What explains the rise in women’s workforce participation during Covid-19?

We found an unusual rise in Workforce Participation Rates among rural women during the pandemic years, which is explained by increases in self-employment. However, we shouldn't be jubilant about this just yet

Throughout the last two years, high frequency, monthly data from the Centre for Monitoring Indian Economy (CMIE) has shown that women bore a disproportionate impact of the pandemic, losing a larger share of jobs, not only as an immediate aftermath of the national lockdown in April 2020, but successively, after each wave.

A shift of the labour force from urban to rural areas was also seen — but only for women. (File Photo)

The Periodic Labour Force Survey (PLFS) 2020-21, on the other hand, offers a slightly longer-term picture — of annual labour market outcomes between June 2020 to July 2021. A comparison of PLFS 2020-21 with the results from the previous years, reveals two trends — rather unexpected for the pandemic period.

First, the all-India Workforce Participation Rate (WPR) for men and women in the working-age group (15 years and above) rose to its highest levels in four years, at 73.5% and 31.4%, respectively. And second, this increase was entirely driven by the increase in rural women’s employment witnessed during the pandemic, from 32.2% in 2019-20 to 35.8% in 2020-21.

A more in-depth review of the data reveals that this increase in rural women’s WPR is owing to self-employment, particularly in own-account enterprises, which typically do not involve any hired workers or unpaid helpers in household enterprises.

Moreover, the biggest increases in rural women’s WPR were seen among those with low education levels — non-literates, primary level, and middle school. On the other hand, WPRs for women who were graduates and higher declined in urban areas.

The sectoral composition of employment remained sticky for rural women, with agriculture continuing to employ a little over three-fourths in 2019-20 and 2020-21. Women’s employment in agriculture even increased in urban areas, even as services such as trade, hotels, and restaurants showed a marked decline.

A shift of the labour force from urban to rural areas was also seen — but only for women. Between 2019-20 to 2020-21, rural women’s labour force participation rate (LFPR) increased from 33% to 36.5%, while urban women’s LFPR fell from 23.3% to 23.2%. Comparatively, male LFPR increased in both rural and urban areas — indicating that women who migrated back to rural from urban areas, did not return even after the pandemic abated.

And finally, absolute and real wages showed a significant decline in both 2019-20 and 2020-21, and the gender wage gap worsened, especially for casual workers in rural areas.

Our analysis demonstrates that this unusual finding of rising WPRs among rural women during the pandemic years is explained almost entirely by increases in self-employment, typically by women with low levels of literacy, and in the agriculture sector — indicative of the income effect, ie, rural women took up low-paying, informal work to supplement family incomes during a period of crisis.

In this scenario, we advocate for gender-responsive employment recovery, with three drivers of job growth warranting government attention.

First, there is a need to enhance digital literacy and technological skills amongst women to ensure their participation in the growing digital economy.

Second, governments can support women’s entrepreneurship through widening access to finance, markets, and linkages with global value chains to spur innovation.

And last, investments in care infrastructure and services need to be enhanced — by governments and private sector employers to ameliorate the gendered burden of unpaid work.

And remember, we cannot be too jubilant about this increase in women’s WPR just yet.

Mitali Nikore is an economist and founder of the economics research group, Nikore Associates. Shiney Chakraborty is an economist and researcher with the Institute of Social Studies Trust

The views expressed are personal