World Bank: India's GDP drains 2.6% due to fewer females in jobs; most entrepreneurs prefer men as employees

Substantial variation in labour force participation rate among states

By Rajiv Shah
World Bank report, “India Development Update: Unlocking Women’s Potential” (May 2017), notes that an approximate 10 percentage points decline in female labour force participation rate (LFPR) between 2004-05 and 2011-12 has imposed “constraints on a country’s growth”, and is proving to be a “drag on GDP growth” to the tune of 2.6%.
Pointing out that the “obstacle” means that India’s GDP per annum could “accelerate from 7.4% currently to over 9% the report, prepared by Frederico Gil Sander as the main author, says, “Considering that 42% of India’s science and technology graduates are women”, there is “a significant ‘brain drain’ for modern services sectors”.

The ‘brain drain’ is happening even though Indian women “have highly sought-after skills”, the report claims, quoting a 2014 World Bank Enterprise Survey to note that only 9.4% of firms identified Indian women as having “inadequately educated” as a major constraint, “compared to 15.7% in Bangladesh and 21.7% globally.”

Quoting Breakthrough Index for Women in the Workplace by the Center for Strategic and International Studies, the report says, high female workforce participation in states like Sikkim, Karnataka, Andhra Pradesh and Tamil Nadu is because in these states there are “fewer restrictions on women’s working hours and high conviction rates for workforce crimes against women.”
In sharp contrast, in some states, social security offered to women is quite low, leading to low LFPR. Thus, an enterprise survey undertaken by the World Bank in Madhya Pradesh revealed that “very few enterprises (40 of the 618 interviewed) offered maternity leave”, the report says.
“Among those that did, only two in every five paid salaries during leave”, the report says, adding, “The provision for childcare was even lower – only 7 firms offered such facilities. Of the firms that provided either maternity leave or childcare facilities (46), the average share of female employees was 20.5%, slightly more than the share of those that did not (14.7%, 2016).

Suggesting how labour laws do not favour higher LFPR in India, the report says, “First, they do not afford the same levels of maternity benefits as other countries. Second, in many cases they prevent women from taking up certain types of jobs in the formal economy. And third, labour laws reduce the flexibility of regular wage jobs: while in the Republic of Korea parents are entitled by law to flexible or part-time work schedules, the same is not available in India.”

Quoting from a survey, the report says, while “around 90% of employers said that men and women deserve equal wages and benefits for the same job”, when asked “whether men have a greater right to a job than women, especially if jobs are scarce, employers were more divided: 53% agreed with the statement, while another 34 percent refrained from offering an opinion.”
“Similarly, when asked whether men made better employees than women, 42% of the employers interviewed responded in the affirmative, while 30 percent did not have a view (the rest disagreed)”, the report says, adding, “There was no significant variation on this subject by firm size, sector or city.”
“In general, employers perceived men to be more suited for jobs in the production/ technical/ operational domain (82% said so); and slightly lesser so for jobs involving procurement/ purchase (71 percent); business development, marketing, sales and HR (62%) and IT support (57%)”, says the report.

“The attitudes and opinions that employers hold about women appear to influence women’s employment outcomes”, the report says, adding, “Across all firms interviewed for the enterprise survey, women comprised a small proportion of total workers (under 16%) with service sector enterprises employing a slightly higher share of women than manufacturing (18% compared with 15%).”