Today's Editorial

08 May 2018

The formal sector has a gender bias problem

Source: By Jayachandran: Mint

Indian women face immense obstacles when they try to join the labour force. It is generally assumed that the problem is restricted to the traditional rather than the modern segments of the economy. It follows that a shockingly low female labour force participation rate will rise as formal enterprises grow.

A recent paper by the World Bank, Reflections Of Employers’ Gender Preferences In Job Ads In India: An Analysis Of Online Job Portal Data, undermines this optimistic assumption. An analysis of more than 800,000 online job recruitment advertisements in the formal and informal sectors shows explicit gender targeting as well as a salary gap in the Indian job market. The data offers harsh insights into the problems faced by working women even in cities—the type that is more likely to be searching online for job opportunities.

The study finds rampant gender targeting for elementary jobs, with men preferred for intensive outdoor work and women preferred for care-giving jobs. Although professional occupations exhibit less gender bias, they can’t be termed gender neutral either. Interestingly, the jobs that prefer women—business process outsourcing centres, teaching and service industries—pay male employees better. This inconsistent relationship between demand for female employees and salary offered indicates that men are valued more by employers.

The existence of lopsided gender preference in the Indian labour market can be explained, in part, by statistical discrimination theory. Economists Edmund Phelps and Kenneth J. Arrow have argued that inequality may persist due to lack of information about the ability of workers in the demographic group that is being discriminated against. This leads to selection bias even if the employer is unprejudiced. The rest can be explained by deep-rooted cultural perceptions regarding gender-specific roles.

The resultant occupational segregation based on gender and concentration of women in relatively low-paying jobs reduces their bargaining power to negotiate the terms of employment. Even in identical jobs, men and women have different bargaining power. This is a reality across industries and socio-economic strata. For a high-profile example, look at Hollywood, where various aspects of gender discrimination are now coming into the limelight. A-list actor Jennifer Lawrence has been outspoken on such issues. On realizing the high salary gap between her and her American Hustle male co-stars, Bradley Cooper and Christian Bale, she wrote, “I got mad at myself. I failed as a negotiator because I gave up early.”

While fixing cultural prejudices takes time, the problems of statistical discrimination and women’s lack of negotiating power in the formal workplace have an immediate and effective solution. The answer lies in strengthening agglomeration mechanisms for women—women creating jobs and opportunities for themselves and bringing other women on board.

An agglomeration metrics, computed by World Bank economists in a 2012 article, “What Explains Gender Disparities In India? What Can Be Done?” notes that “female connections in labor markets and input-output markets contribute to a higher female entry share”? In other words, when more women network with each other in the formal labour market, it lowers the implicit entry barriers for other women.

There are numerous other agglomeration benefits. Higher female participation in the labour market, which leads to gender-diverse teams, is a crucial factor for less biased policy and decision making in the workplace. It also helps improve the extent, coverage, conditions of, and remuneration for women’s work. And the likelihood of recognition of the unpaid work performed by women increases when more women are employed in formal activities. This recognition can help formalize previously unpaid work—think women running dabba services out of their homes. As argued by this paper earlier, encouraging entrepreneurship in women can be a good starting point for this virtuous cycle.

In this context, it is worth considering that governments at the Centre and in the states have been making consistent efforts to facilitate the empowerment of women in the context of employment. For instance, the government of Telangana has recently launched WE-Hub incubators for women entrepreneurs—not only in tech but in all kinds of industries. The Central government, with the help of public-private partnerships, has announced POWERED, an entrepreneurship programme—globally the first of its kind—to nurture and support women entrepreneurs building ventures in energy value chains. To enable women entrepreneurs to grow their businesses, a number of women-only schemes—such as the SIDBI Mahila Udyam Nidhi and Stree Shakti Package entrepreneur loan schemes—have also been designed. However, the lessons from failures in this effort, such as Bharatiya Mahila Bank—a bank runs by women for women—should not be forgotten.

With almost 73% of India’s female population currently outside the workforce, increased education and decline in fertility have clearly been insufficient to improve women’s labour force participation. However, the recent technological changes in communication, networking and internet of things have given rise to new jobs that are relatively free of gender bias. This offers a fighting chance to recalibrate our cultural notions regarding women and authority.



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