India must advance through an equitable workforce - Hindustan Times
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India must advance through an equitable workforce

ByHindustan Times
May 09, 2023 11:04 AM IST

This article is authored by Pravin Agarwala, co-founder & group CEO, BetterPlace.

If you look closely at the conversations revolving around India, many experts are claiming that the next decade belongs to us. Bob Sternfels, the global managing partner at McKinsey & Co. while speaking to a journalist said, “I fully believe this can be not just India’s decade, but also India’s century.” Investment banks like Morgan Stanley are saying that India will see exponential growth and will become the third largest economy in the world by 2027. The crux of their argument is the unprecedented opportunity that India has. Many of them believe that with the country overtaking China to become the most populous and international companies’ desire to move out of China to set up their manufacturing base, India holds the reins of great economic growth.

Working woman(Photo by rawpixel on Unsplash) PREMIUM
Working woman(Photo by rawpixel on Unsplash)

 

I agree that the next decade belongs to India, but it will be on the shoulders of an equitable workforce. Without this, the unprecedented opportunity can soon become an unprecedented opportunity cost.

 

In 2022, women made up only 13% of the workforce–-compared to 61% in China and 56% in the United States. This problem is not because of lack of opportunities but because of a lack of education, awareness, and societal support. According to a survey conducted by FSG, more than 85% of women of employable age have not gone to college, and more than 50% have not completed 10th grade. Moreover, 84% said that they needed permission from their families to start work, and once they do get work and leave it for some reason, they are 20% less likely to return to the workforce.

 

This inequity has resulted in decreasing labour productivity in India. According to the Asian Development Bank (ADB), India’s labour productivity is $5.45 per person per hour. In comparison, Mexico’s labour productivity is four times higher at $20.51 per person per hour. This has huge economic implications. Increasing women’s participation in the workforce tends to directly impact consumer spending. Women spend 42% of their salary on household expenditure, including children’s education, while men spend 28%. Women workers are also considered to be more productive. In a study of sales professionals, female salespeople achieved 86% of their sales quota, whereas male salespeople achieved only 78%. By not increasing women's participation in the workforce to the same level as that of men, India is losing out on a 27% boost to its Gross Domestic Product.

 

At the crux of the inequitable frontline workforce in India is information asymmetry. To solve this problem, many products were rolled out into the market, which followed the marketplace model. The marketplace model was invented to avert information asymmetries in the market and bring efficiency through unrestricted information flow. While this model has worked well across sectors like personal finance and shopping, marketplace innovations in the frontline workforce have not made major dents in solving the information asymmetries that existed.

 

There were mainly three reasons for this. First, when these marketplace solutions were launched, India did not have the infrastructure to support such a model. Internet penetration was low, and digital marketplace models were just getting started in India. Second, because of low internet penetration, there was also low digital adoption among enterprises as well as workers, which led to a very low volume of jobs and applicants coming onto the platform. Last, these marketplaces operated independent of the ecosystem in which workers operated, which resulted in applicants largely being unskilled. Hence, enterprises did not find these platforms useful, and workers were demotivated from using these platforms since they did not get the jobs they needed.

 

However, now with India having more than 70% smartphone penetration rate and booming digital adoption, marketplaces can make a comeback, but it needs to be rooted in the ecosystem in which women workers operate. Hence, the Workforce Marketplace 2.0 should follow a three-pronged approach to attain equity.

 

  • Formalise and digitise the existing women workforce: According to a report by the International Labour Organization (ILO), 88% of women employed in industries and 71% in services are informal. The first step is to formalise this large workforce. To do this, we need to have touchpoints with hubs that have participation and contribution from women workers. One such hub is self-help groups (SHGs). There are 1.2 crore SHGs in India, and 88% of them are all women. Using SHGs to drive inclusion has driven a lot of success in the past. The SHG Bank Linkage Project, which was started in 1992, covered 14.2 crore families through 119 lakh SHGs with savings deposits of 47,240 crores and outstanding credit worth 1.5 lakh crores. Using the same model to formalise and then digitise the workforce who are part of these SHGs can help us formalise at least 10-20% of the women workforce in India.

 

  • Skilling: Once these women are on the platform, we can move to the next step of skilling. Most skills needed by the frontline workforce can be imparted through the internet on a person’s mobile phone. However, the key lies in making the courses intuitive for women workers. Courses like spoken English, telecalling and sales can be gamified to get more women involved in these skilling courses and make them employable.

 

  • Getting the enterprises on board: Once we have a critical mass of employable and pre-skilled workers, we can get the enterprises on board. Enterprises in India are already suffering from an acute workforce shortage of up to 10% from their desirable requirements. With the productivity and low attrition attached to women workers, more and more enterprises are finding ways to hire and retain women employees. Giving these enterprises access to a pool of pre-skilled women workers will accelerate the process of getting these women formal jobs. Moreover, these platforms could also be used by smaller MSMEs to get women gig-workers during seasonal and peak hours to not only variablise their costs but also increase women’s participation in the workforce.

 

Once these three prongs are set in motion, a productive cycle is formed. Since majority of the new hiring in this sector is done through referrals, pre-skilled and employed women can go back to their SHGs to promote more women to get formalised and skilled, creating a larger pool of workers for enterprises which in turn leads to greater equitability. A marketplace built on this productive cycle is not only effective but also sustainable.

 

The G20 Employment Working Group under the presidency of India has the right priorities of addressing the global skills gap, gig and platform economy, and sustainable finance and social security, but it can only be achieved through creating productive cycles with women hubs as the centre. If we are able to crack the equity code, the next century will definitely be ours.

 

This article is authored by Pravin Agarwala, co-founder & group CEO, BetterPlace.

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