Young women return to labour markets: Economy must meet their aspirations

Labour statistics from CMIE's Consumer Pyramids Household Survey for the period January-April 2019 shows a perceptible increase in the labour force participation rate of women in the age group 20-24 years. 

Female labour participation rate in this age group was 13.4 per cent during this period. This is the highest female labour participation rate in this age group since the September-December 2016 survey. We believe that this is a significant development.

Female labour participation rates had fallen across age groups after demonetisation in November 2016. The overall ratio has not recovered since, from its pre-demonetisation level which was around 16 per cent. Prima facie, the adverse impact of demonetisation on female labour force participation rate continues.

During the January-April 2019 survey, the overall female labour force participation rate was down to 11 per cent. But, this survey also contains signs of a possible turnaround.

To avoid any effects of seasonality, we compare the female labour force participation rate during January-April 2019 with the rates during January-April 2018, January-April 2017 and with the pre-demonetisation period of January-April 2016.

During January-April 2016, the female labour force participation rate was 15.7 per cent. This fell to 12.7 per cent in the same months of 2017 and then 11.4 per cent in 2018 and now to 11 per cent in the same four months of 2019.

This fall in female labour participation rate was almost across all five-year age groups. We say almost because between 2016 and 2017, there was one exception. In the age group 55-59 years, female labour participation rate did not fall but it rose by 0.18 percentage points. In subsequent surveys, this age group showed substantial fall in the female labour participation rate -- by 2.1 and 1.2 percentage points in the 2018 and 2019 survey, respectively.

In 2018, while all age-groups showed a fall in the female labour force participation rates, the age-group 20-24 years did not show a fall. It increased, albeit negligibly, by 0.02 percentage points. The two neighbouring age-groups -- 15-19 years and 25-29 years showed a fall in the participation rate by 0.6 and 0.7 percentage points. The increase in female labour participation rate in the age-group 20-24 years. It was too small an increase and was hemmed by other groups that did not show an increase.

But, 2019 shows that small increase seen in 2018 was possibly an early sign of a turnaround. The 20-24 year bracket is a vital age-group when young people join the labour force. Any significant increase in this young age-group is therefore important.

The female labour force participation rate of the 20-24 age group increased by 2.5 percentage points from 10.9 per cent during January-April 2018 to 13.4 per cent during January-April 2019. This is significant.

The two neighbouring age-groups also show a small increase in the participation rates. The young 15-19 years age group showed an increase in its female participation rate by a negligible 0.05 percentage points. But, the increase in the 25-29 years age-group is much better at 0.25 percentage points -- from 13.04 per cent to 13.29 per cent. 

Evidently, young women are returning to the labour markets.

There is still some distance to travel, though. The labour force participation rate of women in their twenties was around 17.5 per cent in early 2016. In early 2019, it was less than 13.4 per cent.

There are two related positive signs regarding female labour force participation rates in the CPHS results of early 2019. First, the fall in female labour force participation rates in 2019 over 2018 is much lower than it was in 2018 over 2017. This is true of all age-groups. And secondly, the fall in labour participation rate among younger women is much lower than it is among the relatively senior women.

While it is heartening to note the return of young women into the labour markets in greater numbers, it is important to highlight the challenges they face in finding jobs. The unemployment rate among young entrants into the labour force is usually high. But, in the case of 20-24 year old women it is exceptionally high. And, the unemployment rate for these also increased sharply in early 2019 compared to the level in early 2018.

Failure to provide jobs to these young women may discourage new cohorts from entering the labour markets. The economy needs to meet the aspirations of its young labour force that is keen to work.

 
/> The author is the MD & CEO of CMIE