According to a recent study, encouraging female entrepreneurship could significantly increase women’s workforce involvement. Creating more opportunities for women would help female-led companies propel significant economic development.
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Imagine a future where half the population, women, run fewer than a fifth of firms. The World Bank revealed this shocking reality in a survey of 138 nations between 2006 and 2018.
How Do Female-Owned Businesses Impact Other Women?
The knock-on impact of female business on other women is among its most appealing features. While female-owned enterprises employ a considerably higher percentage of women, in male-owned companies, just 23% of employees are women. Moreover, whereas just 6.5% of male-owned companies include women as their top bosses, women run more than half of female-owned companies. This discrepancy shows how female business owners might foster a more inclusive workforce.
What Challenges Do Women Face in India?
The scenario in India offers even more significant difficulties. Female labour participation and entrepreneurship rates remain low; the total number of women in the workforce shows minimal improvement over the previous 30 years. On entrepreneurship, the scene seems somewhat better, though.
Women run about 14% of businesses and have a sizable portion of micro, small, and medium-sized enterprises (MSMEs). The 2023 State of India’s Livelihoods Report notes that they employ a significant share of the workers and contribute significantly to industrial output.
According to Niti Aayog, a government think tank, most MSMEs in India are microenterprises; many women-owned businesses are single-person ventures. While some women-owned businesses have plenty of employees, most have few staff members. Indian women, therefore, often run smaller businesses than their male colleagues, particularly in the unofficial sector, but they are not always underrepresented in entrepreneurship.
What Are Women's Economic Contributions and Rankings?
Not surprisingly, women’s share of India’s GDP is just 17%, below half the world average. According to the Global Entrepreneurship Monitor Report 2021, India is ranked 57th out of 65 countries for women’s entrepreneurship.
What Insights Do Recent Studies Provide?
According to a new study, promoting female entrepreneurship could significantly increase women’s labour involvement since female-owned companies usually provide more significant opportunities for other women.
The writers created a structure to gauge the obstacles Indian women must overcome to start businesses and join the workforce. They identified more expenses for female entrepreneurs growing their companies by adding employees and discovered significant barriers to women’s employment. Their simulations showed that removing these obstacles would support female-owned enterprises, raise women’s workforce participation, and generate economic gains via more excellent wages and profits, enabling more efficient female-owned companies to replace less profitable male-owned ones.
Why Are Policy Recommendations Important?
The authors contend that policies fostering female entrepreneurship are vital. Policies that support entrepreneurship and higher labour demand—allowing more women to start businesses—can be more efficient and rapid than altering long-standing social norms.
A scholar says, “History tells us that norms are sticky.” Cooking, cleaning, laundry, childcare, and elder care are among the domestic tasks still primarily assigned to women. Further obstacles limit women’s capacity to work within reasonable distances using restricted access to safe and effective transportation and childcare.
“Even women’s limited ability to travel independently is a key factor restricting their participation in the labour market,” underlines a recent study.
What Does the Current Landscape Look Like?
Though women’s labour market participation in India has lately increased, the picture may not be as bright as it first seems. Studies show that the rise corresponds with the increase of self-employed women, who often mix paid employment with disguised unemployment—a situation in which more people are hired than required for a task, therefore generating low productivity.
“Women’s participation in regular salaried paid labour with job contracts and social security benefits urgently needs to rise. Though not the only one, a researcher claims this would be the most crucial phase of women’s economic emancipation.
How Can We Move Forward?
Achieving this, though, will not be simple. Regardless of their dreams of being entrepreneurs, many women encounter challenges—from family and societal expectations to not working. Earnings may drop if more women join the workforce, and insufficient employment remains due to continuous obstacles to launching firms.
Studies show that women in India work when opportunities present themselves, implying that low demand for women’s labour and inadequate employment help explain the dropping labour force participation rate. Ensuring that women account for more than half of the new workforce by 2030 will help India reach 8% GDP growth.
Encouragement of female entrepreneurship offers a practical route to reach these objectives and empower women financially.
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