Missing half the demographic dividend

There is much excitement that the demographic dividend is going to be a major driver of India’s future economic growth.

According to estimates by the World Bank, the working-age population (15 to 59 years) is set to increase by more than 200 million in India over the next two decades, while it is expected to decline in most developed regions of the world, even China.

However, India might fail to reap the benefits, mainly on account of the extremely low rates of female participation in the country’s economy. The proportion of females (aged 15 years and above) in the labour force in India in 2012 was only 29 per cent compared to 64 per cent in China.

There are a number of social and economic factors that tend to reduce female labour participation in India, including the discouragement women face from husbands and in-laws and discrimination at the workplace.

But equally or more important is the the sheer absence of suitable employment opportunities.

The National Sample Survey Organisation (NSSO) surveys show that persons engaged in agriculture and allied activities declined to 224 million in 2011-12, from 258 million in 2004-05. (Nevertheless, agricultural workers comprised nearly half of India’s total workforce, numbering 472.5 million).

More students There is evidence on how growing numbers of India’s young are leaving farm work and joining schools or colleges. Almost 80 per cent of those who left agricultural work after 2004-05 were females.

The NSSO survey data also points to a remarkable growth in the population of students in India since the 2000s, notably among those who are 15 years and above. In fact, more than half of India’s rural females aged 15 to 19 years were attending educational institutions in 2011-12.

As more workers leave agriculture, there is greater demand for new employment opportunities in industry and services. Students do not form part of the labour force. But a growth in their numbers now suggests a rising supply of educated persons seeking high value-adding jobs in the future.

Given such a context, the growth of employment in India between 2004-05 and 2011-12 was far from adequate. The net increase in non-agricultural employment in the country during this period was 48 million.

As much as half of this increase in employment occurred in construction, which is generally characterised by poor wages and working conditions.

On the other hand, manufacturing, the sector that has absorbed vast numbers of the labour force in East Asia and China, generated only 5.1 million jobs in India in this seven-year period.

More importantly, the majority of new jobs went to men. Women workers accounted for only 18 per cent of the net increase in non-agricultural employment in India during 2004-12. The share of women in the incremental employment generated in high-productivity sectors such as finance, business services, and computer and related activities was particularly low.

Low demand Between 2004-05 and 2011-12, the population of urban females aged 15 to 59 years increased by 26 million. Out of this, 6 million were students. The rest were potentially available for work in industry and services. In addition, 1.5 million urban females exited agricultural labour during this period and were available for employment outside agriculture.

But look at the number of urban females who were actually absorbed in industry and services during 2004-12: a meagre 3.7 million.

Where does that leave the rest of the incremental population of urban females in that period? A huge majority opted out of the labour force. NSSO reports that as many as 17.7 million were attending to domestic duties in their own homes.

There were a total of 230 million women in India who were attending to domestic duties and were considered to be outside the labour force in 2011-12.

This number exceeds the entire population of Brazil. The proportion of females attending to domestic duties in India is relatively high among the better educated and those belonging to richer households.

The slow growth of jobs in the Indian economy is a hurdle.

(The writer teaches economics at IIT-Delhi)

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