David E. Bloom and Jeffrey G. Williamson in 1998 highlighted the significance of demographic dividend in developing countries. They state that the benefits of a high working-age population will be missed if women, who form almost half the population, do not join the labour market.
Female labour force participation can be understood as a multidimensional agglomeration of structural and socioeconomic factors. Factors like marriage, motherhood, high education levels of husband/male household heads, social norms, religion, and lack of women-oriented jobs reduce women’s probability of joining the labour force. Part of it is countered by positive factors like rising education levels and wages, favourable government policies.
The Periodic Labour Force Survey, 2019-20, presents a better and a hopeful picture. The female labour force participation rate is observed to be 22.8%, which is about 4.2 percentage points more than that of 2018-19. The major push has come from the rural sector than the urban sector, where it increased by 5 and 2.4 percentage points, respectively.
The increase in the female LFPR could result from the positive force – growing education of females over the years. However, in urban areas, females having education level beyond middle school had minor contributions to the labour market. Whereas, in rural areas, females with low or no education level joined the labour force significantly. Accordingly, it is most likely to be seen as a stress-driven surge due to loss of employment and the livelihood of the masses due to Covid-19.
A similar trend was also noticed during the period 1999-2000 to 2004-05. There was widespread distress in the rural sector, especially the agricultural sector, with price uncertainty, low productivity, and stagnation leading to indebtedness, which pushed women to join the labour market. Thus, a new peak in the female LFPR was achieved in 2004-05. Similarly, a drought in 1987-88 also led to the surge in female LFPR.
Unlike the traditional framework of labour market, which presumes that an individual maximizes his utility based on a division of time between leisure and labour work, women’s decision to join the labour force or not is based on her ability to allocate time among leisure, work at home, and work at labour market (Mincer 1962). The neo-classical theory further breaks down when the household is below or near the subsistence income level. Under such circumstances, there is a limited amount of choice between work and leisure. During an economic setback, households belonging to the lower percentile of income distribution follow a joint utility function of the household, which involves acquiring the subsistence income for all members of the family. Generally, the ‘breadwinners’ who are the primary workers either lose their jobs or the current wage earnings are insufficient to meet their livelihood. Subsequently, secondary workers, which mostly comprises women, enter the labour market for paid employment, leaving their previous status of being domestically engaged.
Mainly, when the economy recovers, expanding the employment opportunities and wages, the secondary workers withdraw from the labour market. This occurs because women belonging to the vulnerable economic group join the labour force out of need rather than willingness. And when that need is no longer there, they bounce back to their previous domestic duties. Further, even the social responsibilities of marriage, motherhood, caste and religion do not let women survive in the labour market for a long time.
Lockdown imposed due to Covid-19 resulted in an economic crisis, which led to the fall of substantial primary workers, especially the casual and salaried workers, as markets all over India were shut down for an unforeseeable future. On the other hand, there is a 3.4 percentage point increase in the self-employed category of women in rural areas, which is predominant in agriculture and allied activities. Other casual and regular salaried females experienced a decline in employment.
The peculiar changes in rural employment over the year seem to signal distress-driven employment. Thus, the turnabout in the female LFPR should be seen in the light of the Covid-19 crises, where the secondary workers are acting like household insurance mechanisms against the economic crises. The surge in female participation can fall back to the low and declining rates if we are unable to retain the additional female workers in the labour market.
Amit Kapoor is chair, Institute for Competitiveness, India and visiting scholar, Stanford University. Subhanshi Negi is researcher, Institute for Competitiveness, India.