Why Female Entrepreneurs Are Crucial for Increasing Women’s Workforce Participation
14 DEC 2024
A recent study emphasizes that fostering female entrepreneurship can substantially boost women's participation in the workforce. According to the findings, businesses led by women not only create opportunities for others but also contribute significantly to economic growth.
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There are barriers, including limited access to childcare, restricting women's ability to work
Women currently contribute just 17% to India’s GDP, significantly lagging behind the global average. A recent study underscores how encouraging female entrepreneurship could dramatically improve women’s participation in the workforce. Female-led businesses not only empower women economically but also create greater opportunities for other women, fostering substantial economic growth.
Globally, women own less than 20% of businesses, a sobering statistic revealed in a World Bank survey conducted across 138 countries between 2006 and 2018. However, female-owned enterprises are unique in their ability to empower women. Unlike male-owned businesses, where only 23% of the workforce are women, female-led firms employ significantly more women. Additionally, while only 6.5% of male-owned businesses have women in top management roles, over half of female-owned firms are managed by women.
India presents an even more complex picture. Women’s participation in both the workforce and entrepreneurship has remained stagnant for three decades. However, the entrepreneurial landscape offers a glimmer of hope. Women account for 14% of entrepreneurs and own a significant share of micro, small, and medium enterprises (MSMEs). According to the 2023 State of India’s Livelihoods Report, these businesses contribute substantially to industrial output and employment.
Most women-owned enterprises are micro-businesses, often single-person ventures. While some employ large teams, the majority operate on a smaller scale compared to male-owned firms, especially in the informal sector. This is a contributing factor to women’s low GDP contribution in India, which ranks 57th out of 65 countries in women’s entrepreneurship, as per the Global Entrepreneurship Monitor Report 2021.
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There has been an increase in self-employed women
Recent study by Gaurav Chiplunkar (University of Virginia) and Pinelopi Goldberg (Yale University) highlights the potential of female entrepreneurship to drive workforce participation and economic growth. Their research measures barriers that women face when entering the labour market or starting businesses. They discovered that high costs and societal constraints hinder women from scaling their enterprises and hiring more workers.
The study’s simulations suggest that eliminating these barriers could significantly enhance women’s workforce participation, boost wages, and improve productivity. Notably, efficient female-owned firms could replace less productive male-owned businesses, driving economic gains.
Several obstacles continue to limit women’s workforce participation in India. These include a lack of access to affordable childcare, inefficient public transportation, and societal norms that burden women with household responsibilities. According to Rolly Kapoor from the University of California, even restricted mobility impacts women’s ability to work within commuting distances.
While women’s labour force participation has seen a slight increase recently, Ashwini Deshpande of Ashoka University notes that this is primarily due to a rise in self-employment. This trend often reflects disguised unemployment, where more people are engaged in low-productivity tasks than needed. She stresses the importance of creating regular, salaried jobs with social security benefits to achieve true economic empowerment.
For many Indian women, societal pressures prevent them from working, regardless of their aspirations. Additionally, without sufficient entrepreneurial opportunities, an increase in women joining the workforce could lead to wage reductions due to job scarcity.
However, research shows that women in India actively seek work when viable opportunities arise. Barclays Research predicts that if women comprise more than half of the new workforce by 2030, India could achieve an 8% GDP growth rate. Promoting female entrepreneurship offers a promising path to bridging these gaps and unlocking the country’s economic potential. Boosting female entrepreneurship is not just about empowering women individually; it’s a critical step towards fostering inclusive economic growth. Policies that enable women to overcome barriers and support their entrepreneurial journeys could transform India’s workforce dynamics and set the stage for sustainable progress.
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