Trend Analysis Of Female Labor Force Participation In India From 1993-94 To 2020-21 – IMPRI Impact And Policy Research Institute

Policy Update
Kirti Ranjan

Introduction

India’s ranking based on the female labor force participation rate is one of the lowest in the world. “Low FLFPR jeopardises country’s growth and prosperity” (International Monetary Fund and World Bank, 2007). It is a pressing issue that Indian FLFPR has been declining consistently, with occasional spurts during crises. 

This paper analyses the female labor force participation trend and the sectoral changes from 1993-94 to 2020-21 and attempts to identify the underlying factors behind the fluctuations in the FLFPR in India. The paper focuses on how the labor market changes and social factors affect female mobility in the labor force. 

The official data on NSS Round employment and unemployment- of 1993-94, 1999-2000, 2004-05, 2011-12 and Periodic Labor Force Participation (PLFS) – 2017-18, 2018-19 and 2020-2021 has been used. All the estimates are done on the Usual status (usual principal and subsidiary status) for all ages (unless specified). The methodologies and samples used in NSSO and PLFS surveys are more or less the same and, therefore, comparable. 

Trends of Female Labor Force Participation Rate

The female labor force participation rate has declined since 1972–1973 from 32 % to 18.6% in 2018-19, except in distress-affected years 2004-05 and 2020-21. Figure 2 clearly shows that rural FLFPR has mainly caused fluctuations in the overall participation of the female labor force. The urban FLFPR has remained more or less stagnant over the years, rising slightly from 16.4 % in 1993-1994 to 18.6 % in 2020-21.  

The fluctuations in the female labor force participation rate could be understood through the changing dynamics of the labor market due to changing economic conditions.
To study the fluctuations in FLFP, we have divided the time period into 4 phases i.e. 1993-2004, 2004-2011, 2011-2017, and 2018-2020.

Phase 1: 1993-2004 

The process of “de-feminisation” had started way before the 1990s, as shown by (Parthasarathy & Nirmala, 1999). It is shocking to see that after the liberalization, the resulting economic growth, instead of creating favorable employment for women, showed bias towards the employment of men. Boserup points out that “the growing globalization, liberty through liberalization and economic development in contemporary capitalism has not necessarily benefited women and men equally.” (Boserup, 2008)

Between 1997-1998 and 2002-03 economic growth was stagnant. The economy was in a boom phase from 2003 to 2008 regarded as the golden era where India was about to achieve double-digit growth. Though the overall economic growth rate was rising, from 1999 to 2000 and from 2004 to 05, India faced an agrarian crisis as public investment decreased and agricultural wages stagnated. It was observed through the NSSO surveys that the employment growth in India had taken a downturn from 1993-94 to 1999-2000 compared to the period between 1983 and 1993-94 (Thomas, 2012). Until 2004, around 80% of workers were engaged in agriculture, and any shock to the agrarian economy directly affected the women’s labor force. (Table 2)

During this crisis period, there was no significant fall in FLFPR, which was between 30 % and 33%. From 2004-05, the agriculture sector was hit hard due to monsoon failures. As we can see from Table 2, in 2004, the female labor force participation rate in rural areas increased. During this period, women’s self-employment in agriculture increased significantly. It has been observed that the occasional rise in the FLFPR may be the response to “joint utility maximising households towards subsistence under the dire conditions”(Abraham, 2013). “The rise in female labor force participation rate was distress driven to supplement household earnings” (Thomas, 2012).

Phase 2: 2004-2011

This phase was marked by the continuous fall in female labor force participation and the shift of female workers from agricultural to non-agriculture activities.  

Various studies have shown a continuous fall in the labor force rate in India from 2004-05 to 2011-12. (Chandrasekhar & Gosh, 2011; Rangarajan et al., 2011) “Missing female labor” has been responsible for the decline in the overall LFPR, as the male labor force participation rate has remained more or less constant (Figure 1). Some studies claim that due the increase in student-to-population ratio during this period caused the decline in labor force participation (Rangarajan et al., 2011; Thomas, 2012). 

Other studies have shown that women were crowed out of the labour force due to the slowdown in the agriculture sector during 2004-05 (Kannan & Raveendran, 2012). The rise in household income due to accelerated growth during the golden era caused the withdrawal of women from the workforce as male income sufficed to run the household. Eapen’s study in Kerala showed a voluntary decline in female work participation as the household income rises (Eapen, 2004). 

There had been a significant fall in women workers engaged in agriculture from 1999-2000 to 2018-19. This shift from the agricultural sector to the non-agriculture sector can be seen in relation to Arthur Lewis’s theory, where the “surplus labor” will shift to secondary or tertiary sectors and the economy moves towards higher stages of development (Lewis, 1954). 

The shift from the agriculture sector has been caused by push and pull factors. The pull factor was the growing income opportunities in the construction sector and other services. The manufacturing sector, construction, electricity, gas and water supply grew by around 8.3% from 2001-02 to 2011-2012 (Table 3). The women’s workforce in rural areas increased from 7 %  to 9.79 %  in the manufacturing sector and from 5 % to 6.5% in the construction sector from 2004 to 2011 (Figure 3). Urban women’s workforce in “other services” increases significantly after 2004 (Figure 4). Indian rural economy started recovering in 2009 due to a significant rise in government expenditure through Mahatma Gandhi National Rural Employment Guarantee Act, which created jobs in non-agriculture activities.

Phase 3: 2012-2018 

The Indian economy was slowing down due to a deceleration in investment activity. India’s export growth rate has continuously declined since 2011 due to the global economic slowdown.

The workers from the agricultural sector continued to shift to the non-agriculture industry but this time due to the push factors. First, there was a slowdown in agrarian income between 2012 -13 and 2017-18 compared to growth during 2004-12 due to frequent monsoon failures and declining agricultural prices. The study by Das & Usami showed that “the growth of rural wages in India declined in 2015–16, but improved from the latter half of 2016–17” (Das & Usami, 2017).

Second, manufacturing, construction electricity, gas and water supply sector growth has declined to 6 % (Table 3). The growth of income from the construction sector was severely hit, resulting from a slowdown in rural incomes. The informal sector, which employed the majority of women, faced back-to-back setbacks due to the demonetization in 2016 and the hasty implementation of the Goods & Service Tax regime in 2017. “Female workers accounted for almost all of the job losses suffered by Indian manufacturing after 2012. There has been a massive mismatch between labor supply and labor demand during this period, which was also responsible for the withdrawal of women from the labor force.” (Abraham, 2013)

Phase 4: 2019-2020

There has been a slow increase in female labor force participation since 2018 and a sudden rise in 2020 to 27 %, an all-time high in the last decade. There has been a slight shift to the agriculture sector from the non-agriculture industry in rural areas in 2020 (see Table 2 ) The Indian economy faced a severe downturn due to the coronavirus crisis, which forced millions of workers to migrate back to villages. Informal workers were hit severely as the country went on lockdown. 

Migrant workers are sustained by their rural households (Breman, 2020). When the market or government fails to provide secure income, rural homes serve as a refuge and a fallback option (Naidu & Rao, n.d.). During the pandemic, only agriculture showed positive growth. With lower incomes and no jobs, women engage in low-wage agricultural work to keep their families afloat (Carswell et al., 2020).

“Without the accountability of state and market institutions, gendered labor has to step in to ensure survival and life” (Naidu & Rao, n.d.). In many previous studies, it has been found that women come into the labor force during economic distress. Usually, with the increase in income, female labor force participation declined. Thus, at lower income levels, women’s participation is relatively higher. Thus, it is hard to say that we are on the rise of the curve under the U-shaped feminization hypothesis. Further assessment of current data is needed. 

Factors underlying Female Labor Force Participation

Apart from changing market conditions which affect the female labor force, several factors hinder the participation rate like an increase in household income, mechanization of agriculture, lower demand for labor-intensive products and gender-based discrimination. Social norms played the most important role in the participation of women as the domestication of women is considered essential to maintaining their social status. 

U- shaped feminization hypothesis examines the relationship between FLFP and GDP. It argues that as the economy moves from subsistence level to developing level, women’s labor force participation reduces then starts to increase again (Sinha, 1965; Durand, 1946-66; Goldin, 1995; Mammen & Paxson, 2000). 

Seeing the FLPFR trend we can see that we are somewhere in the middle of the curve (Abraham, 2013). With the structural transformation in agriculture, commercialisation of agriculture and enhancement of household income, women withdraw from force or we can say there were replaced by men as with mechanization of agriculture men are more preferred over women.

Though the primary education level among women has increased yet there exists a huge gap between men & women in higher and technical education.  The lack of white-colored jobs and emerging skill-based demand labor reduce the job opportunities for women in India. “With the development of capitalist organisation of production in a patriarchal social system, female labor progressively undergoes female marginalisation” (Hartman, 1976; Boserup, 2008; Mies, 1982).

Upward social mobility is marked by male employability and marginalisation of women in the labor force and domestication of women’s labor (Kala, 1976; Mies, 1982). With the increase in household income after the 1991 economic reforms, these cultural norms were reflected through the withdrawal of women from the labor force. Women also get engaged in the status production of the household which involves looking after the studies of the children, taking care of the members, etc. Even the education qualification of the women is now considered as part of the status production, thus, it could be the possible reason for the increasing education level among women and falling labor force participation (Jeffery & Jeffery, 1994).

 “Social status linked to women’s employment is inbuilt into the caste system.” Women working outside the house premises are considered impure in the upper caste and thus they live in home isolation while women from the lower caste engage in income-generating activities for subsistence (Boserup, 2008) As we can see the share of Scheduled Caste women has the highest in the labor force participation while “others” category (which is mostly upper caste) has the lowest share (Figure 5).

 Female participation in the workforce is also get affected by religion. As the FLFPR is considerably low for Muslim women in comparison to Christianity or Hinduism. Religious conservatism directly affects the work status of women. (Figure 6) The social norms are also responsible for the high amount of women’s time spent on unpaid domestic activity. The time spent on unpaid domestic participation by women is four times greater than men’s  (Table 4). The double burden on women often discourages them to move out of the labor force. 

Other factors like location of the workplace, lack of job security, lack of technical education, unavailability of hygienic facilities, sexual harassment at the workplace and unavailability and inaccessibility of childcare facilities and lack of facilities to take care of the elderly, led to the lower percentage of women entering the workforce.

Conclusion 

Indian female labor force participation rate has been on a declining trend since 1993-94, mainly caused by fluctuation in rural women’s participation rate. In Phase 1 (1993-2004), due to the agrarian crisis, there had not been any significant fall in FLFPR, in fact, it rose in 2004. In Phase II (2004-2011), the decline in FLFPR had been marked by rising in household income levels and by an increase in participation in education. This decade also marked the beginning of a structural shift from the agricultural sector to the non-agricultural sector due to “pull factors”.

Phase III saw a further decline in FLFPR, possibly due to the growing gap between labor supply and labor demand caused due to Indian economy’s slowdown. The shift to the non-agriculture sector in this phase was due to “push factors” as the growth in the manufacturing and construction sectors declined.  The trend has been reversed in the last 2 years due to the onset of the coronavirus crisis and the slowdown of the Indian economy. It has been observed in earlier studies that in a crisis situation women engage in income-generating activities to support the household income.  

The factors identified, apart from market changes for the declining rate are increased household income after the liberalization policies, mechanization of agriculture, patriarchal norms causing domestication of women as a sign of upward social mobility, caste and religion, status production activity leading to increase in unpaid domestic work and unfavorable working conditions for women. 

In order to increase the job opportunities for women, several steps are needed, including investment in technical education of women and healthcare, providing adequate infrastructure for women’s employment, provision of easy credit facility to promote self-employment, social security benefits, access to child care, maternity protection and a safe working environment. 

The policy should not only try to increase job opportunities for women but also try to empower them so that they can gain the freedom to choose to work outside their

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About the contributor : Kirti Ranjan is currently an Intern at IMPRI and a PhD student in Economics at the Centre for Economic Studies and Planning (CESP), Jawaharlal Nehru University (JNU). Her interest areas are gender and behavioural economics.

Acknowledgment – The author extends sincere thanks to Dr. Arjun Kumar for the invaluable opportunity, and to Nandani and Lakshita Singh for their informative inputs.

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