Employing Women in the Indian Workplace

Posted by Reading Time: 7 minutes

By: Pritesh Samuel

The female workforce in India remains much smaller compared to the opposite gender. Some estimates reveal that while 80 percent of men are in jobs or are looking for employment, only 32 percent of women remain in the workforce. Some of this can be attributed to cultural attitudes and social norms. Despite rapid economic growth, female workforce participation across all age groups, education levels, and in both urban and rural areas has not caught up. In addition, a recent survey by a hiring firm found there to be a significant gender pay gap in India – as high as 27 percent. Men earned a median gross hourly salary of US $4 (Rs 288) while women earned US $3 (Rs 207) per hour, with the highest gap in manufacturing and lowest in Banking Financial Services and Insurance (BFSI), Transport, Logistics, and Communication.

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Other statistics say that only 10 percent of the 60 million or so women have jobs in the organized sector with informal contracts and no social protection. Female workers in the unorganized sector such as casual workers, daily wage earners, or self-employed workers have little or no social benefits such as paid maternal leave. The government has attempted to make some changes, albeit without much success, in implementation. For instance, the government is planning to extend maternity leave to 26 weeks from the current 12 through an executive order under the Maternity Benefits Act of 1961. Several companies have also made amendments to their HR policies allowing women to extend their maternity leave to reduce attrition. Moreover, as per the Companies Act of 2013, listed companies must have at least one woman director on their boards. This was enacted to encourage gender diversity in boardrooms. However, in May, more than a thousand listed companies were fined for not appointing women directors on their boards. Several companies are yet to comply.

In fact, whenever the government makes regulatory changes, companies make knee-jerk decisions and hire to fill a requirement, rather than doing its due diligence on the type of employee they are hiring and if the skill set matches the job description. When the Companies Act was enacted, firms rushed to appoint women directors by taking shortcuts, including the promotion of family members, to meet the deadline. Companies should ideally look beyond their inner circle to find qualified individuals with fresh perspectives to fulfill the requirement.

Lagging Behind

According to the National Association of Software and Services Companies (NASSCOM), women constitute around 51 percent of entry-level hiring and are likely to get IT-BPM offers. Nevertheless, the majority of women in India are employed in the rural and agricultural sectors where wages currently favor men. Studies also suggest that if India increased its female labor force participation by 10 percent (68 million more women) by 2025, it could increase its GDP growth to 16 percent. It is estimated that 217 million women are missing from the workforce.

Compare this with even neighboring Bangladesh where the garment industry accounts for over 75 percent of national export earnings – nearly 80 percent of the four million garment workers are women. Seeing this, women have delayed marriage and parents have resorted to investing in their daughters’ education. Such changes have reinforced strong growth record in the country’s garment sector.   

While women-friendly industries such as financial services and aviation have made in-roads in hiring women, India needs to create rapid policies to encourage growth in other sectors. Recently, the labor and employment ministry made a proposal to amend laws in order to allow women to work night shifts in factories. However, this may not be enough. Analysts argue that very few sectors require night shift female workers. Socio-cultural norms also play a role with many women not wanting to work night shifts. The successes in finance and other industries only represent a few thousand compared with hundreds of millions. One option is to use quotas; India has successfully used quotas in local elections. Studies show that even when the quotas were removed, more women ran for office and won. Another industry where quotas have worked is in education. However, for such programs to work, quotas must be supported by effective job training and placement programs. This will incentivize organizations as well as companies to seek candidates based on their abilities.

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Start-Up Women

In a recent study by the National Sample Survey Organization (NSSO), no more than 14 percent of business establishments are run by female entrepreneurs. Out of 58.5 million businesses in the country, only 8.05 million are managed by women employing around 13 million people. The businesses range from mom and pop stores to venture-funded start-ups. Further, India ranked 29th out of 31 countries in the 2015 Global Women Entrepreneurs Leader report by ACG Inc, just above Pakistan and Bangladesh and worse than Nigeria, Uganda, and Ghana. The results stated that in India and other such lower ranking countries, unequal inheritance rights for women and work restrictions limit their access to start-up capital and collateral. Indeed, most businesses run by women are self-financed at around 79 percent and only 4.4 percent have borrowed money from a financial institution or received help from the government. Data also suggests that female entrepreneurs are more likely to be found in the southern states compared to north India. Around 13.5 percent (1.08 million) of female-run establishments are based in Tamil Nadu, followed by Kerala and Andhra Pradesh.

Recently, Prime Minister Narendra Modi launched the Stand Up India scheme, under which banks will give loans of up to Rs 1 crore to scheduled castes, scheduled tribes, and female entrepreneurs. They will also be provided with a debit card and other support such as pre-loan and marketing training.

Hiring and Retaining Women

Firms should invest in finding the right candidate for the job. If companies offer flexible roles to women that return to work, it should be designed fairly. There have been instances where women have taken up positions at reduced pay but with long hours.

Advocating & Support – Companies should provide women with an advocate – whether male or female, but someone who is looking out for their careers and promoting them to roles they deserve.

Networking – Companies should support and develop strong female networks. Studies suggest that women want to share experiences, solve problems, and look for role models in other women from whose successes they can learn.

People Process – Companies must ensure that the people processes for assessments, promotions, and job placements are fair. Women may not be vocal or articulate their desire for job promotions, but expect their manager to take action, if they qualify for a potential advanced role. The outlook on promotions in a company should identify capable women candidates; not giving them unfair advantages but rather ensuring that they are not inadvertently overlooked.

Observations: With social and cultural norms are recognized as factors contributing to low female participation, it remains a daunting task to incorporate more women into the workforce. While the government has made some changes to regulations regarding women and wants to incentivize hiring more women, more needs to be done. However, companies can themselves make it a practice to hire more women. The results of doing this have shown great success rates with higher turnovers for companies that implement better gender diversity. In addition, while companies have shown encouraging signs for hiring women in the entry-level position (i.e. IT and ITeS sectors), they need to work harder in hiring and developing women for leadership roles.

About Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email india@dezshira.com or visit www.dezshira.com.

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