Insights into Editorial: Equal opportunity for women will boost growth
The new report on economic freedom in the world was released by the Fraser Institute recently.
What’s so special about the report?
One of the interesting innovations in the report is to adjust the data by also considering the economic freedom of women in various countries.
- Several countries move up and down the ranking once the legal status of women is considered.
- For example, the United Arab Emirates was the fifth most open economy in the world in 2013. Its rank plummeted to 74 once the overall ranking is adjusted for the economic freedom of its women. Slovenia climbs from 92 to 72 in the adjusted ranking.
- Overall, according to the report, Muslim countries fare badly when it comes to the legal protections offered to women to take advantage of economic freedom. The European countries do very well, especially some of those that were once under communist rule.
What does this indicate?
The adjusted rankings underline the point that the economic freedom of women is too often ignored in the broader narrative about open economies.
Where does India stand?
India was at 95 in 2013. However, the adjusted score for India in 2013 was 92.
- Slovenia and India were more or less the same when it came to general economic freedom; the gap widens once the economic freedom of women is specifically taken into account.
- According to the report, India does not do badly in terms of the legal rights of women—but not so well that its economic freedom score adjusted for the legal rights of women takes it far up the ranks.
Gender disparity index:
The index of gender disparity in terms of legal rights has been developed by the Fraser Institute and its research partners—including the Centre for Civil Society in New Delhi.
The index measures the legal barriers women face when it comes to exercising the same economic freedom available to men in their countries.
There are five components to the index of gender disparity. These include:
- Freedom of movement.
- Property rights.
- Financial rights.
- Freedom to work.
- Legal status.
What’s the concern now?
When it comes to the issue of female participation in the labour force, India is an outlier in Asia. Too few women go out of their homes to work for a wage on a regular basis.
Data show that women enter the labour force in large numbers when there is economic distress, such as a drought. They come out to support the dwindling family income. They then withdraw from the labour force once economic circumstances improve.
Statistics reveal that improvement in education hasn’t completely chipped away at the gender disparity in employment.
- The World Economic Forum Global Gender Gap Report 2015 ranked India at 139 out of 145 countries on the economic participation and opportunity gap. India’s overall female labour force participation (FLFP) rate remains low and has, in fact, dropped from 35% in 1991 to 27% in 2014. As per World Bank data, the world average is around 50% and South Asia is at 31%.
- According to a 2015 International Monetary Fund (IMF) working paper, in urban India, the recent FLFP rate is even lower at less than 20%; within this, segments such as graduates are around 30%, which although higher than the national average, have seen a decline since the 1990s.
- Another study notes that women account for only 24% of senior management roles globally. In India, women held 19% of senior manager roles, but only 14% did so at the executive level. India is ranked among the worst of 48 countries in terms of female leadership.
- The right to safety and to choose the life they want is the biggest challenge even today.
- Women who get paid for their work earn less than their male colleagues, even when doing the same work, which economists call the gender wage gap.
- Female unemployment has been on the rise in some states of India. And few states have not taken this seriously.
- Lack of infrastructure, transportation, and child care facilities have also held women back.
- The more daunting problem is that of social norms that deny the possibilities of economic freedom to women.
What can be done to improve the participation of women?
- Diversity targets have to be set. They help elevate the issue, thereby pushing organizations to identify women with high potential and ensure that they are provided opportunities to accelerate.
- Another positive move is the increasing openness of organizations to extend paid maternity leave beyond the grossly insufficient three months mandated by law.
- In advanced economies, more women will work if they have access to parental leave and affordable child care.
- Flexible work arrangements help women to juggle their many responsibilities and to achieve a better work-life balance.
- It’s also important to allay negative perceptions associated with utilizing flex options, by making them more broad-based and encouraging their use for both men and women.
- Organizations need to proactively coach employees on biases that unconsciously play out through body language, day-to-day behaviour and word choices. These often go undetected and stand in the way of hiring and retaining the best talent in the organization.
- Affinity groups and their mission continue to be as relevant as ever. At the same time, the methods must evolve. They need to be a platform for proactive solutions, be more inclusive, and must bring male colleagues to the table, as peers, thought leaders and co-beneficiaries of the mission.
But, why a better deal for Indian women is necessary?
- First, a higher proportion of women in the labour force will boost economic growth, as was the case in most successful Asian economies.
- Second, the persistent problem of high levels of child malnutrition cannot be solved unless pregnant women have privileged access to nutrition within families, itself a function of gender rights.
- Third, higher political participation by women seems to result in better public goods choices if one goes by the wealth of research that is now available on panchayat decisions in India.
It is also important to remember that the legal rights of women are not the only factor that need to be considered when it comes to understanding gender disparity. Social norms are equally important. Institutional economists such as Nobel laureate Douglass North have often pointed out that the rules of participation in an economy depend on both formal institutions as well as informal social norms. India has done well in terms of its formal institutions. But more work is needed when it comes to social practices.
Unlocking the potential of women definitely requires an increase and shift in the composition of overall employment opportunities as well as questioning of societal strictures. As the country commends itself on world-leading economic growth and aspires towards a $20 trillion economy, organizations need to take women along to make this goal a reality. Societal change will be the largest needle mover, but a constant push through the government, organizations and individuals is critical to bend societal norms for the better.