Women participation and labour productivity

Labour productivity is regarded as one of the trademarks of development for a country. It has a direct impact on economic growth and social welfare. An economy with higher productivity may produce many goods and services without increasing the number of input resources, or an economy may produce the same number of goods and services, using fewer input resources. The benefits of higher labour productivity can be observed in various sectors of the economy. Businesses with high labour productivity can generate higher profits, workers can earn higher wages and have better working conditions. Growth via enhanced labour productivity may also provide the government with much-needed revenues to spend on infrastructure and social welfare.

According to ILO, since 2000 Pakistan’s labour productivity has grown at a rate of 1.5% annually. In comparison, India’s labour productivity has grown by 5.7% and China’s by 8.8% during the same period. Pakistan’s GDP output per worker in 2021 was $3,801 lower than India’s $6,688 and Vietnam’s $3,905. Labour productivity in terms of GDP per hour worked also has the same trend. Pakistan per-hour labour productivity was $6.3 against Vietnam’s $7.3 and India’s $8.3. Pakistan’s labour productivity indicators provided the basis for the decline in socio-economic development as compared to its peer countries in the last two decades.

According to the labour force survey 2020-21, Pakistan’s total labour force consists of 71 million people, of whom 67 million are employed and 4.5 million unemployed. In percentage terms, total labour force participation remains around 45% out of which female labour force participation was recorded around 21%. Pakistan’s workforce participation rate for women is one of the lowest both in South Asia and globally. According to the World Bank, Bangladesh’s female labour force participation is around 38% and Vietnam’s is almost 48%. Lower female participation in the labour force represents a major loss of potential in productivity. Low education levels, mobility challenges and gender norms limit women from entering and being retained in the formal workforce.

Between 2003 and 2016, Bangladesh increased the female labour participation rate by 10% to 36%, thanks to the readymade garments and livestock sectors. In fact, today over 70% of rural women are small-holder farmers and own poultry and livestock. The government’s successive Five-Year Plans emphasised gender equality and sought to promote women’s entrepreneurship and participation in regional and international trade. As a result of this long walk towards equality, many women are benefiting from an environment that enables business startups and greater access to digital economy.

Increasing female labour force participation rate creates an opportunity for countries to increase the size of their workforce and achieve additional economic growth. One way to explore the importance of women to labour productivity is to consider the share of adult women who are participating in the labour market. The labour force participation rate, which reflects the share of adults who are either working or looking for work, is a fundamental component of a country’s total economic output. For example, if workers in two countries are equally productive but the countries have different fractions of their populations working, then the country in which a larger share of people working will produce more output per person. Hence, to the extent that countries increase the engagement of women in their workforces, this has the potential to increase economic output.

Increased women participation can impact an economy significantly. It helps reduce income inequality, alleviate poverty, boost girls’ education, etc. Governments should create opportunities for women by providing skill-based technical education related to information technology. Women can take part in technology as excelling in it is not dependent on one’s gender. Public transportation and city infrastructure development is another policy tool particularly relevant for enhancing women’s mobility in Pakistan. Some of the problems women face can be alleviated in pursuing work opportunities. Higher female participation could lead to higher labour productivity and economic growth.

 

Published in The Express Tribune, April 6^th, 2023.

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