Below-potential contribution of women to India’s GDP today contrasts with their higher share of unpaid care work

Screen shot 2016-01-31 at 7.02.31 PMIn a recently-released report, “The power of parity: Advancing women’s equality in India”, McKinsey Global Institute (MGI) has argued how India’s poor Gender Parity Score (GPS) is telling heavily on the growth of the country’s economy. Excerpts:

India has lower gender equality than warranted by its stage of economic development. Gender inequality in India is high or extremely high on three dimensions in MGI’s framework—gender equality in work, legal protection and political voice, and physical security and autonomy—and medium to high on the fourth dimension of essential services and enablers of economic opportunity.

Women are currently particularly under-represented in India’s economy compared with their potential. MGI estimates suggest that, at 17 percent, India has a lower share of women’s contribution to GDP than the global average of 37 percent, and the lowest among all regions in the world. In comparison, China’s women contribute 41 percent, those in Sub-Saharan Africa 39 percent, and women in Latin America 33 percent.

Women in India only represent 24 percent of the labour force that is engaged in any form of work in the market economy, compared with an average of 40 percent globally. India’s position on share of women in workforce is on a par with countries in the Middle East and North Africa (MENA), where, unlike India, legal provisions can restrict many forms of female employment in many countries.

India’s economy would have the highest relative boost among all regions of the world if its women participated in paid work in the market economy on a similar basis to men, erasing the current gaps in labour-force participation rates, hours worked, and representation within each sector (which affects their productivity).

MGI considered a “full-potential” scenario in which women participate in the economy identically to men, and found that it would add up to $28 trillion, or 26 percent, to annual global GDP in 2025 compared with a business-as-usual scenario. In this scenario, India’s would gain the most of any of ten regions analysed with $2.9 trillion added to annual GDP in 2025, or 60 percent of GDP.

However, it is unlikely that this scenario will materialise within a decade because the barriers hindering women from participating in the labour market on par with men are unlikely to be fully addressed within that time frame and because, ultimately, such participation is a matter of personal choice.

MGI therefore considered an alternative “best-in-region” scenario based on actual evidence of how rapidly countries have closed the gender gaps in work in the past decade. This scenario assumes that all countries match the momentum of the fastest-improving countries in each region. Global GDP could rise by $12 trillion in 2025 in this scenario. India could boost annual GDP by $0.7 trillion, or 16 percent, in 2025 compared with a business-as-usual case, adding an incremental 1.4 percentage points each year to its GDP growth rate. As in the full-potential scenario, this is the largest relative potential of any region in the world.

The below-potential contribution of women to India’s GDP today—measured by their share of paid work in the market economy—contrasts with their higher share of unpaid care work such as cooking, cleaning, and taking care of children and older members of the family. Globally, women spend roughly three times the amount of time spent by men on unpaid work. In India, the situation is more extreme—women perform 9.8 times the amount of unpaid care work than men. If that unpaid work were to be valued and compensated in the same way as paid work, it would contribute $0.3 trillion to India’s economic output.

Much of this unpaid work may be done willingly and provide great satisfaction to women and welfare for their families. However, it does not translate into wage-earning opportunities for women or promote their financial independence. Substituting non-market work with market- based work would increase GDP because the current measure of GDP does not assign value to the contribution of household production, but does give a value to market-based production.

Similarly, more equitable sharing of unpaid work among men and women, and productivity-enhancing measures for unpaid work could result in higher GDP (as currently defined) if the time saved by women was used to engage in paid work. This process may or may not have an effect on societal welfare and utility. It could, however, have positive second-order effects, for example greater financial independence for women, and inter-generational benefits.

Screen shot 2016-01-31 at 7.10.49 PMGlobal Parity Index

MGI has calculated a GPS for each country and region on a scale of 0.00 to 1.00, where a GPS of 1.00 indicates gender parity. India’s aggregate GPS is 0.48, higher than the GPS of the rest of South Asia excluding India (0.44), but about the same as that in MENA (0.48), and lower than the GPS of Sub-Saharan Africa (0.57). The best performing region in the world in terms of overall GPS is North America and Oceania comprising Australia, Canada, New Zealand, and the United States with an aggregate GPS of 0.74.

India’s position on gender equality is somewhat lower than its stage of economic development would warrant. Twenty-six countries in our dataset of 95 have a lower per capita GDP and Human Development Index (HDI) than India. However, many of these countries have higher levels of gender parity than India. Ten of the 26 countries, including two within the South and Southeast Asia region, have higher gender parity than India on seven or more of the 12 indicators we used for this comparison. This suggests that it is not only the economic stage of development that influences India’s position on gender equality but also non-economic factors, such as deep-rooted social attitudes about men and women.

On the four major categories of gender equality, India has high or extremely high levels of inequality on three: gender equality in work, legal protection and political voice, and physical autonomy. It has medium to high levels of inequality on the various aspects of essential services and enablers of economic opportunity.

Underlying social attitudes about the role of women are, arguably, some of the biggest barriers India’s women face. MGI has analysed the World Values Survey and OECD data and found a strong link between attitudes that limit women’s potential and actual gender equality outcomes in a given region. For instance, the survey asked respondents, both men and women, whether they agreed with the following statements: “When jobs are scarce, men should have more right to a job than women” and “When a mother works for pay, the children suffer.” We examined the responses against outcomes related to work equality and found strong correlations with both. Half or more of the respondents in India agreed with both statements—and India has some of the world’s lowest rates of women’s labour-force participation.

Authors of the report: Jonathan Woetzel (Shanghai), Anu Madgavkar (Mumbai), Rajat Gupta (Mumbai), James Manyika (San Francisco), Kweilin Ellingrud (Minneapolis), Shishir Gupta (Gurgaon) and Mekala Krishnan (Stamford). Download report HERE


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