Focus on women’s workforce participation to improve gender equality and global economy

While policies aimed at influencing fertility warrant attention, more urgency should be applied to increasing women’s labour force participation
Female education is a vital source of support for long-term economic growth, and that growth feeds into a virtuous cycle that can benefit everyone

Ecaterina Bigos

Published: 10:05pm, 12 Jul 2023

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Earlier this year, the United Nations calculated that in April, India’s population would reach 1.425 billion people, “matching and then surpassing” that of China. The UN indicated that India’s population was set to expand for several decades while China’s has peaked, having experienced a decline in 2022 and potentially falling below 1 billion before the end of the century.

The implications of India dethroning China as the world’s most populous country are significant. As much as the absolute numbers are important, so are the demographic changes within. In many countries, the size of the working-age population – people aged between 15 and 64 – are experiencing a more pronounced change.

From 2018 to 2030, the number of people aged 60 and above globally is expected to rise to 1.4 billion, faster than the growth in the population of the under-60s. The over-60 demographic is expected to account for 16 per cent of the global population by 2030, with Asia having among the fastest-ageing populations in the world. The world’s working-age population growth is in decline.

Broadly, the demographic transition includes first an increase and then a decrease in the share of working-age people in the total population. The initial increase occurs following a sustained reduction in fertility rates, lowering the number of children in the population. The subsequent decrease in the relative size of the working-age population is driven by rapid growth in the proportion of older people.

02:14

Chinese reluctant to have children as China reports first population fall in 61 years

While policies and programmes aimed at influencing fertility warrant attention, even more urgency should be applied to raising the women’s labour force participation rate. Notably, a low female labour force participation rate doesn’t mean women are unwilling to work but rather they are in many instances denied the opportunity to join the formal workforce. As a result, their skills and talents are not fully utilised to maximise their, and society’s, full economic potential.

Employment and social policies need to make it both possible and desirable for women to have children while remaining in the labour force and continuing to develop their careers. These could include approaches such as providing subsidised childcare, maternal and paternal leave, tax credits and supportive corporate frameworks.

Japan, for example, has witnessed a sharp rise in female employment in recent years, although it remains below that of many other developed economies. The gains are partly because of government efforts such as expansion of child care services and the removal of tax disincentives.

The female workforce participation rate in some Asian economies, such as Vietnam, mainland China and Thailand, is relatively high, while in South Asia it remains largely low. Putting the numbers into perspective, if the female labour force participation rate in India – which is currently about 25 per cent – could be raised to that of the Philippines, at around 45 per cent, it could provide the economy with an additional 115 million workers.

As India’s population booms, where are its working women?

In developed and developing countries alike, gender gaps persist in education, health, work, wages and political participation. Education is key to gender equality. Educating girls and women can lead to higher wages, a greater likelihood of working outside the home, reduced maternal and child mortality and better health. The impact of closing gender gaps is felt not only in women’s lifetimes but also in the health, education and productivity of future generations.

At the macroeconomic level, female education is a vital source of support for long-term economic growth. It has been linked to higher productivity, better investment returns, better agricultural yields and a more favourable demographic structure.

A 2008 report noted that in Brazil, Russia, India and China, and in the so-called Next 11 countries (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam), greater investment in female education could yield a growth premium that raises trend gross domestic product growth by about 0.2 per cent per year. Narrowing the gender gap in employment, which could result from expanded female education, has the potential to push income per capita as much as 20 per cent higher by 2030.

“The economic growth that results from higher education feeds a virtuous cycle, supporting continued investments in education and extending the gains to human capital and productivity,” the report said.

12:50

World’s largest population: why it could be a headache for India

The challenge in education is twofold – first to widen access in an equitable and continuous manner, then to develop quality and effective learning methods. Progress and development in this space hinge on wide-ranging and comprehensive policy responses at the national and multilateral levels.

Socially aware investors and companies have a role to play. Ultimately, all economic activity is a result of human behaviour, which in turn affects human welfare. On that basis, the “social” part of environmental, social and governance (ESG) is arguably a powerful and paramount dimension.

Ecaterina Bigos is chief investment officer of core investments (Asia ex Japan) at AXA Investment Managers