It is generally agreed that a key element in the transformation of India is the creation of a large number of good jobs. While micro and small enterprises provide lots of jobs, consistent with their low productivity, they pay relatively low wages.
For example, according to recent research by Rana Hasan and Nidhi Kapoor of the Asian Development Bank (ADB), manufacturing firms with less than 20 workers each employed 73% of manufacturing workforce but produced only 12% of manufacturing output in 2010-11, the latest year for which such data are available. With such a large share in employment but small share in output, these firms are able to pay only a fraction of the average wage paid by larger firms, which is itself low in India when seen in international context.
The position of the small firms within manufacturing is not unlike that of agriculture in the economy as a whole. As many observers have noted, agriculture had 49% share in the workforce and 15% in the GDP in 2011-12.
There is compelling evidence that wages rise with the size of the enterprise. This wage pattern mirrors the pattern of average labour productivity, which shows a rising trend with the size of the enterprise. High productivity of large firms partially results from their ability to effectively exploit scale economies. Moreover, with the domestic market often small, they also overwhelmingly operate in the world market where competition is intense. Therefore, they must continuously innovate and adopt cost-saving technologies and management practices.
The presence of large, export-oriented firms also fosters a highly competitive environment in regions of their location. In so far as small and medium firms either become ancillaries of large firms or must compete against them, they too are compelled to strive for efficiency. Therefore, substantial presence of large firms combined with an outward-oriented trade policy fosters high overall productivity. Conversely, the absence of large firms is often associated with low average productivity.
India’s own experience is consistent with these observations. In apparel, where we lack substantial presence of large firms, average labour productivity is low. This in turn translates into meagre exports in relation to the total employment in the sector. Our apparel exports are less than one-tenth those by China and less in absolute terms than those by much smaller Bangladesh and Vietnam. In contrast, in software, we have significant presence of large firms and this sector exhibits high productivity and a large volume of exports.
Lack of substantial presence of large firms in India has impacted average labour productivity in two ways. First, the level of productivity in micro, small and medium firms is low compared with their counterparts in countries such as China. And, second, a disproportionately large volume of the workforce is employed in these low productivity firms.
According to a 2009 ADB study, only 10.5% of manufacturing workforce in India was employed in firms larger than 200 workers compared to China’s 51.8% in 2005. At the other extreme, 84% of India’s manufacturing workforce was in firms with less than 50 workers compared to China’s 24.8%. These differences translate into substantially lower average labour productivity and wages in India than China.
Unfortunately, large firms are missing in India in precisely the sectors in which they are needed the most: employment-intensive sectors such as apparel, footwear, electronic and electrical products and host of other light manufactures. These are products in which China has done well thereby generating a large volume of good jobs for its workers. In 2014, the country exported $56 billion worth of footwear compared with $3 billion by India and $782 billion worth of electrical and electronic goods compared with $9 billion by India.
The single most important key to China’s success in manufactures has been its decision to go for the large world markets in preference to its much smaller domestic market.
In 1980 when China’s GDP was less than $500 billion at today’s prices and exchange rate, it began by establishing four very large Special Economic Zones (SEZs) along its southeast coast. These zones were located directly across from Taiwan and Hong Kong, which then faced the prospect of being priced out of the world market due to their high wages.
Shenzhen, one of these four SEZs, was then at best semi-urban with a population of 300,000. Attracted by low wages and business- and foreign-investment-friendly environment, investors from Hong Kong immediately flocked to this SEZ. Later, investors from Taiwan, Japan, United States and other countries followed as well. Coastal location allowed these firms to operate in the world markets unhindered by the poor infrastructure in the hinterland, especially in the early years. They could import inputs from and export outputs to foreign destinations. Employment opportunities for Chinese workers multiplied.
Today, Shenzhen has a population of 11 million and it boasts of gross city product of $265 billion. Though originally Cantonese, it speaks Mandarin because the bulk of its population migrated from other parts of China. Most of the major multinational firms have a presence in Shenzhen.
Having risen at the rate of 10% a year in real terms since at least 2007, average annual manufacturing wages in China today stand above Rs. 5 lakh per year. Due to demographic transition, the country also faces worker shortage that would only get worse in the years to come. When asked in surveys, Chinese firms today point to labour costs as the most important barrier to their development. Already, many multinational firms are looking for alternative locations where they can find abundant supply of workers.
So far the firms exiting China have gravitated more towards countries such as Vietnam and Malaysia. But with its large labour force, India is well positioned to take advantage of the opportunity. What is needed to convert this opportunity into reality is a business friendly ecosystem in regions that can serve as export bases of the migrating firms. Given our relatively weak internal infrastructure links, coastal regions adjacent to deep-draft ports are the best candidates for such bases.
Happily, this opportunity coincides with the launch of Sagarmala project of Prime Minister Narendra Modi. Building on the Gujarat experience of the Prime Minister, this project seeks to unleash port-led development in the country. The impressive success of Gujarat during the Prime Minister’s tenure as Chief Minister had been partially built on a port-led-development strategy.
In 2013-14, Kandla distinguished itself among the major port for carrying the most cargo. At the same time, non-major ports of Gujarat jointly carried three times the cargo carried by Kandla. The SEZs in Gujarat also accounted for a hefty 45% of exports by all SEZs in India in 2013-14.
Therefore, in the context of Sagarmala project, India could begin by creating one Shenzhen-style Coastal Economic Zone (CEZ) on its western coast and another on the eastern coast near deep-draft ports capable of accommodating very large and heavily loaded ships.
To be successful, these zones would have to cover a large area (Shenzhen covers 2,050 square kilometres) and would have to have some existing infrastructure and economic activity. They would need to must provide a business friendly ecosystem including ease of doing business, especially, ease of exporting and importing, swift decisions on applications for environmental clearances and speedy water and electricity connections.
Apart from conventional infrastructure, the zones would need to create urban spaces to house local resident workforce. For firms that create a threshold level of direct employment (e.g., 50,000 jobs), a tax holiday for a pre-specified period may be considered. To incentivize early investments in the zones, the tax holiday might be limited to investments made in the first three or four years of the creation of the zones.
An important advantage of locating the zones near the coast is that they would attract large firms interested in serving the export markets. These firms would bring with them technology, capital, good management and links to the world markets. They would help create an ecosystem around them in which productive small and medium firms would emerge and flourish.
It may make sense to initially limit the number of zones to a few, perhaps two or three. This would help ensure that many sector-specific zones and clusters emerge within each CEZ to fully exploit economies of scale and agglomeration. Simultaneous creation of too many zones would spread the available public resources thinly while also diffusing economic activities with potential synergies. As initial zones succeed, more may be subsequently launched. This is not unlike the software industry, which initially concentrated in Bangalore but subsequently spread to other towns. (Of course, since software travels on the wire, this industry did not require location near a coast.)
There remain two final questions. First, why can we not rely on a protected domestic market to attract investment? The answer is that the domestic market still remains small and fragmented so that it will not give rise to genuinely large firms. For example, home market in electronic goods is $65 billion of which $26 billion is already supplied by domestic firms. In comparison, the world market in electronic goods is $2 trillion. Domestic market can serve as an attractive complement; it cannot substitute for the large world market.
Second, with the export market growing slowly, can we rely on an export-oriented strategy? The answer is in the affirmative. At $18 trillion, the world export pie is extremely large. Even if this pie is not growing, our current share of it at 1.7 per cent leaves us considerable scope for expansion. We should remember that during 1995 to 2013 when China grew at 10%, the OECD [Organization for Economic Cooperation and Development] countries grew only 1.4% annually. China succeeded by taking an ever-larger slice of the world market: it expanded its share in the world exports from 2.9% in 1995 to 12.3% in 2014.
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On March 31, the World Economic Forum (WEF) released its annual Gender Gap Report 2021. The Global Gender Gap report is an annual report released by the WEF. The gender gap is the difference between women and men as reflected in social, political, intellectual, cultural, or economic attainments or attitudes. The gap between men and women across health, education, politics, and economics widened for the first time since records began in 2006.
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]No need to remember all the data, only pick out few important ones to use in your answers.
The Global gender gap index aims to measure this gap in four key areas : health, education, economics, and politics. It surveys economies to measure gender disparity by collating and analyzing data that fall under four indices : economic participation and opportunity, educational attainment, health and survival, and political empowerment.
The 2021 Global Gender Gap Index benchmarks 156 countries on their progress towards gender parity. The index aims to serve as a compass to track progress on relative gaps between women and men in health, education, economy, and politics.
Although no country has achieved full gender parity, the top two countries (Iceland and Finland) have closed at least 85% of their gap, and the remaining seven countries (Lithuania, Namibia, New Zealand, Norway, Sweden, Rwanda, and Ireland) have closed at least 80% of their gap. Geographically, the global top 10 continues to be dominated by Nordic countries, with —Iceland, Norway, Finland, and Sweden—in the top five.
The top 10 is completed by one country from Asia Pacific (New Zealand 4th), two Sub-Saharan countries (Namibia, 6th and Rwanda, 7th, one country from Eastern Europe (the new entrant to the top 10, Lithuania, 8th), and another two Western European countries (Ireland, 9th, and Switzerland, 10th, another country in the top-10 for the first time).There is a relatively equitable distribution of available income, resources, and opportunities for men and women in these countries. The tremendous gender gaps are identified primarily in the Middle East, Africa, and South Asia.
Here, we can discuss the overall global gender gap scores across the index’s four main components : Economic Participation and Opportunity, Educational Attainment, Health and Survival, and Political Empowerment.
The indicators of the four main components are
(1) Economic Participation and Opportunity:
o Labour force participation rate,
o wage equality for similar work,
o estimated earned income,
o Legislators, senior officials, and managers,
o Professional and technical workers.
(2) Educational Attainment:
o Literacy rate (%)
o Enrollment in primary education (%)
o Enrollment in secondary education (%)
o Enrollment in tertiary education (%).
(3) Health and Survival:
o Sex ratio at birth (%)
o Healthy life expectancy (years).
(4) Political Empowerment:
o Women in Parliament (%)
o Women in Ministerial positions (%)
o Years with a female head of State (last 50 years)
o The share of tenure years.
The objective is to shed light on which factors are driving the overall average decline in the global gender gap score. The analysis results show that this year’s decline is mainly caused by a reversal in performance on the Political Empowerment gap.
Global Trends and Outcomes:
– Globally, this year, i.e., 2021, the average distance completed to gender parity gap is 68% (This means that the remaining gender gap to close stands at 32%) a step back compared to 2020 (-0.6 percentage points). These figures are mainly driven by a decline in the performance of large countries. On its current trajectory, it will now take 135.6 years to close the gender gap worldwide.
– The gender gap in Political Empowerment remains the largest of the four gaps tracked, with only 22% closed to date, having further widened since the 2020 edition of the report by 2.4 percentage points. Across the 156 countries covered by the index, women represent only 26.1% of some 35,500 Parliament seats and 22.6% of over 3,400 Ministers worldwide. In 81 countries, there has never been a woman head of State as of January 15, 2021. At the current rate of progress, the World Economic Forum estimates that it will take 145.5 years to attain gender parity in politics.
– The gender gap in Economic Participation and Opportunity remains the second-largest of the four key gaps tracked by the index. According to this year’s index results, 58% of this gap has been closed so far. The gap has seen marginal improvement since the 2020 edition of the report, and as a result, we estimate that it will take another 267.6 years to close.
– Gender gaps in Educational Attainment and Health and Survival are nearly closed. In Educational Attainment, 95% of this gender gap has been closed globally, with 37 countries already attaining gender parity. However, the ‘last mile’ of progress is proceeding slowly. The index estimates that it will take another 14.2 years to close this gap on its current trajectory completely.
In Health and Survival, 96% of this gender gap has been closed, registering a marginal decline since last year (not due to COVID-19), and the time to close this gap remains undefined. For both education and health, while progress is higher than economy and politics in the global data, there are important future implications of disruptions due to the pandemic and continued variations in quality across income, geography, race, and ethnicity.
India-Specific Findings:
India had slipped 28 spots to rank 140 out of the 156 countries covered. The pandemic causing a disproportionate impact on women jeopardizes rolling back the little progress made in the last decades-forcing more women to drop off the workforce and leaving them vulnerable to domestic violence.
India’s poor performance on the Global Gender Gap report card hints at a serious wake-up call and learning lessons from the Nordic region for the Government and policy makers.
Within the 156 countries covered, women hold only 26 percent of Parliamentary seats and 22 percent of Ministerial positions. India, in some ways, reflects this widening gap, where the number of Ministers declined from 23.1 percent in 2019 to 9.1 percent in 2021. The number of women in Parliament stands low at 14.4 percent. In India, the gender gap has widened to 62.5 %, down from 66.8% the previous year.
It is mainly due to women’s inadequate representation in politics, technical and leadership roles, a decrease in women’s labor force participation rate, poor healthcare, lagging female to male literacy ratio, and income inequality.
The gap is the widest on the political empowerment dimension, with economic participation and opportunity being next in line. However, the gap on educational attainment and health and survival has been practically bridged.
India is the third-worst performer among South Asian countries, with Pakistan and Afghanistan trailing and Bangladesh being at the top. The report states that the country fared the worst in political empowerment, regressing from 23.9% to 9.1%.
Its ranking on the health and survival dimension is among the five worst performers. The economic participation and opportunity gap saw a decline of 3% compared to 2020, while India’s educational attainment front is in the 114th position.
India has deteriorated to 51st place from 18th place in 2020 on political empowerment. Still, it has slipped to 155th position from 150th position in 2020 on health and survival, 151st place in economic participation and opportunity from 149th place, and 114th place for educational attainment from 112th.
In 2020 reports, among the 153 countries studied, India is the only country where the economic gender gap of 64.6% is larger than the political gender gap of 58.9%. In 2021 report, among the 156 countries, the economic gender gap of India is 67.4%, 3.8% gender gap in education, 6.3% gap in health and survival, and 72.4% gender gap in political empowerment. In health and survival, the gender gap of the sex ratio at birth is above 9.1%, and healthy life expectancy is almost the same.
Discrimination against women has also been reflected in Health and Survival subindex statistics. With 93.7% of this gap closed to date, India ranks among the bottom five countries in this subindex. The wide sex ratio at birth gaps is due to the high incidence of gender-based sex-selective practices. Besides, more than one in four women has faced intimate violence in her lifetime.The gender gap in the literacy rate is above 20.1%.
Yet, gender gaps persist in literacy : one-third of women are illiterate (34.2%) than 17.6% of men. In political empowerment, globally, women in Parliament is at 128th position and gender gap of 83.2%, and 90% gap in a Ministerial position. The gap in wages equality for similar work is above 51.8%. On health and survival, four large countries Pakistan, India, Vietnam, and China, fare poorly, with millions of women there not getting the same access to health as men.
The pandemic has only slowed down in its tracks the progress India was making towards achieving gender parity. The country urgently needs to focus on “health and survival,” which points towards a skewed sex ratio because of the high incidence of gender-based sex-selective practices and women’s economic participation. Women’s labour force participation rate and the share of women in technical roles declined in 2020, reducing the estimated earned income of women, one-fifth of men.
Learning from the Nordic region, noteworthy participation of women in politics, institutions, and public life is the catalyst for transformational change. Women need to be equal participants in the labour force to pioneer the societal changes the world needs in this integral period of transition.
Every effort must be directed towards achieving gender parallelism by facilitating women in leadership and decision-making positions. Social protection programmes should be gender-responsive and account for the differential needs of women and girls. Research and scientific literature also provide unequivocal evidence that countries led by women are dealing with the pandemic more effectively than many others.
Gendered inequality, thereby, is a global concern. India should focus on targeted policies and earmarked public and private investments in care and equalized access. Women are not ready to wait for another century for equality. It’s time India accelerates its efforts and fight for an inclusive, equal, global recovery.
India will not fully develop unless both women and men are equally supported to reach their full potential. There are risks, violations, and vulnerabilities women face just because they are women. Most of these risks are directly linked to women’s economic, political, social, and cultural disadvantages in their daily lives. It becomes acute during crises and disasters.
With the prevalence of gender discrimination, and social norms and practices, women become exposed to the possibility of child marriage, teenage pregnancy, child domestic work, poor education and health, sexual abuse, exploitation, and violence. Many of these manifestations will not change unless women are valued more.
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]2021 WEF Global Gender Gap report, which confirmed its 2016 finding of a decline in worldwide progress towards gender parity.
Over 2.8 billion women are legally restricted from having the same choice of jobs as men. As many as 104 countries still have laws preventing women from working in specific jobs, 59 countries have no laws on sexual harassment in the workplace, and it is astonishing that a handful of countries still allow husbands to legally stop their wives from working.
Globally, women’s participation in the labour force is estimated at 63% (as against 94% of men who participate), but India’s is at a dismal 25% or so currently. Most women are in informal and vulnerable employment—domestic help, agriculture, etc—and are always paid less than men.
Recent reports from Assam suggest that women workers in plantations are paid much less than men and never promoted to supervisory roles. The gender wage gap is about 24% globally, and women have lost far more jobs than men during lockdowns.
The problem of gender disparity is compounded by hurdles put up by governments, society and businesses: unequal access to social security schemes, banking services, education, digital services and so on, even as a glass ceiling has kept leadership roles out of women’s reach.
Yes, many governments and businesses had been working on parity before the pandemic struck. But the global gender gap, defined by differences reflected in the social, political, intellectual, cultural and economic attainments or attitudes of men and women, will not narrow in the near future without all major stakeholders working together on a clear agenda—that of economic growth by inclusion.
The WEF report estimates 135 years to close the gap at our current rate of progress based on four pillars: educational attainment, health, economic participation and political empowerment.
India has slipped from rank 112 to 140 in a single year, confirming how hard women were hit by the pandemic. Pakistan and Afghanistan are the only two Asian countries that fared worse.
Here are a few things we must do:
One, frame policies for equal-opportunity employment. Use technology and artificial intelligence to eliminate biases of gender, caste, etc, and select candidates at all levels on merit. Numerous surveys indicate that women in general have a better chance of landing jobs if their gender is not known to recruiters.
Two, foster a culture of gender sensitivity. Take a review of current policies and move from gender-neutral to gender-sensitive. Encourage and insist on diversity and inclusion at all levels, and promote more women internally to leadership roles. Demolish silos to let women grab potential opportunities in hitherto male-dominant roles. Work-from-home has taught us how efficiently women can manage flex-timings and productivity.
Three, deploy corporate social responsibility (CSR) funds for the education and skilling of women and girls at the bottom of the pyramid. CSR allocations to toilet building, the PM-Cares fund and firms’ own trusts could be re-channelled for this.
Four, get more women into research and development (R&D) roles. A study of over 4,000 companies found that more women in R&D jobs resulted in radical innovation. It appears women score far higher than men in championing change. If you seek growth from affordable products and services for low-income groups, women often have the best ideas.
Five, break barriers to allow progress. Cultural and structural issues must be fixed. Unconscious biases and discrimination are rampant even in highly-esteemed organizations. Establish fair and transparent human resource policies.
Six, get involved in local communities to engage them. As Michael Porter said, it is not possible for businesses to sustain long-term shareholder value without ensuring the welfare of the communities they exist in. It is in the best interest of enterprises to engage with local communities to understand and work towards lowering cultural and other barriers in society. It will also help connect with potential customers, employees and special interest groups driving the gender-equity agenda and achieve better diversity.