More is less: Labour force rises but wage growth slows, gender pay gap widens

The Indian economy grew 7.8% in the first quarter of the year on the back of services growth and strong domestic demand. The improving employment situation in the country also translated into an improvement in female labour force participation in urban areas to 23.2% from 22.7% in the previous quarter. Male labour force participation remained steady at 73.5%. Labour Force Participation Rate (LFPR) is defined as the percentage of population in the labour force, as per the report.

Moody's Analytics reports that India and the Philippines have seen the largest reduction in the gender gap in labor force participation post-pandemic. The narrowing gap since 2019 has added $1.5 trillion to global income, with almost half coming from India and Japan. Despite progress, India's gender gap remains over four times that of the US or the EU, attributed to traditional gender roles and insufficient supportive policies for women in the workforce.

India needs women to account for more than half of the new jobs created by 2030 in order to achieve an 8% growth rate, according to a study by Barclays. The study suggests that female labor force participation would need to rise six percentage points to 43.4% for growth to reach 6-6.5%. The report also highlights the need to shift workers from agriculture to non-agriculture sectors, as well as the importance of job creation in sectors that enhance productivity. Upskilling and formalization are also identified as crucial for India's growth.

Olia Kuranova of Moody's discusses the impact of narrowing the gender labour force participation gap, estimating $1.5 trillion added to the global economy. India has made impressive progress, but traditional gender roles and lack of supportive policies contribute to a significant gender gap. Change in global attitudes towards remote work and hybrid arrangements has created opportunities for women in particular.

​ET analysed the median salaries for male and female employees disclosed by Nifty50 constituent companies. Of the 50 companies, 43 disclosed this data in their FY23 annual reports. The median male salaries were higher than median female salaries in 31 of these companies. The median female salaries were, on average, 9.2% lower than the median male salaries.

Net new female members added under the retirement fund body more than doubled to 2.8 million in FY23 from 1.30 million in FY19, as per EPFO payroll data. This is primarily because companies have become more inclusive and are now moving towards greater gender parity while the government has brought in several incentives to attract more women to the workforce.

Some of these factors are addressed by the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) scheme that acted as a ballast during the pandemic's reverse migration. Enhanced budgetary allocation to the scheme since 2020 absorbed some shock of the steep fall in women's employment.

In an attempt to find out the reason behind India's low female labour force participation rate, Zerodha's Nithin Kamath shared insight in the same on X (formerly Twitter)

An ET analysis found that between 2017-18 (July-June) and 2021-22 (July-June), the annual growth rate of women's wages at 4.5% in urban areas was lower than that of men, which was 5.2%. In rural areas, wages for men increased 4.9%, compared with 4.6% for women.