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A lot has been written about the rise in female participation in India’s workforce (Periodic Labour Force Survey, or PLFS, 2022-23). The rise in overall female labour force participation rate (LFPR) – labour force as a percentage of population of all ages – to 27.8%, up 3 percentage points YoY, came largely from the rural areas (up 3.3% to 30.5%).
Some have interpreted the rise in the female LFPR and worker-to-population ratio (WPR) – a major contributor to the overall rise in employment and availability of labour in 2022-23 – as a sign of significant funnelling of economic progress to household livelihoods, particularly for women.
The rise in LFPR and employment (WPR, 27%) has been the same for females (+3% YoY). However, for males, the LFPR declined (-1.1% at 56.2%) more than WPR (-0.4%, to 54.4%). This implies that notwithstanding a greater contribution by women, the decline in the unemployment rate (UR) for males has been larger than for females. Thus, the rise in overall reported employment and labour force has been driven by women, particularly in rural areas.
Also read: Growth in Female Labour Force Participation in India Now Seems to Be Stagnating
Further details show that the surge in employment (WPR) has been driven by self-employed persons (57.3%, +1.5pp YoY) predominantly in rural areas and again contributed by women in the agriculture sector, especially young cohorts.
So, what does the PLFS data tell us?
Occupation status data shows a rise in female workers in agriculture sectors in FY23, both in the rural (+0.3pp YoY to 76.2%) and urban areas (+0.6pp to 11.7%). In contrast, their proportion in urban industry, construction and services has declined. In rural areas, the proportion of women in industry and services has risen even as the agri sector remains the most dominant.
Additionally, there has been a rise in the proportion of rural females of self-employed status (+3.2pp at 71%), indicating increasing dependence of rising LFPR and WPR on the agri sector. The worsening quality of the work profile reflects a decline in the proportion of regular wage work and casual wage work.
Thus, the rise in the contribution of rural females in the workforce and employment exhibits a strained situation where the decline in rural unemployment rate due to discouraged males in the mature group (30+ years) is balanced by a sharper rise in WPR and LFPR for young cohorts, especially females.
Whether the rising contribution of females in the labour force signifies improved job opportunities or reflects the underlying stress can be gauged from the trends in incomes. A gainful situation would imply an abundance of employment opportunities in productive sectors, translating into rising incomes. Conversely, a distress situation would emanate from a decline in average real incomes forcing women to seek work, even in less productive sectors and at lower wages.
In this respect, there are two takeaways from the PLFS data.
First, wages for the self-employed segment, male and female, are majorly driven by the rural areas (80% weight). As rural self-employment accounts for the disguised unemployment clustered under (a) helper in the household enterprise, (b) own account worker, and (c) employer, a significant portion of wage data represent imputed values based on activities they do; they do not represent actual cash wages.
Second, with respect to self-employed women, the weight of wages from rural (lower paying vs urban) has seen a remarkable rise from 72% in September 2018 to 84% in June 2023; the contribution of higher paying urban wages has declined. As a result, the 4-year CAGR for self-employed females was a meagre 3.5% (INR 5636/month).
Since the pre-pandemic levels, wages for self-employed females have remained stagnant (growing 0.6% pa) and the relative female self-employment wage is 64% lower than males. As a corollary, real female wages (net of inflation) have fallen by 5.4% pa since pre-Covid.
Besides this, the regular salary/wage growth for rural females (7.8% 4-year CAGR, 1.8% in real terms) was higher than for males (5.7% CAGR) reflecting the narrowing female-male gap in regular wages. However, the proportion of regular wage earners among females has declined in rural areas (8%, -0.1pp) and risen in urban areas (50.8%, +0.5pp).
Monthly income for female casual workers has grown by 10% on four-year CAGR, with a higher pace in rural at 10.2%. But this has been largely a pre-covid phenomenon. The average income growth since 2QFY22 has been just 1.4%. In 2022-23, the proportion of females in casual work has declined to 21% (-3.1pp YoY). Hence, the real income from casual work has also contracted over the past seven quarters.
Declines in real income per worker amid the rise in dependency have led to a forced increase in women’s participation in the workforce even though at lower earnings. Stretched per capita incomes can have structural implications through the impact on investment in education and health, thereby impairing labour productivity and future earnings capability.
All put together, with changes in the work status of females, predominated by the rise in agri sectors and incomes mainly from self-employment, the rising contribution of females in the labour market epitomises a stressed livelihood rather than a bountiful situation. At a broader level, this trend mirrors an important dimension of the rising ruralisation phenomenon of the declining proportion of employment in the urban industrial and services sectors translating into rising dependence on rural sectors.
Exhibit 1: Female earnings from self-employment have stagnated (0.6% CAGR over pre-covid)
(Source: PLFS annual reports, Systematix Research)
Dhananjay Sinha is co-head of Equities and head of research of Strategy and Economics at Systematix Group.
