If India wants to make the most of its demographic dividend or aspire to a developed status, it needs to nudge its women to take up paid employment. Or so economists have told us for a long time.

Official data now show that Indian women are doing precisely this in the last five years, without much nudging. Data from the latest annual report of the Periodic Labour Force Survey (PLFS) show nothing short of a revolution underway in women joining the workforce. The challenge however seems to lie in providing them with salaried jobs at fair pay.

The PLFS is the largest official survey of employment trends in India. Conducted by the National Sample Survey Office, the latest one (published in September) surveyed 4.18 lakh persons from 1.01 lakh households spanning all States, for the four quarters from July 2023 to June 2024. There are four key trends from it that are of interest to economy watchers and stock market investors.

Actively seeking paid work

India has historically struggled with too few women seeking paid employment (Labour Force Participation Rate or LFPR), because women are weighed down by domestic work or social mores. Research suggests that women do over seven hours of daily unpaid housework compared to three hours for men.

But this behaviour is witnessing a sea change. In FY24, 41.7 per cent of India’s women above the age of 15 were on the active look-out for paid work. This was a big jump from 24.5 per cent in FY19, just five years before.

The above numbers capture the LFPR in usual status, which measures a person’s status over the last 365 days.

The women’s LFPR in India is still much lower than men’s LFPR at 78.8 per cent. But the proportion of women seeking jobs has grown much faster than men. Between FY19 and FY24, India’s female LFPR surged from 24.5 per cent to 41.7 per cent, while the male LFPR crept up from 75.5 to 78.8 per cent.

But why are women suddenly seeking paid work in large numbers? Just before Covid, in FY18, commentators were bemoaning female LFPR slumping to 23.3 per cent. When Covid years saw LFPR climb from 24.5 per cent in FY19 to 32.8 per cent in FY22, many attributed this to household distress caused by reverse migration during Covid. The argument was that if women in India take up formal employment it could only be because of more mouths to feed.

But the rise in India’s female LFPR has persisted well beyond Covid, rising from 32.8 per cent in FY22 to 41.7 per cent in FY24. This suggests that more heartening factors are likely to be driving women seeking work. More women are completing higher education, some are being freed of domestic work due to better amenities and shrinking family sizes are reducing the care-giving burden.

Whatever the reasons, India has significantly narrowed the gap with the rest of the world on this development indicator. In FY19, India’s female LFPR at 24.5 per cent was at just about half of global levels of 48 per cent (Source: ILO/World Bank). By FY24, at 41.7 per cent it was at 85 per cent of the global norm of 49 per cent.

Finding jobs

As women step out of homes to seek formal jobs, are they finding them? The good news is that they are. As the women’s LFPR jumped between FY19 and FY24, unemployment rates among women (15 plus) dropped from 5.1 per cent to 3.2 per cent. Urban women (7.1 per cent) find it harder to land jobs than their rural peers (unemployment rate 2.1 per cent). But both urban and rural women are much better off than five years ago, as unemployment rates have steadily dropped.

This has led to a big expansion in the cohort of working women. If only 23.3 per cent of women in the 15 plus age-group were working in FY19, 40.3 per cent of them were employed in FY24. The proportion of working women in rural India (25.5 to 46.5 per cent) has shot up much more than in urban India (18.4 to 26 per cent).

With four out of every 10 women now working, along with eight in 10 men, the number of double-income families is likely to have shot up. This could explain the falling share of essentials such as food in household spends, with a rising share of services. It could also be a reason for the premiumisation of consumption despite sluggish income growth.

Quality problems

While women don’t seem to have trouble finding work, the real issue is in the quality of work they’re likely to get.

The PLFS breaks the types of jobs into four categories — running one’s own enterprise (own account), working as an unpaid helper in a family enterprise, regular salaried jobs and casual labour.

Of these, regular salaried jobs are the most desirable based on earnings potential, followed by own-account enterprises and casual labour. Unpaid helpers contribute to GDP but may not be individually better off as they slog for free.

In FY24, women willing to work were three times more likely to be roped in as unpaid helpers in a family shop than men, with about 37 per cent of them in this role compared to just 10 per cent of working men.

The proportion of working women in regular jobs has slumped from 22 per cent in FY19 to 16 per cent in FY24, while those in unpaid helper roles rose from 31 to 37 per cent. This a disheartening trend that needs to be reversed.

But the silver lining is that the proportion of women running their own enterprises has risen from about 23 to 31 per cent while those in casual labour declined from 25 to 17 per cent. While self-employment in agriculture may be less remunerative, manufacturing and agriculture have seen the sharpest increases in self-employment of women in this period.

In rural areas, nearly 77 per cent of the working women are engaged in agriculture and allied activities. In cities though, a majority of women are in services (40 per cent), manufacturing (24.1 per cent) or trade, hotels and transport (15 per cent). While agricultural jobs in the hinterland are likely to be low-paying, city jobs in services or manufacturing may be better-paying.

Regular jobs pay best

PLFS data on monthly earnings suggest that the gender pay gap is real. The average monthly wage for men from regular jobs was about ₹22,100 in FY24 compared to ₹16,500 for women.

Women in the cities were neck-and-neck with men, earning about ₹19,700 a month. It was their much lower earnings in rural India (₹11,900) that contributed to the gap. The earnings gap was yawning in self-employment, where women averaged ₹5,500 against ₹16,000 for men. This points to a need for greater guidance to women entrepreneurs on their choice of sectors, financing and marketing.

Big numbers

Extrapolating data from the PLFS survey to the entire population (based on population estimates of the Ministry of Family Welfare), India is likely to have seen its population of working women rise from about 11 crore in FY19 to 21 crore in FY24.

Not counting those employed as unpaid helpers, women running own-account enterprises have shot up roughly from 2.5 crore to 6.4 crore, while those in regular salaried jobs have seen a rise from 2.5 crore to 3.3 crore and casual workers from 2.8 crore to 3.5 crore in the last five years.

If only India can address the job quality issue for its female workforce, it can set in motion a juggernaut of social and economic transformation that would be hard to stop.