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CfB Bureau

A new report from McKinsey Global Institute (MGI) titled, The Power of Parity: Advancing Women’s Equality in India, shows poor levels of gender parity in Indian society, which compares poorly with the developed world

To increase GDP, India needs to create jobs for 68 million women over the next 10 years

Where a score of 1 would be ideal, India’s global Gender Parity Score or GPS of 0.48 represents an “extremely high” level of gender inequality, which compares poorly with 0.71 for Western Europe and 0.74 for North America and Oceania.

The flip side to the abysmal ranking, the report suggests, is that a focus on improving gender parity can help India reap rich rewards of economic growth. “India could boost its GDP by $ 0.7 trillion in 2025, the largest relative boost of all 10 regions analysed by MGI. This translates into 1.4 per cent per year of incremental GDP growth for India,” it says.

According to the report, about 70 per cent of the GDP increase can happen by raising India’s female labour force participation rate by 10 percentage points, from 31 per cent now to 41 per cent in 2025. That would mean jobs for 68 million women over the next 10 years.

But the economic gains are contingent upon the removal of the gender inequality in Indian society, says the report. “Our analysis shows that scores vary widely, and India’s challenge is that the five states with the lowest gender inequality account for just 4 percent of the female working-age population; the five states with the highest inequality account for 32 percent.”

The report has developed, for the first time, a state-level Female Empowerment Index, or Femdex, for India. Femdex is based on a sub-set of 10 of the 15 indicators used in GPS, for which data are available at the state level. The results show wide geographical variation across India. The bottom five states on gender parity — Bihar, Madhya Pradesh, Assam, Jharkhand, and Uttar Pradesh — have an average Femdex of 0.46, which is close to the GPS of Chad and Yemen. But at 0.67, even the average Femdex of the five best states in India in terms of gender parity — Mizoram, Kerala, Meghalaya, Goa, and Sikkim — is comparable with the GPS for only China and Indonesia. Clearly, India has a long way to go before it can catch up with developed world standards.

So how can things be improved? The key takeaway from the analysis is that there are no countries in the world with high gender equality in society but low gender equality in work. In other words, the two go hand-in-hand. Even Indian states, when mapped over these two variables, show strong linkage between gender equality in society and at work. Clearly, India must ensure that issues like the lack of female education and financial inclusion, and health and protection from violence, etc. are addressed.

According to the analysis of 95 countries, female workers currently generate about 37 per cent of the world's GDP, considerably lower than their 50 per cent share of the global working-age population suggests is possible.

In case of India, the share of regional GDP generated by women is only 17 per cent.

Earlier, International Monetary Fund (IMF) managing director Christine Lagarde said GDP in India would expand 27% if its women participated in the workplace at the same rate as men. Another study, released last month by IMF Direct, the IMF’s global economy forum, also finds strong links between gender inequality and income inequality across time and across countries of all income groups.In most countries, income inequality is caused by the fact that more men than women work and also get paid more for similar work, finds the study conducted by Sonali Jain-Chandra, Kalpana Kochhar and Monique Newaik.

The MGI report analysed 15 gender equality indicators for 95 countries home to 93 per cent of the world's women and 97 per cent of the world's GDP. Globally, the report said "if all countries were to match the progress toward gender parity of the country in their region with the most rapid improvement on gender inequality, as much as USD 12 trillion could be added to annual global GDP growth in 2025".

In case of a "full-potential scenario" in which women play an identical role in labour markets as men, as much as USD 28 trillion, or 26 per cent, could be added to global annual GDP in 2025.

"This report shows how much the global economy stands to gain from accelerating momentum toward gender parity," McKinsey Global Institute director Jonathan Woetzel said adding that "but capturing the economic benefits will mean addressing gender inequality in society as well as attitudes".

According to McKinsey, the gap in labour force participation partly reflects the unequal sharing of household responsibilities between men and women. Around 75 per cent of the world's unpaid work is undertaken by women, including the vital tasks that keep households functioning such as child care, caring for the elderly, cooking and cleaning.

"Using conservative assumptions, MGI estimates that this unpaid work could be valued at USD 10 trillion per year, an amount roughly equivalent to 13 per cent of global GDP," the report said.

Gender inequality is not only a pressing moral and social issue but also a critical economic challenge. If women—who account for half the world’s working-age population—do not achieve their full economic potential, the global economy will suffer.

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