By Dr Santosh Kumar Mohapatra*
The Nobel Memorial Prize in Economic Sciences was awarded on October 9, 2023, to Claudia Goldin, a Harvard professor, for advancing the world’s understanding of women’s progress in the workforce and exposing the causes of deeply rooted wage and labour market inequality between men and women.
The prestigious award, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is the last of this year’s crop of Nobel prizes and is worth 11 million Swedish crowns, or nearly $1 million. Goldin becomes only the third woman to win the prize, after Elinor Ostrom in 2009 and Esther Duflo in 2019. Since the Nobel Prize in Economics was awarded in 1969, Claudia Goldin became the first one to be honoured with it solo rather than sharing the prize.
Dr. Goldin, 77, was born in 1946 in New York and has a doctorate in economics from the University of Chicago, has long been a trailblazer in the field — she was the first woman to be offered tenure in Harvard’s economics department, in 1989. She often co-authors papers with her husband, Lawrence Katz, a fellow Harvard University economist. Goldin explained this pattern as the result of structural change and evolving social norms regarding women’s responsibilities for home and family.
Undoubtedly, women are vastly underrepresented in the global labour market and, when they work, they earn less than men. Claudia Goldin has trawled the archives and collected over 200 years of data from the US, allowing her to demonstrate how and why gender differences in earnings and employment exist. As on 2022, the World Economic Forum also says that at the current rate of progress, it will take 132 years for the world’s labour force to reach full gender parity.
Goldin showed that female participation in the labour market did not have an upward trend over this entire period, but instead formed a U-shaped curve. The participation of married women decreased with the transition from an agrarian to an industrial society in the early nineteenth century but then started to increase with the growth of the service sector in the early twentieth century when one got a chance to work in the office.
During Industrial society, female participation in the labour market declined due to the result of structural change and evolving social norms regarding women’s responsibilities for home and family. It was not possible for women to balance both factory and family work.
According to Goldin, educational decisions, which impact a lifetime of career opportunities, are made at a relatively young age. If the expectations of young women are formed by the experiences of previous generations – for instance, their mothers, who did not go back to work until the children had grown up – then development will be slow. However, now, despite children becoming independent, mothers’ participation did not improve as mindsets remained unchanged.
Goldin demonstrated that access to the contraceptive pill played an important role in accelerating this revolutionary change by offering new opportunities for career planning. However, despite modernization, economic growth, and rising proportions of employed women in the twentieth century, for a long period of time, the earnings gap between women and men hardly closed.
Historically, much of the gender gap in earnings could be explained by differences in education and occupational choices. During the twentieth century, women’s education levels continuously increased, and in most high-income countries, they are now substantially higher than for men. However, Goldin has shown that the bulk of this earnings difference is now between men and women in the same occupation and that it largely arises with the birth of the first child.
That understanding provides a basis for policymakers globally to address the situation. Randi Hjalmarsson, an expert on the prize committee, said Goldin had combined the tools of a labour market economist with those used by economic historians to chart how female employment in the US evolved over more than 200 years, in which a largely agricultural economy evolved into an industrial and then an office-based society.
Abysmal Female Labour Force Participation
In reality, the poor female labour force participation and gender pay gap is a complex issue influenced by various factors such as discrimination, age, working hours, parenthood (including time away from the workforce), industry, location, ethnicity, occupational segregation, the desire for flexible work, education, and the types of jobs held by men and women.
As per International Labour Organisation ( ILO) , 52 per cent of women in India express a desire to work either in paid jobs or in both paid jobs and care for families and homes. But surprisingly, India’s female labour participation rate (FLFP) – the proportion of the population ages 15 and older who are working or seeking work – has been surprisingly declining over the past two decades, dropping from 31 per cent in 2000 to 24 per cent in 2022 as against a world average of 47 per cent according to the World Bank.
India has the lowest FLFP among G-20 countries too. While the men’s labour force participation rate slightly decreased over time, too, it is four times that of women. India’s position is also abysmal when compared to other countries like Australia (62 per cent), the UK (59 per cent), the US (56 per cent), Germany (56 per cent), and European Union (52 per cent). India is also far behind its neighbouring countries such as China (61 per cent), Bangladesh (38 per cent) and, Srilanka (33 per cent). This downward trend applies to women across different social classes, religions, and age groups, including rural women who may rely on income the most.
India’s job stagnation, increasing unemployment, and jobless growth in the past few years could further worsen this situation. Women are also more likely to be a victim of vulnerable employment. According to ILO data, vulnerable employment can be manifested in various forms: Women often work fewer hours than men involuntarily, experiencing ‘time-related underemployment’ rates . Women perform over three times more unpaid household and care work than men, impacting their ability to engage in paid work.
The grim reality is today that many employed women are contributing family workers, often poorly paid and lacking social protection. The lack of statutory rights to maternity leave and limited access to social protection further impede women’s employment opportunities. Women face lower entitlements to social protection, particularly in pension schemes.
However, the Periodic Labour Force Survey Report 2022-23, released by the Ministry of Statistics and Programme Implementation on October 9, demonstrates a remarkable increase of 4.2 percentage points, pushing the FLFPR to 37.0 per cent in 2023. Still it is one of the lowest in world.
But the number of employed women has been largely in decline, falling by a third over the past seven years. In 2016-17, the labour pool was around 44.6 crore, of which women constituted 6.8 crores making up just 15 percent of total workforce. In 2022-23 of the 43.9 crore total labour force, women were 4.5 crore -around 10 percent. There were around 2.27 crore women workers in urban India in 2016-17; that number declined to 1.2 crore in 2022-23. Four out of five women are not working in India.
Moreover, unemployment rates alone do not provide a complete picture of the crisis, as they fail to account for individuals who have stopped searching for jobs after repeated unsuccessful attempts. Women constitute a considerable portion of this group, intensifying the severity of the situation.
A lack of decent and accessible job options hinders women from entering or remaining in the workforce. Poor job creation, wrong economic policies, and insufficient investment in unorganised sectors, micro, small, and medium enterprises, and rural development contribute to the paucity of gainful employment for both genders.
Data also reveals a significant disparity in labour force participation rates between men and women in India. Some sectors, particularly male-dominated ones like manufacturing, present barriers to entry for women entrepreneurs and employees. Additionally, women’s representation in high court judgeships remains below 10 per cent.
Gender Pay Gap
The gender pay gap or gender wage gap is the difference between the average earnings for men and women, expressed as a percentage of men’s average earnings. There are two distinct numbers regarding the pay gap: non-adjusted versus adjusted pay gap. The latter typically takes into account differences in hours worked, occupations chosen, education, and job experience.
According to Forbes Advisor, there are two types of gender pay gaps: the controlled and uncontrolled gap. The controlled gap measures the difference in pay between men and women performing the same job, with the same experience and qualifications. The uncontrolled gap represents the overall difference in pay between men and women, considering all the jobs and industries in which they work.
Women earned an average of 17 percent less than men in 2022. For every dollar earned by men, women earned 82 cents. When comparing women and men with the same job title, seniority level, and hours worked, a gender gap of 11 percent still exists in terms of take-home pay. The controlled gender pay gap, which considers factors such as job title, experience, education, industry, job level, and hours worked, is currently at 99 cents for all dollars men earn.
There are a few areas where women earn higher salaries than their male counterparts. Women earn 3 percent more than men as compliance officers and vocational nurses, and 2 percent more as wholesale and retail buyers. Despite the previous examples of gender pay disparity in the workforce, there is one job role where men and women earn equal pay: teaching assistants.
The EU average gender pay gap was 12.7 percent in 2021. Across the EU, the pay gap differs widely, being the highest in the following countries in 2021: Estonia (20.5 percent), Austria (18.8 percent), Germany (17.6 percent), Hungary (17.3 percent) and Slovakia (16.6 percent). Luxembourg has closed the gender pay gap. Other countries with lower gender pay gaps in 2021 are Romania (3.6 percent), Slovenia (3.8 percent), Poland (4.5 percent), Italy (5.0 percent), and Belgium (5.0 percent).
The gender pay gap is also a tenacious issue in India, with women often earning significantly less than men for performing the same work. According to a report by the World Economic Forum, India ranks a low 108th out of 153 countries in terms of the gender pay gap, with women earning just 71 percent of what men earn. What is disconcerting is that India has reached only 36.7 per cent parity on economic participation and opportunity.According to a report by ILO, the gender pay gap in India stands at 27 percent as of 2023. percent. This gap is even wider in certain industries.
What is grim reality is that Indian women are often required to prioritize domestic work, particularly if they are married due to the cultural and societal expectations of women as caregivers. According to the ‘Women@Work’ report, 38.5 per cent of working women surveyed said they were adversely affected by the burden of added housework, childcare and eldercare while 43.7 per cent said that work-life balance has become worse. There is a shift from paid to unpaid work.
Some other sources reveal that mothers are 40 percent more likely to report that childcare issues have detrimentally affected their careers. Women who take a year off work for caregiving purposes earn 39 percent less than those who do not.
The Oxfam India Discrimination Report 2022 highlighted the gender pay gap in India, with women facing bias in recruitment and pay across the country. Disparities in earnings were observed across casual work, regular jobs, and urban self-employment, further reinforcing the gender wage gap.
The gender pay gap affects women’s earning potential and long-term financial stability, leading to a significant difference in retirement benefits compared to men.
One of the main reasons for the gender pay gap in India is the lack of women in leadership positions.
According to a report by McKinsey, just 14 percent of senior-level positions in India are held by women. This lack of representation at the top levels of organizations leads to a lack of role models for women and a lack of policies and practices that support gender equality.
Additionally, women are more likely to work more conventional hours due to responsibilities outside of work, limiting their ability to take on overtime or irregular shifts. The lack of continuity in work experience, stemming from traditional patterns of women leaving the workforce during their childbearing years, also contributes to lower wages for women. Moreover, employers’ reliance on prior salary history in hiring and compensation decisions can perpetuate pay discrimination from job to job.
The gender pay gap in India is not only an economic issue but also a societal one, as it is deeply embedded in cultural and societal biases and shaped by patriarchal expectations. For example, women are often expected to prioritize their families over their careers, and they are also often viewed as being less competent or less committed to their work than men. This mentality is not only biased but also limits the potential for economic growth and stability in the country.
Empowering Women in the Workforce
It was in 1848 that India got its first school for girls, thanks to Savitribai Phule and her husband, Jyotirao Phule. Thirty-five years later, India and the British Empire got their first female graduates — Chandramukhi Basu and Kadambini Ganguly. Things have improved but still women have not been allowed to make dent as expected
Empowering women in the workforce requires more than just motivation; it requires proper and innovative policy, quality childcare, and mentorship backed by inclusive rules. Health and education should be provided at cheaper rate. As women face a myriad of issues at workplaces and it is highly imperative on the part of institutional authority, policymakers, and the government to provide a conducive and cordial atmosphere with adequate facilities for childcare, and mentorship and counselling for women who join work after maternity break. Additionally, policies such as parental leave and flexible work arrangements can support to creation of a more level playing field for women in the workforce.
To address the poor female labour participation and gender pay gap in India, it is essential to recognize the cultural and societal biases that exacerbate it. This includes increasing consciousness of the issue and encouraging fair pay practices in the workplace.
The International Labour Organisation suggests the following strategies to bridge the workforce gender gap: (1) Ensuring equal pay for work of equal value through legal protection, wage transparency, and gender-neutral job evaluation. (2) Addressing occupational segregation by challenging preconceived notions about the value of certain types of work. (3) Eliminating gender discrimination and harassment through legislation, effective remedies, and awareness campaigns. (4) Promoting work-family balance through adequate maternity protection, paid paternity and parental leave, and social protection measures. (5) Creating quality care jobs and improving regulation and protection for care professionals. (6) Implementing gender-responsive policies to safeguard women’s employment during economic downturns.
Promoting gender equality and increasing women’s participation in the workforce are critical steps toward leveraging India’s demographic dividend and achieving sustainable growth. The need of the hour is not just gender equality but gender equity. Gender equity is the process of being fair to women and men. To ensure fairness, strategies, and measures must often be available to compensate for women’s historical and social disadvantages that prevent women and men from otherwise operating on a level playing field.
Equity leads to equality. Gender equity removes the obstacles to progress that are inherent in our society and it is the bridge to treating all people fairly, whether they are male, female, transgender, or non-binary. It solves problems with our labour force by providing more opportunities for women to excel in professions currently dominated by men.
The author is an Odisha-based eminent columnist/economist and social thinker. He can be reached through e-mail at [email protected]
DISCLAIMER: The views expressed in the article are solely those of the author and do not in any way represent the views of Sambad English.