A large and active labour force can significantly boost a country’s economy, but a low participation rate (LFPR) can hinder it. The working-age population, typically those aged 15-64, falls into three categories: Employed, unemployed but actively looking for work, and unemployed but not seeking employment. The first two groups are considered part of the labour force, while the rest are classified as out of the labour force (OLF). In countries like India, it’s striking that a substantial portion of the working-age population, particularly women, is not participating in the labour market, even though the country has a young population and limited unemployment benefits. By addressing why so many women remain outside the labour force, we can improve overall welfare and unlock economic potential.

In developed countries, less than 40 per cent of the working-age population is outside the labour force, whereas in India, the figure is almost 60 per cent. India’s female labour force participation rate (FLFPR) is particularly concerning, standing at just 37 per cent as per the PLFS. A range of factors contribute to this, including deep-rooted social norms that favour traditional gender roles, the overwhelming responsibility of unpaid household work, fertility-related challenges, and safety concerns. Additionally, there needs to be more job opportunities that align with the education and skills many women possess. To improve FLFPR, exploring ways to encourage more women to join the workforce is essential.

Recent data from the Periodic Labour Force Survey shows positive trends, with the overall female labour force participation rate rising from 23.3 per cent in 2017-18 to 37 per cent in 2022-23. However, the growth is uneven across rural and urban areas. In rural areas, the FLFPR jumped from 24.6 per cent in 2017 to 41.5 per cent in 2023, while in urban areas, it saw only slight changes, from 20.4 per cent to 24.5 per cent. In rural areas, the rise is mainly due to women entering self-employment in agriculture, with the percentage increasing from 55.9 per cent in 2017-18 to 70.1 per cent in 2022-23. However, many rural workers remain in low-skill jobs, often facing underemployment. The key takeaway is that skilled women in urban areas still show low labour force participation. What keeps women in urban areas away from the labour market?

Two critical reasons are hindering women’s active participation in the labour market.

One, the disproportionate economic burden of household care work on women vis-à-vis men. Women historically have suffered from gender differences in the labour market as a consequence of the interplay between markets and households (Goldin, 2023). They bear an excessive burden of non-economic and unpaid care activities at home. This is a serious concern, especially in an urban setup with nuclear family structures. Women spend around seven-plus hours daily doing non-market household chores and child/elderly care work. This figure is less than half, around three hours a day for men. This disparity is even more pronounced in India compared to the US where women spend about three times less time on such tasks. This excessive caregiving burden leaves women with fewer hours to engage in paid work, contributing to the low participation rate and highlighting the broader economic impact of unpaid care work.

Two, the lack of detailed and well-structured legislation on part-time employment contracts. The ILO Part-Time Work Convention, 1994 (No. 175) defines the term part-time worker as an employed person whose regular work hours are fewer than those of comparable full-time workers. Part-time employment is the most common traditional form of non-standard employment. It exists in diversified forms — substantial part-time work, short part-time work, marginal part-time work, on-call work, etc. (ILO). Legal and statistical definitions of part-time work often differ. In many countries, the legal definition of part-time employment is aligned with that of the ILO standards. In the US, for example, the Internal Revenue Service, under the Affordable Care Act (ACA), defines part-time contracts with a threshold of 30 hours of work per week or 130 hours per month. The Bureau of Labor Statistics (BLS) has set the threshold at 35 hours weekly for statistical purposes. Each employer often determines the exact number of part-time work hours, which varies among them.

In India, part-time employment is not clearly addressed in labour laws, which typically define workers based on full-time hours. The law sets a cap of 48 hours per week for full-time employees, but part-time contracts, which involve working fewer hours, are often left at the employer’s discretion. These contracts lack guarantees like job security, a minimum number of hours, or fairness in work schedules. Pay for part-time work is usually unregulated, and the Minimum Wage Act, which dates back to 1948, does not account for part-time roles, as it bases wage calculations on full days of work. Unlike in the US or Europe, where hourly rates are standard, India’s law makes it difficult to pay part-time workers proportionally for their hours, leaving gaps in how part-time employment is managed.

Given the time burden of household chores, women find part-time contracts as a suitable gateway to enter the labour force due to the inherent flexibility in work hours. A well-designed framework for flexible part-time employment contracts could offer valuable work opportunities to many women trapped in the caregiving economy.

The writer is Associate Fellow, National Council of Applied Economic Research. Views are personal.