While female adult literacy and employment rates are increasing in India, the country still scores much lower than China in both counts due to gender inequalities and a larger rural population. This could hold back India’s economic and income growth potential and impede social improvements such as in health and education. However, India’s employed female population is set to grow while China will face a shrinking female workforce as a result of its one-child policy and gender imbalance.
Female Adult Literacy Rate and Female Employment Rate in India and China: 2006-2011
Source: Euromonitor International from International Labour Organisation (ILO)/Eurostat/national statistics
- India scores much lower than China in female literacy and labour participation, which is affecting the country’s growth potential. In 2011, the Indian female adult literacy rate stood at 55.0% of the female population aged 15+, compared to 91.4% in China. In the same year, India’s female employment rate was 25.0% of the working age female population (aged 15-64), compared to 71.5% in China;
- The lower rates in India have been due to gender inequalities and a preference among many Indian families of educating males instead of females. According to the World Economic Forum’s Gender Gap Report 2011, India ranked 113th out of 135 countries, compared to China (61st). The index measures countries’ gender disparity in terms of education, health, economic clout and political empowerment;
- India’s large rural population, where women typically work informally in households and in agriculture has also been a factor in its lower rates of female literacy and employment. In 2011, 68.8% of India’s population still lived in rural areas, higher than 50.1% in China.
The differences in female literacy and employment have important implications for China and India:
- India’s low female employment rate could hinder its economic growth potential as women who are literate and actively employed enhance a country’s production output and labour productivity. In 2011, India’s labour productivity stood at US$4,350 per person employed, compared to US$8,377 for China. From 2006-2011, India’s real GDP grew at an average annual rate of 8.1%, lower than 10.9% in China;
- Low female employment constrains the growth of household incomes in India as men are often the only bread winners. India’s annual per household disposable income stood at US$6,671 in 2011, remaining significantly lower than US$10,332 in China. Between 2006 and 2011, India’s per capita female annual disposable income grew by an average of 24.1% in real terms to reach US$716 in 2011, compared with 64.8% and US$2,268 respectively in China;
Average Female Per Capita Annual Disposable Income in China and India: 2006-2011
Source: Euromonitor International from national statistics.
- As women in both China and India have seen their incomes rising, this has resulted in changes in consumer spending patterns. In China, women have become an important market segment who tend to spend more of their income on healthcare, food, education and home improvement. China’s consumer expenditure on household goods and services expanded by 88.2% in real terms between 2006 and 2011. Partly owing to increased female incomes, India saw a real growth of 64.2% in consumer expenditure on education during the same period;
- Increased female literacy and more female participation in the workforce can also help to improve social indicators such as poverty, health, school enrolment and children’s education outcomes. This is because improved female literacy will lead to better child and maternal health while increased income owing to employment will enable women to invest in their children’s education.
China and India will witness different trends in female employment in the coming years:
- China will continue to enjoy a high rate of women participation in the workforce, at 73.6% of the working age 15-64 female population by 2020, yielding significant economic and social dividends for its economy. Nevertheless, its total employed female population is forecast to contract by 1.2% between 2012 and 2020 due to the country’s preference for a male child and its one-child policy being in place since 1979. This will slow down income growth and consumer demand in China;
- In Henan, China’s most populous province, new legislation was passed in 2011 which allowed couples made up of single children on both sides to have a second child. If other provinces follow suit then the employed female population in China may rise;
- Owing to India’s growing population, increasing female literacy and urbanisation by 2020, its female employment rate will reach 25.2% of the working age female population, representing a growth of 14.7% over 2012. This will create opportunities for businesses targeting this consumer segment in India;
- In order to reduce gender inequalities, in 2010 the Indian government launched a National Mission for Empowerment of Women. The mission aims to provide education from primary to high school level for all girls.