The economic benefits of gender diversity in the workforce

India aims to become a $30 trillion economy by 2047, with a per capita income of $18,000 per year and achieve high-income country status. To achieve this, the labour force participation rate (LFPR) of women needs to increase significantly from the current 27.8% (aged 15 years and above), which is in stark contrast to countries such as China (60.5%), the UK (58.2%) and the US (56.8%). Despite India’s young demographics, women aged 15-29 have an even lower LFPR of 24.5%, coupled with a worrying unemployment rate of 10.6%. This translates to approximately 16.85 million women out of the 159 million working-age population being unemployed.

As highlighted by the World Economic Forum, when millions of women and girls lose economic access and opportunities, this has “far-reaching consequences” for the economy. The relationship between women’s labour force participation and broader economic and social development is intricate, influencing and being influenced by factors such as economic activities, social norms, education levels and fertility rates. A simplistic view of the overall female labour force participation rate fails to capture the quality of women’s employment, and often leaves out critical aspects of their work. Globally, there is a U-shaped relationship between women’s labour force participation and a country’s economic growth. economic developmentIn poorer countries, women are actively involved in subsistence activities, but in middle-income nations, participation declines as men move into industrial positions. This structural shift in economic activity and changing family dynamics influence attitudes toward women’s work outside the home.

Of the 159 million working women in India, 65.3% are self-employed, 15.9% are paid a regular salary, and 18.8% are classified as casual workers or in the manual labour segment. While the dominance of self-employment among women reflects an entrepreneurial spirit, it also poses many challenges. A large portion of these women operate within the informal economy, often outside the tax net, leading to an unequal tax burden, weakened social contracts, governance issues, and long-term economic instability.

Underlying causes

● Education: STEM occupationsKnown for being well-paid and growing in importance, these fields remain dominated by men. While more women are entering science, technology, engineering and mathematics (STEM) fields, retention remains an issue, particularly in senior leadership positions. Female representation in artificial intelligence, while showing modest growth, still reflects marked underrepresentation, with only a small increase in participation in recent years.

● Unpaid work: A 2024 study by the Indian Institute of Population Sciences (IIPS) and Tata Institute of Social Sciences (TISS) highlighted the stark disparity in unpaid domestic work, with women spending 301 minutes a day compared to men’s 98 minutes. Women perform 75% of the world’s unpaid work, essential to the functioning of the household but not recognised in GDP calculations. Redistributing this work through better infrastructure, public services or more equitable distribution among household members would improve female participation in the labour force, increase women’s paid work hours and enable them to take on more demanding roles. ● Gender parity: The situation of gender parity in the labour market remains critical, with stark economic disparities between men and women persisting. This often forces families to prioritise home or childcare over low-paying jobs for women, excluding them from the workforce. Among female graduates, the labour force participation rate (LFPR) is 35.4%, but this group faces a notable unemployment rate of 20.6%. Many of these women may be leaving the workforce due to marriage, but their re-entry can often be discouraged by disparities in employment. The potential for concentrated efforts by governments plays a crucial role in addressing these challenges. Removing legal barriers that prevent women from entering the workforce and ensuring access to gender-friendly services such as safe transport, sanitary facilities for girls in schools and specialised courts for gender-based violence are essential measures. Policies can be designed to boost women’s participation in the workforce, increase wages, improve access to finance and technology, and enhance representation in public sector leadership. In India, the government has implemented several initiatives to support women’s economic participation. For example, the Pradhan Mantri Mudra Yojana, which has benefited women by approving 69% of the total Rs 44.46 crore loans given to them.

The Beti Bachao Beti Padhao campaign continues to raise awareness and sensitize the masses on gender equality. The Mahila e-Haat initiative has provided an online platform for women entrepreneurs, benefiting thousands of women across India by facilitating the sale of their products and services. This year’s Union Budget laid emphasis on enhancing women’s participation in the workforce by partnering with industry to set up hostels and daycare centres for working women, organise women-centric training programmes and promote market access for women-led SHG enterprises.

What actions can companies take?
Businesses play a key role in driving change. By investing in women’s capabilities through vocational training, companies can directly influence gender parity. Collective and coordinated action by the private and public sectors is essential to achieving gender parity and driving sustainable economic growth. Companies can also transform organizational culture by promoting inclusion in innovation processes, improving access to affordable childcare, and supporting better parental leave policies. These initiatives not only empower women, but also contribute to greater resilience and economic growth.

A glimmer of hope
The pandemic accelerated the adoption of work-from-home (WFH) and work-from-anywhere (WFA) models, creating new opportunities for women to re-enter the workforce. According to an ILO report, women’s participation in the Indian workforce increased by 3.5% in 2021, largely due to flexible work arrangements. This trend is particularly evident in sectors such as IT, finance, and education, where work-from-home models have become more prevalent.

In India, the demand for women in the manufacturing industry is growing, particularly in sectors such as electronics, textiles and automotive. Historically, manufacturing jobs demanded physical strength, which limited opportunities for women. However, the rise of automation and machine-assisted tasks has leveled the playing field, allowing women to contribute more effectively to the industry. Their inherent dexterity and attention to detail make them well suited for roles in precision manufacturing, quality control and assembly processes. The automotive industry alone has seen a 30% increase in female participation over the past decade. Initiatives such as the National Apprenticeship Promotion Scheme (NAPS) have also encouraged more women to join technical and vocational training programmes, further increasing their representation in manufacturing roles.

Gender diversity Gender diversity in the workplace is not only a moral imperative, but also an economic necessity. Companies with greater gender diversity are more likely to innovate, as the cognitive diversity resulting from balanced gender representation enhances creativity and drives better business results. Metaphors such as “glass ceiling,” “leadership maze,” and “sticky floor” have long illustrated obstacles to women’s advancement in the workplace. However, for many companies, investment in gender diversity began years ago, and this ongoing commitment is now generating a positive feedback loop.