 "jobs")
Key highlights:
- India faces one of the world's lowest rates of female workforce participation.
- One per cent more workers = 0.47 per cent more women: For every one per cent increase in employees, there is a 0.47 per cent rise in female workforce, as per Annual Survey of Industries (1998-2019) data.
- Firms with more employees have a greater share of female workers.
- Larger companies offer valued non-wage benefits, especially appreciated by women
- Larger companies offer valued non-wage benefits, especially appreciated by women
- Almost 98 per cent of Indian firms are micro-sized (less than ten employees), potentially restricting female employment opportunities.
Female participation in India’s workforce is below global standards and one reason for that could be “micro-firms” that employ less than 10 people on the average, two economists have said in a paper.
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The World Bank’s recent data showed that in 2022 only 24 per cent of women older than 15 were part of India’s labour force, compared to the global average of 47 per cent. While it is easy to blame social norms, income, and education for the disparity, the paper said larger firms hire more women and maintain a better gender ratio in employment. India might be lagging in employing women because it mostly has “micro-firms” said Pubali Chakraborty, assistant professor of economics at Bates College in the US, and Kanika Mahajan, associate professor of economics at Ashoka University in India, in their paper called 'Does the size of an organisation have any link to the share of women it employs?'. The full paper is available on the Centre for Economic Data and Analysis (CEDA) web portal of Ashoka University.
Larger firms, higher female workforce
An analysis of the Economic Census of 1998, 2005 and 2013 showed that almost 98 per cent of firms in India employ less than 10 people. Even in manufacturing, 30 per cent of firms are micro-sized. These firms also hire more than half of the workforce (53 per cent).
Chakraborty and Mahajan found a positive correlation between firm size and the proportion of female workers they employed. Between 1998 and 2019, for every one per cent increase in the workforce there was a corresponding 0.47 per cent increase in the employment of women. This correlation held across agriculture, construction, manufacturing, services and other sectors.
However, this correlation is more evident in larger firms. The study stated that female workers are 27 per cent more likely (vis-a-vis male workers) to be employed in firms having 20 or more workers versus firms having fewer than six workers.
Gender inclusivity
The paper proposed non-wage benefits offered by larger firms is one reason for them employing more women. These companies provide benefits such as maternity and paid leave, childcare facilities and health care benefits. Bigger firms are more likely to provide child care, free transport, and work-from-home options. This array of offerings not only attracts more female employees but also enhances their overall job satisfaction and they are able to retain these employees for the long run.
Estimates show that firms with 500-1000 employees are 40 percentage points more likely to offer benefits to women compared to firms that have less than 10 employees.
Chakraborty and Mahajan argued against a common belief that larger firms do not compromise on monetary wages for additional benefits. Their research suggests that the marginal productivity of women in larger firms might be higher, thereby justifying their equal, if not higher, wages.'
Role of government policy and regulation
Rajasthan and Jharkhand amended their labour laws in 2014 and 2017 to allow firms to hire more employees without certain regulatory constraints. These amendments led to a significant rise in the proportion of female workers by 13 per cent. Moreover, there was a 15 per cent increase in output, along with profits and welfare expenses per employee in these two states as compared to states in India where no such amendment was made.
The two economists said the impact of such amendments adds to their theory on the correlation between firm size and gender inclusivity. Moreover, this points to the impact a few changes in policy can have on increasing female participation in the workforce. By encouraging the growth of larger firms and promoting similar employee benefits in smaller enterprises, India can bridge the gender employment gap and foster a more inclusive workforce.
