The Female Labour Force Participation Rate (LFPR) in recent times has become an area of speculation owing to its decline despite various policy measures being in place. The composition of the female labour force is different in different areas and across different sectors. While in rural areas, agriculture is the sector where females are generally involved, it is the manufacturing and services sector in the urban area in which females are involved. However, despite having a considerable share of employment in these sectors, most of the female workforce is concentrated in the informal sector and thus most of them are involved in marginal jobs. More importantly, a large portion of the contribution of the female labour force goes unnoticed owing to it being a part of family labour or unpaid household work/care work which is not accounted for in most cases.
What this essay aims to do is discuss the trends of female labour force participation in the service sector since the post reforms period till the present in India, highlighting the policy gaps for the same and suggest policy measures for improvement of the female LFPR.
The female labour force participation rate can be defined as the percentage of women willing to work at the existing wage rate. There are multiple factors that are responsible for determining the female labour force participation rate of a country. These factors include education, availability of jobs, financial infrastructures, and various other social and cultural factors especially in the case of India. An important aspect that determines female LFPR in India is the regional differences. For instance, female LFPR in the west and the south of India is higher than that in the north mainly because of strong cultural and religious norms and restrictions that stop women in North India from joining the labour force. (Sorsa, et al., 2015)
Female LFPR is an important aspect of gender equality in the labour market as a higher female LFPR is generally associated with greater gender equality and vice versa. Female LFPR indirectly plays a big role in achieving labour market equality in terms of gender by acting as a key means to achieve human development goals such as poverty eradication, increased productivity and aggregate output, reduced infertility, reduced infant mortality, and child labour, greater decision making and bargaining power for women within and outside households. In India, female LFPR has been consistently low over the past few years thereby placing India 137th among 144 countries in the Global Gender Gap Index 2017 in the category of ‘economic participation and opportunity.’ India is ranked 120th among 130 countries, according to the India Employment Report 2017, thereby highlighting India’s low position in terms of female LFPR. (Mehrotra & Sinha, 2019)
According to an NSSO survey, the rural female workforce fell by 28 million in the period between 2005 and 2012. In the urban area, even though the increase in the female workforce was marginal in the same period (by 1.3 million), overall the total female workforce declined. There are a lot of factors responsible for this fall in female LFPR. Social and cultural barriers, lack of jobs, increase in the number of girls enrolling themselves in secondary education, fall in child labour, increase in household income levels, and intensification of structural transformation post-2005 are some of the prime factors responsible for the fall in female LFPR in recent times.
More than half of the women tend to work in marginal or informal jobs without any social security or any other safety net. A large portion of the female labour force is self-employed, most of whom are unpaid family workers whose work is not taken into account. It was the self-employed group that saw the maximum dip in female LFPR after 2005. Unemployment in India is small so most of those who lost their jobs dropped out of the labour force. Even though this meant that the female LFPR declined, the fall in marginal jobs and an increase in salaried employment indicated that it was likely that the quality of jobs for females has improved over the period. However, data suggests that only 6% of working women had social security benefits.
Background of the Service Sector
Globally, the service sector has crossed the agricultural sector in employing the maximum number of people. By 2015, 50.1% of the total workforce globally was working in the service sector. Women’s share in the total employment in the service sector worldwide since 1995 has increased from 41.1% to 61.5%. (ILO, 2016)
The economic reforms of 1991 brought about major structural reforms in the Indian economy. These reforms opened up new avenues for various sectors of the economy especially the industrial and the service sector where trade restrictions were loosened, the private sector was given more leverage to expand their businesses and more flexible FDI and trade policies were introduced which would change the roadmap of the Indian economy for days to come. The 3 major economic reforms namely liberalization, privatization, and globalization put India on a new growth trajectory.
The Hindu rate of growth averaging around 3.5% increased to around 5% post reforms. According to the literature available on the Indian economic growth, the service sector is one of the sectors that has shown a stellar improvement and has been one of the fastest-growing sectors which has contributed significantly to the overall economic growth of the economy. With the economic reforms of 1991 in place, the service sector has played a significant role in bridging the gap between the Indian economy and the global economy. Services like IT and businesses have given India an important position globally. (Maertens & Basu, 2010, pp. 193-205)
However, the question that remains is that how much of this growth has trickled down to various sections of the society and to what extent has it resolved the occupational segregation and gendered biases when it comes to the labour force participation rates for women.
Female LFPR- Trends in the service sector
According to the latest study by UNGC (United Nations Global Compact), among 153 surveyed countries, India is the only one where the economic gender gap is wider than the political gap. The Female LFPR has dropped from 34% in 2006 to 27.1% in 2011 and further to 24.8% in 2020, according to this latest study. (PTI, 2020) More than half of the female workforce is in the service sector is in the urban areas. However, the quality of the jobs available for them and the occupational segregation on the basis of gender is a concern.
After a fall in the female LFPR in the service sector from 2005 till 2010, it rose by 3.5 million during the period from 2010 to 2012 and there has been a significant rise in regular employment over this period. What remains is the concern of the availability of social security as a safety net. The 55th round of the NSSO revealed that at least 55% of the regular female workers in the service sector have no access to social security like provident funds, pensions, insurance etc. Majority of the jobs available for females in the service sector were found to be informal, and employment conditions were vulnerable as well as payments were lower than their male counterparts.
Within the service sector, women are restricted to only specific sub-sectors which include education (25%), retail trade (16%), domestic workers (15%), and other miscellaneous jobs like laundry, stylist etc. (10%). While women in rural areas are mainly concentrated in education and retail trade, in urban areas it is education, retail trade and domestic help where women dominate. It was found that 52% of the total workforce in the primary education sector was women. However, it is the men who dominate secondary and higher education. (Mehrotra & Sinha, 2019)
In retail trade, it is mainly the street vendors and hawkers where women dominate. The National Federation of Hawkers accounts for almost 4 Cr. people engaged in business on the streets out of which 30% of them are women streets vendors and again 41% of them are unpaid workers. Most of these workers are engaged in petty trade working as street vendors daily as they do not have sufficient fixed capital. For them, this is only a meagre means of survival rather than the accumulation of wealth. (Kaur & Ramachandran, 2020)
Another occupation that is largely dominated by women is the service provided by the domestic workers who are perpetually taken for granted. According to the 2005 NSS reports, there are around 4.75 million domestic workers out of which at least 3 million are women. There are mainly two reasons why domestic workers are highly demanded in the urban areas- firstly, a rise in the income of the rising middle class in the urban areas made it possible for them to hire domestic workers for their convenience and the fact that they could afford domestic help acted as a status symbol. Secondly, the number of jobs created overall was low which pushed a lot of women into working as domestic help. Even though domestic workers are registered under the Unorganized Worker’s Social Security Act 2008, there are hardly any of the domestic workers who receive the basic minimum wages and social security benefits prescribed by the Act.
The sub-sectors of the service sector that had the maximum growth post reforms are banking, telecommunications, real estate and business, and transport all of which are male-dominated. Hence, the creation of jobs in the service sector for women has not been as high as the growth that this sector showed.
There is a lack of decent work conditions even in the service sector irrespective of the remarkable growth that this sector has shown of which women are the biggest victims. According to the ILO, there are four aspects to conditions of decent work- full and productive employment, rights at work, social protection and promotion of social dialogue (Mehrotra, Inequalities in the Gendered Labour Market: What can be done?, 2019). However, in most of the developing countries including India, these conditions were hardly achieved. Most of the women are engaged in unpaid family work be it engaging in social reproduction or petty jobs in the retail trade such as cleaning, sorting etc. Hence, the first condition of decent work is far from being achieved unless we incorporate unpaid household work as a part of the services imparted by women. Moreover, more women tend to work in marginal jobs in the informal sector than men which again makes it difficult to realize the next three conditions of decent work. It gets difficult for these informal women to form collectives to assert their basic rights to decent work as they are not registered and are not accounted for in most of the cases.
Policy Implications- Gaps and Recommendations
Comprehensive measures are needed to ensure decent work conditions for women to generate more quality jobs for them and improve the Female LFPR of the Indian economy. There are multiple hurdles that women face when they want to join the labour force. Social institutions, lack of quality jobs, gender biases, and lower-wage payments are some of the major issues that women face in developing economies like India. More skill development programs and training should be initiated by the Government, for instance, vocational training, technical training etc. under the National Skill Development Corporation should be intensified. Even though in recent years, policies have focused on skill development, only 2% of the women in the workforce have received these benefits as of 2017-2018.
There should be minimum safety standards and safe working environment compliances prescribed across all sectors and kinds of work to ensure that women do not have to survive on the brink of marginal jobs in the informal sector. However, the recent changes in the labour laws can make it worse for women workers. With no restrictions on the ease of hiring and firing, women might be pushed into more vulnerable positions than they already were in. Social security benefits especially for women workers should be introduced to protect them from the various vulnerabilities that the informal sector and unregistered workers face.
However, one positive aspect for women has been the Self Help Groups under the National Rural Livelihoods Mission that has been supported by various organizations such as SEWA Bharat. These programs could further be increased to encourage collective action and self-reliance for rural women who can start their SHGs instead of working in marginal jobs in the service or the manufacturing sector.
Lack of jobs and lack of skills required for the existing jobs is a factor that is more apparent for women than men which is why more women dominate the primary education sector but men dominate the secondary and higher education sector. Higher education should be encouraged for girls so that they don’t have to settle for less paid and marginal jobs. Even though the increase in higher education has been one of the reasons why Female LFPR fell after 2005, the quality of jobs available for women hasn’t improved much which again hinders the positive effects generated by an increase in enrolment rates in higher education. Better quality jobs and social security as safety nets for women can help solve the problem to a great extent which is why the government needs to focus on the creation of quality jobs, social insurance and other qualitative benefits such as paid maternity leaves across all sectors or some alternate provisions like a guarantee of jobs when they return after pregnancy so that employers cannot be biased in taking away their jobs on the basis of them having kids. Economic growth doesn’t necessarily transcend into economic development unless the benefits are reaped by the people even at the lowest economic strata. Hence, an improvement in the Female LFPR would be a valid indicator of a comprehensive all-round development on which the government should focus.
Also read: The Debate on Wages for Household Work
ILO. (2016). Women at Work: Trends 2016. . Geneva: ILO.
Kaur, G., & Ramachandran, R. (2020). Impact of COVID-19 National Lockdown on Women Street Vendors. Institute of Social Studies Trust.
Maertens, A., & Basu, K. (2010). The Concise Oxford Companion to Economics in India. New Delhi: Oxford University Press.
Mehrotra, S. (2019). Inequalities in the Gendered Labour Market: What can be done? Centre for Sustainable Employment, Azim Premji University.
Mehrotra, S., & Sinha, S. (2019). Towards higher female work participation in India: what can be done? Azim Premji University.
PTI. (2020, March 06). Business Standard .
Sorsa, P., Mares, J., Didier, M., Guimaraes, C., Rabate, M., Tang, G., et al. (2015). Determinants of the Low Female Labour Force Participation in India. OECD Economics Department.