What’s Holding Back India’s Economic Ambitions?
Just 24% of women in India are working or looking for work
Many countries have followed a similar economic trajectory: As they develop, women increasingly enter the workforce, further fueling the country’s upward climb.
It happened in China, Japan and South Korea in the latter half of the 20th century. The U.S. saw its female labor-force participation rate—the percentage of women age 15 and up who are working or actively looking for work—grow from 32% in 1948 to 59% by 2000.
India, which overtook the U.K. last year as the world’s fifth largest economy, hasn’t followed that path. Since 1990, its female labor-force participation rate has hit a peak of only 31% in 2000, according to data from the World Bank. Last year, it was 24%.
That rate is among the 12 lowest in the world, a list including Afghanistan and Somalia. Saudi Arabia has a higher percentage of women working or looking for a job.
India has made some recent progress. The percentage of women in the labor force has grown slightly from a low of 21% in 2018, but those small gains have been hard won. Even companies that have made an effort to hire women have found it difficult. India’s low numbers helped bring down the percentage of women in the world’s labor force from around 51% in 2000 to 47% last year.
Economists blame India’s low figures on two main factors: weak job creation, which has led to intense competition for the available opportunities, and a deeply conservative culture that emphasizes a woman’s place is at home.
Despite being the world’s fastest-growing major economy in recent years, India added zero net new jobs over the past decade.
India’s failure to bring more women into the labor force is complicating its ambition to capitalize on its youthful demographics as Western companies look for alternatives to China for manufacturing.
The world’s most populous country could boost its gross domestic product by $734 billion if the country increased its female labor-force participation rate by 11 percentage points by 2030, according to McKinsey Global Institute. India’s GDP was about $3.4 trillion last year, according to the World Bank.
Only 38 million women were in paid employment in India last year, compared with 368 million men, according to the Centre for Monitoring Indian Economy, a Mumbai think tank.
Cultural pressure is so strong that Anamika Pandey, a 26-year-old entrepreneur in New Delhi, said many women believe that working outside the home is a shameful activity reserved only for the poor.
Last year, Pandey founded a natural food company called Naario. Initially she wanted to hire female employees, including in warehousing, logistics and sales, but women feared public censure, she said.
Pandey ended up hiring men for all the jobs that involve being outside the home. She said she was able to find more than 500 women to sell Naario products on social media and at events in their homes for friends and neighbors, although that wasn’t easy.
“Sometimes you have to sit down with the family members and tell them, ‘Hey, this is not a sales job. She’s not going out of the house to do anything,’” Pandey said.
Anmol Jaggi, co-founder of the ride-hailing startup BluSmart, said he had wanted female drivers to reflect the customer base, which is 50% female. In 2021, BluSmart announced plans to hire 500 female drivers within a year.
The company launched a training program, in partnership with the Indian government, to teach women how to drive and help them obtain driver’s licenses. BluSmart installed three panic buttons in each car to address safety concerns, allowed female drivers to take only day shifts, and based women near big metro stations for easier commutes.
Only 80 of the 800 women who learned how to drive ended up taking a job. The company has 6,500 male drivers. Many women wanted to work but gave in to family members who opposed the idea, Jaggi said.
The majority of women who do work for the company are single mothers like Deepa Shankar whose financial needs trump their family’s objections.
The 25-year-old in New Delhi said she became a driver after her husband abandoned her and their baby son. Her mother, brother and neighbors all tried to shame her into quitting. They told her she was staining the family’s good name.
The money gradually changed their minds. Her earnings allowed her to pay for her father’s medical treatment, build a house for her mother and fund her brother’s education. Shankar makes around $490 a month. “Now they’re happy I work,” she said.
Jaggi’s dream of thousands of female taxi drivers remains far off. “It might take my full life to get to that goal,” he said.
In many parts of India’s economy, jobs are in short supply. Many jobs disappeared during the pandemic and never came back. Work in agriculture, long India’s biggest employer, has vanished in recent decades as farms became more mechanized. Other sectors, especially manufacturing, failed to compensate.
“Once you run out of men, you have to employ some women,” said Alice Evans, a senior lecturer at King’s College London. “But those labor shortages never materialized in India.”
Economists say a boom in jobs could help overcome the social stigma that remains a barrier to more women working.
Japan and South Korea both had female labor participation rates below 50% before their economies began to take off in the 1970s and ’80s.
Today, female labor-force participation is around 55% in South Korea and 54% in Japan, though if women over 64 are excluded, the rates are much higher. The rate for women aged 15 to 64 is 60% in South Korea and 74% in Japan, according to the World Bank. In India, it’s 25%.
China’s rise, too, was bolstered by women who joined its labor force. As millions of women flocked to factories in the cities, its female participation rate soared to over 70% by the early 1980s, according to data from the United Nations’ International Labor Organization.
Once a country develops to a certain point, the percentage of women in the labor force often falls as greater wealth gives women the option to decide to stay at home or spend more time pursuing higher education. A lack of child-care options can also play a role. Economists say those factors have contributed to a dip in China, where the share of working women has dropped to 61%, from 73% in 1990. Its rate is still higher than in many developed countries.
In the U.S., the female labor-force participation rate has fluctuated over the past two decades as more women stayed in school and baby boomers entered retirement. The rate was around 56% last year, down slightly from almost 59% in 2000, according to the World Bank.
The pandemic also took some women out of the labor force, but more have been flowing back recently. The rate for women aged 25 to 54 in the U.S. hit a record high of 77.8% in June, according to the Bureau of Labor Statistics.
Germany, France, the United Kingdom and Australia have all seen increases in the percentage of women who are working or looking for a job since 2000.
Part of what makes India’s drop since 2000 worrisome to economists is that it occurred before the country climbed out of the ranks of lower middle-income countries. India’s GDP per capita of roughly $2,400 is less than one-fifth of China’s.
In neighboring Bangladesh, female workers have played a crucial role in helping develop the garment industry—although the country’s factories have drawn charges of safety issues and worker exploitation. Bangladesh had a female labor-force participation rate of 38% last year, up from 28% in 2000. Its GDP per capita has surpassed India’s since 2019.
Economists say compared with India, Bangladesh has looser labor laws that have allowed factories to expand quickly and doesn’t have as many strong caste rules that encourage social conformity.
Indian officials have said the low participation numbers are exaggerated by data that doesn’t fully capture what women do there. In its latest annual economic report, the government argued that unpaid domestic work such as collecting firewood, cooking and tutoring one’s children should be counted as productive work.
Indian officials have touted improved education for girls. India’s female literacy rate climbed to 70.3% last year from 54.2% in 2001, according to United Nations data. The literacy rate for males last year was 84.7%.
In many parts of India, a college degree is still seen as part of a marriage dowry in some conservative wealthy families. “The returns to women in education are largely in the marriage market, but not in the labor market,” said Rohini Pande, an economics professor at Yale University. “Parents are worried about marriage prospects if they let their daughters go where the jobs are.”
Kanchana Balachandar, 32, holds a master’s degree in business administration and used to work for one of India’s top consulting firms. She took a decadelong break starting shortly before getting married then decided last year that she wanted to return to a full-time job. Her husband, in-laws and parents all insisted she stay at home to care for her son.
“It comes from all three sides: Who will take care of your baby?” said Balachandar, who lives in Chennai and said she has turned down several job offers due to family pressure. “There is always a question to the women: Why are you even working?”
New Delhi has made efforts to expand female employment, including opening vocational institutes for women and increasing paid maternity leave from 12 to 26 weeks. The government requires companies with at least 50 employees to have in-house daycare facilities.
British equipment manufacturer JCB, which operates six factories in India, began making a concerted effort more than a decade ago to hire women, partly because the company found that women did well at some complex manufacturing tasks, said Deepak Shetty, the chief executive of JCB India.
JCB hired a psychologist to visit its factories in India, in part to counsel female employees on how to handle family pressure, Shetty said.
The company negotiated leases on apartments near some of its factories because many of the women wanted to live near each other. It provides transportation to and from the factory each day. Workshops taught men and women about inappropriate conduct, such as telling women they don’t belong in manufacturing.
Shetty said women make up about a third of the workforce on the shop floor at JCB’s two factories in the city of Jaipur, and more than half are women in its newest factory in Gujarat. Across India, about 19% of its 2,500 employees who work in manufacturing are female.
At a gas station in New Delhi, most of the jobs like filling up tanks and changing oil are held by a crew of 27 women. Aarti Shakya started working at the station seven years ago after her husband fell ill. Even though he was too sick to work, he was so opposed to her working that she quit after eight days.
Shakya returned when he was hospitalized and needed money for medical care. Now their combined salaries cover a bigger apartment and private school for their daughter. Even so, Shakya said she hopes her daughter won’t have to work.
“If women step out to work, people don’t look at them with respect,” she said. “It’s better for them to be happily married.”
Write to Shan Li at shan.li@wsj.com and Vibhuti Agarwal at vibhuti.agarwal@wsj.com