Abuse of women hurts economy

Many in India see rape and other violent crimes against women as a typical law and order problem. Is it really so? Reports of women refusing job offers in Delhi/NCR or seeking relocation to supposedly safer cities tell a different story. Men too, fearing the safety of women in their families, may follow them soon.

If this issue remains unaddressed, it can adversely affect India’s tertiary sector, in particular IT and BPO, banking and financial, fashion, interior designing, sales and marketing, medicine, nursing, retail and tourism as women form a large proportion of the workforce.

Only a few months ago, rumours of violence against north-eastern people in Bengaluru led to their mass exodus and caused temporary closure of many restaurants in the city. IT and BPO companies too were badly affected.

Smart economics

Trust Law, the legal news service of Thomson Reuters, has ranked India as the fourth most dangerous place for women. To give us company are Afghanistan, Congo and Pakistan, the top three countries on the list. It would be pertinent to see how increasing crimes against women can affect business and economy.

However, there is a dearth of studies about the implications of crime against women on the economic performance of a country or region.

From their study of gender equality in education and employment, Luisa Natali and Naila Kabeer conclude that there is evidence to suggest that the ‘expanded pool of talent that results from increasing participation of women’ in workforce can contribute positively to the economic growth.

The reasoning is quite simple. Increasing participation of women in the economy supports it from both supply and demand side. From the supply side, it does so by adding to the size of the workforce, promoting division of labour and greater specialisation. From the demand side, it supports the economy by generating additional demand for a range of products and services.

The World Bank rightly reports that the business case for expanding economic opportunities for women (by closing the gap between men and women employment) is increasingly evident and hence it is nothing but ‘smart economics’.

The study of Booz & Co concludes that ‘women can be powerful driver of economic growth’ and raising female employment up to the levels of males can have a direct positive impact on a country’s economy. In India’s case, it is as high as 27 per cent of its GDP given India’s poor rank of 115 on Third Billion Index (which ranks countries in terms of how effectively, they empower their women as active economic agents).

The positive impact of women’s education and employment on the next generation is obvious as women in general are more likely (than men) to spend a higher proportion of their income on the education of their children.

Thus, even a small increase in the economic opportunities available to women and removal of cultural bottlenecks that hold them back from becoming active economic agents can be immensely beneficial to the economy.

Agent for economic growth

Ideally, women should form roughly 50 per cent of the workforce of an economy. However, women’s share in India’s workforce was just 25.3 per cent in 2010. Instead of going up, their share has fallen by 4 per cent in the period 2005-10. Given the predominant role of services (60 per cent share in the GDP) in India’s economy, demand for skilled people is growing much faster than its supply. Women can fill this gap if the right environment (physical safety would be one of the key components here) is ensured.

Many women are migrating from smaller towns to big cities such as Delhi to acquire higher education and skills and take up better paying jobs in secondary and tertiary sectors of the economy. Many of them stay alone or with roommates far away from their hometowns.

Crimes against women will check their migration to cities and retard the process of transforming more women into active economic agents and leave the economy worse off.

Slower addition of India’s women in the country’s workforce means slower increase in labour supply, less scope for specialisation and faster increase in wages. Already, average labour cost in India is almost equal to China, even though Chinese per capita income is roughly thrice that of India.

A check on participation of women in the workforce on the issue of their safety and security concerns will further erode the cost competitiveness of Indian businesses, already suffering from demand slowdown, high prices of inputs, poor regulation and poorer infrastructure.

Economically empowered women in India are a new, steady source of consumption demand. In the last two decades, they have benefited the manufacturers and retailers of bags, beauty care and cosmetics, food and beverage, expensive clothing and lingerie and other life style products and services — in which they have a larger say in purchasing decisions.

These sectors are more likely to post poor results in future if crime against women is not given the attention it deserves.

Tourism, which accounted for foreign exchange earnings of $18 billion (besides providing livelihood support to millions of skilled and unskilled workers) in 2012, can be another casualty. India’s poor record in attracting tourists (6.5 million tourists against China’s 65 million in 2012) is undisputable.

Given the fact that the share of women tourists is 40 per cent now, up from 25 per cent a decade earlier, India’s effort to promote this sector can take a hit if crimes against women remain unchecked.

Business case

Given the nature of politics in India, judicial, legislative and police reforms will take their own time.

Meanwhile, businesses having operations in areas perceived to be unsafe for women will have to bear the financial consequences of not being able to find suitable and sufficient number of women employees, in addition to overall lower demand for their products and services.

Thus, it makes commercial sense for businesses operating in cities such as Delhi/NCR, especially those from services sector, to take pro-active steps to make their women employees (current or prospective) feel safe.

This also calls for taking tough in-house measures to deal with cases of sexual harassment, as they tend to demoralise women employees and hurt their overall productivity.

(Ritesh Kumar Singh is Group Economist of a corporate house. Prerna Sharma is a research analyst in a financial services firm. Views are personal)

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