IWWAGE Study Highlights Reasons For Declining Female Labour Force Participation In India

The Initiative for What Works to Advance Women and Girls in the Economy (IWWAGE) at LEAD today released a research paper, ‘Working or Not: What Determines Women’s Labour Force Participation in India?’ examining the determinants of women’s declining participation in the Indian labour force.

These findings are drawn from an analysis of household-level data from India’s Periodic Labour Force Surveys (PLFS), covering the years 2017-18 and 2018-19 and is among the few research papers to analyse the PLFS data for 2018-19. The analysis also looks at long-term trends using the National Sample Survey Organization’s (NSSO) Employment-Unemployment Surveys (EUS), covering the years 1993-94 and 2011-12.

Women’s participation in India’s labour force has been steadily declining since 1993-94 and India has one of the lowest female labour force participation rates among developing countries. Despite decades of policies and programmes aimed at addressing this issue, the figure has remained consistently low. The study shows that the primary driver behind this decline has come from rural areas, with participation dropping by 24 percentage points since 1993-1994. By contrast, the participation of urban women during this period saw only a marginal decline, from 25 percent to 22.5 percent.

The gender disparity in the workforce is evident across the country, with even the better-performing regions displaying a colossal gap when compared to male workforce participation across both urban and rural areas. While many factors influence these statistics, a number of trends have stood out.

Demographic and regional trends

As previously highlighted, the precipitous drop in the employment levels of rural women has been a major factor contributing to the decline of India’s female labour force participation rate (FLFPR). Rural women’s participation declined across all states during 2011-12 and 2018-19. A number of factors explain this phenomenon, including decreasing employment opportunities for women in rural areas.

The NSSO’s data (1993-94 and 2011-12) also highlights that this decline is not limited to young women workers and that women’s participation has decreased substantially across all age-cohorts.

This is especially true of those aged between 25 and 59, including India’s young women - the demographic dividend that is expected to join and remain in the workforce.

Overall, the long-term trends from 1993 onwards suggest that women across both urban and rural areas have been increasingly contributing to domestic duties. Although these activities have large economic benefits not only for the households, but also the economy, this work often goes overlooked, undervalued and underreported.

Social identities and labour force participation

The female rural labour market has always been distinguished by the high participation levels of women from Scheduled Caste (SC) and Scheduled Tribe (ST) communities. Across rural areas, these two demographic groups typically comprise the major share of the female labour force. In particular, women from ST or Adivasi communities show the highest participation rates among all social groups, closely followed by SC or Dalit women. This is attributed to generally high household poverty levels among these categories, and higher mobility and fewer restrictions on working, particularly for occupations that require manual labour.

Although a decline in labour force participation has been witnessed across all social groups since 2004, the highest drop has been registered for ST women, followed by SC groups and Other Backwards Classes (OBC) in rural areas. This trend has carried over into urban areas as well, with ST women once again experiencing the highest decline in this period. These changes stem from factors such as labour market discrimination, skill mismatch, lack of adequate jobs, and employer bias against women from marginalized sections of the society.

Sectoral employment trends

The period between 2011 and 2019 has seen the percentage of female labour in the agricultural sector fall from 62 percent to 54.7 percent. The percentage of women employed in industrial work during this period also saw a marginal decline, from 19.9 percent to 19 percent. Although the same period also saw the share of women workers in the services sector rise significantly, this growth has largely been confined to urban areas.

Thirty percent of women in rural India are performing low-skilled occupations, compared to 19 per cent in urban areas. Within the agricultural sector, over 71 percent of women are engaged in low productive activities.

The occupational structure of women’s workforce shows that most women continue to undertake marginal and vulnerable jobs, and that more than half work as self-employed. Of those who are engaged in self-employment, most are unpaid helpers and contributing family workers.

Determinants of women’s labour force participation
A multivariate analysis of the odds of a woman working in 2018-19 enables determination of several critical factors that significantly affect women’s participation in the labour force. The first is that higher household incomes are negatively linked to the labour force participation of women in both urban and rural areas. As the household’s income levels increase, the likelihood of a woman being in the labour force decreases. A similar relationship has been noted between women’s LFPR and the household head’s education, suggesting that women withdraw from the labour force once the household’s socioeconomic status improves.

Women’s own education is a major determinant of their labour force participation rate. There is a clear U-shaped relationship between female labour force participation rate and education. While women with no or primary education work more than those with higher secondary schooling, a woman with a graduate and higher degree has more than a 12 percent chance of being in the labour force in urban areas. Similarly, vocational training of all types raises the probability of labour market participation in both rural and urban areas, with on the job training having the highest effect.

For urban women, marriage reduces the likelihood of their participation in the workforce by 17 percent. The presence of young children is also associated with lower participation, as women in households with children less than five years of age are less likely to participate in the labour force across rural and urban areas.

The state’s social sector spending positively influences women’s LFPR across rural and urban areas. As such, the South of India has a higher proportion of women in the workforce than other regions in the country. Finally, social group and religion also play a dominant role in determining women’s paid work participation in India. Both are important correlates of female labour force participation, with SC/ST women and Hindu women being more active in the labour market than Muslim and upper-caste women.