles.