'Distress driven, nothing unusual': Recent increase in rural female labour force participation

By Sapna Goel* 
Female Labour Force Participation (FLFP) rate in India has been declining, by and large, since the first quinquennial Employment-Unemployment Survey (EUS) of National Sample Survey (NSS) in 1972/73 until 2017/18. There were brief increases during 1983-1987/88 and 1999/00 and 2004/05, the periods marked by agrarian distress. 

The decline in the FLFP rate was largely on account of the decrease observed in rural India while the rate in urban areas has remained stable. The FLFP rate (all ages) in rural India declined from 33.3 percent in 2004/05 to 25.3 percent in 2011/12 and further declined to 18.2 percent in 2017/18.
However, in recent years, the FLFP in rural India has seen a turnaround with an increase in the FLFP rate (all ages) from 18.2 per cent in 2017-18 to 30.5 per cent in 2022-23 (PLFS 2022/23). This period is marred by a significant health and economic crisis due to the Covid-19 pandemic. 

Since 2011/12 itself, the Indian economy has experienced a slowdown attributed to the Non-Performing Asset (NPA) crisis, compounded by the effects of demonetization and implementation of Goods and Services Tax (GST). However, the economy continued to grow reasonably well, supported by several policy measures like fiscal stimulus and temporary income gains resulting from a large fall in international oil prices. 

The growth rate in the agriculture sector fell twice consecutively to 5 percent in 2017/18 and then to 2.7 percent in 2018/19. Eventually, by late 2018, the economy collapsed, witnessing a significant decline in both consumption and investment growth. The slowdown was further exacerbated by the Covid-19 pandemic. 

The above discussion establishes that from 2017 through the period leading up to and including Covid-19 has been a period of great slowdown for the Indian economy. 

In this context, let’s try to understand the recent rise in the FLFP rate by analyzing it across employment status, level of education and socioeconomic dimensions like caste and expenditure class.

First, NSS categorizes workers into three broad categories based on their employment status. These categories are self-employed, regular wage/salaried employee and casual labour. Within the self-employed category, there are two sub-categories: i) own account worker and employer and ii) unpaid helper in household enterprises. 

Own account workers are those who operate their enterprises on their own or with one or few partners without hiring any labor while employers are those who work on their own account or with one or more partners and run their enterprise by hiring labour.
Between 2017/18 and 2022/23, the proportion of women that are casual labour among all women workers decreased from 31.8 percent to 21 percent in rural India. However, there is no corresponding increase in the proportion of regular wage/salaried women. The proportion of regular wage/salaried women declined from 10.5 percent in 2017/18 to 8 percent in 2022/23. The share of self-employed women constituting own account workers/ employers and unpaid helpers  increased by around 13 percentage points during the same period (Fig.1).

Between 2017/18 and 2019/20, the rise in the participation of women was driven by an increase in the share of helper in household enterprises, while the share of own account workers remained largely stable. However, from 2019/20 to 2022/23, which included the period during and after the Covid pandemic, the increase in women’s participation rate was primarily due to an increase in the share of own account workers (Fig.1). The proportion of own account women workers rose from 20.6 percent in 2019/20 to 27.9 percent in 2022/23. 

This substantial increase in the proportion of own account women workers may partly be an outcome of the large exodus of male migrants returning back to their villages during the Covid pandemic with women in the household joining own farm activities or other non-farm activities to support household income. 

Notably, the Labour Force Participation rate for men increased only slightly from 76.4 percent in 2017/18 to 80.2 percent in 2022/23. The distribution of male workers among self-employed, regular wage/salaried or casual workers remained stable between 2017/18 and 2022/23.
Additionally, between 2017/18 and 2022/23, the proportion of self-employed women rose by 13.2 percentage points in the agriculture sector, 10 percentage points in the manufacturing sector and 8.6 percentage points in the services sector in rural India. The proportion of regular wage/salaried women or casually employed women declined across all sectors (Fig.2-4).

Interestingly, the increase in the FLFP rate in rural India between 1999/00 and 2004/05 was also driven by an increase in the percentage of self-employed women. During this period, the share of self-employed women increased from 57 to 63.7 percent, while the proportion of women who are casual labor decreased from 39.6 percent to 32.6 percent. The proportion of regular wage/salaried women rose marginally by less than one percentage point between 1999/00 and 2004/05 (NSS-EUS 2004/05). 

Further, during this period, the proportion of self-employed women in the agriculture sector rose by 8 percentage points while the proportion of self-employed women in the manufacturing and services sector declined marginally. The recent rise in the proportion of self-employed women is broad-based, extending across all sectors.
Secondly, there is a U-shaped relationship between education and FLFP rate in any given year. The FLFP rate is generally higher among women with little or no education. As the level of education increases, the FLFP rate declines, before eventually rising for highly educated women. 

The U-shape hypothesis states that among the poorest with no or very little education, women are forced to work to survive and can combine farm work with domestic duties, while among the highly educated, high wages induce women to work and stigmas associated with female employment in white-collar jobs are low.
For instance, between 2017/18 and 2022/23, the FLFP rate for illiterate women increased from 29.1 percent to 48.1 percent, while it increased from 49.2 percent to 52.2 percent for women with post-graduate or above education. During the same period, the FLFP rate increased from 10.3 percent to 30.7 percent for women with secondary education.
The increase in the FLFP rate in rural India is observed among all education categories. However, the extent of increase in rural India is higher among women with lower education levels than relatively higher education levels.
Thirdly, we look at the FLFP rate among 4 categories, scheduled tribe (ST), scheduled caste (SC), other backward class (OBC) and the rest referred to as others. FLFP rate is higher among ST women compared to women belonging to other caste groups. 

Between 2017/18 and 2022/23, the FLFP rate rose across all caste groups with ST women experiencing the highest increase of 17.6 percentage points followed by OBC, SC and others. FLFP rate for ST women increased from 27.6 percent in 2017/18 to 45.2 percent in 2022/23 while it increased from 15 to 21.5 percent for others women.
Fourthly, the FLFP rate is relatively higher among the upper expenditure classes than the lower expenditure classes. These expenditure classes are based on the usual monthly per capita consumer expenditure (UMPCE). Further, the FLFP rate has increased across all expenditure classes but the extent of increase is highest among the richest two deciles and lowest among the bottom 10 percent. 

In a way, the relatively large increase in the FLFP rate among the upper expenditure classes challenges the income effect hypothesis. The main idea of the income effect hypothesis is that with rising household income, women withdraw from the labor market. 

Kannan and Raveendran (2012) found that a large number of women who withdrew from the labour market between 2004/05 and 2011/12 were from economically poor households. The recent increase in the FLFP rate has also happened more among the relatively upper expenditure classes than lower expenditure classes (Fig.7).

Across all deciles, the proportion of self-employed women workers has increased with marginal changes in the proportion of regular wage/salaried workers or casually employed women workers. The proportion of self-employed women workers in the 1st decile class increased slightly from 9.6 percent in 2017/18 to 12.6 percent in 2021/22 while it increased from 10.3 percent to 21.7 percent for the richest decile class. 

While the UMPCE doesn’t fully capture the class differences, it still offers interesting insights. It is largely the upper expenditure classes who are able to increase their participation by engaging in self-employment activities (Fig.8).

Way forward

The recent increase in female labour force participation is distress-driven and is nothing unusual compared to the previous periods when the participation rate of women rose. However, the recent increase is broad-based, with the proportion of self-employed women rising across all sectors, including agriculture, manufacturing, and services. 

This increase is observed across all caste and class groups, as well as across all expenditure classes, though the degree of increase varies. The highest increase in the participation rate is observed among vulnerable groups, including ST women and relatively less educated women, underpinning the distress and necessity-driven nature of participation. 

Notably, FLFP has grown significantly more among the upper expenditure classes than the lower ones. The increase in participation was driven by an increase in the proportion of self-employed women, which increased significantly more for upper expenditure classes than lower expenditure classes. 

This indicates that it is mostly the upper expenditure classes who can rely on household agriculture or other activities in distress times while the lower expenditure classes still have to look for paid opportunities as agricultural laborers or in the non-farm sector.
Having said that, women in rural India continue to bear a disproportionate burden of domestic responsibilities. According to the 2019 Time Use Survey, rural women in India spend an average of around 5 hours per day on unpaid domestic services, compared to only 1.5 hours by men. 

Women also spend around 2 hours per day on care activities, compared to around 70 minutes by men. 

To increase and sustain higher participation of women in the labour force, public provision of care services, equal division of labor at home and decent job opportunities in the non-farm sector would be essential in the long run.

---

*Assistant Professor in the Economics Department at Hindu College, University of Delhi; final-year PhD Economics student at South Asian University, New Delhi. Click here for all the nine figures