Digital gender divide amidst India’s service-led growth

While India’s growth in recent decades has been services-led, entering high-productivity business services requires an adequate supply of high-skilled workers. In this context, Isha Gupta discusses how the country’s ‘digital gender divide’ – women’s lower access to and use of information and communication technologies – acts as a constraint. Outlining avenues offered by digital technologies, she recommends policy interventions that can help leverage these opportunities for women’s economic empowerment.

Since the 2000s, India’s growth trajectory has followed a unique pattern of having skipped industrialisation and services-driven growth, which defies the conventional path of structural transformation experienced by most developed countries (Krishna et al. 2016a, Jorgenson and Timmer 2011). Even as India remains in the category of lower-middle-income economies, its services sector has already reached 55% output share in GVA (gross value added), whereas industry remains prematurely stagnated at 27% share (Eichengreen and Gupta 2011). This distinguishing feature of marked acceleration in services is driven primarily by substantial expansion of business services, which have grown annually by 8.2% over the past two decades (Krishna et al. 2016a).

India’s structural transformation is not gender-neutral

As India seeks to advance towards high-productivity services such as financial services, business services and telecommunications, it faces a crucial barrier of lack of adequately qualified individuals to carry out these high-skilled jobs – a shortage that is exacerbated by the low representation of women with the necessary technical skills in these areas of work (Krishna et al. 2016b, Bhandari et al. 2018). These gaps stem from the fact that the average ICT (information and communications technology) task intensity of jobs in business services is much higher than other services, and low-skilled workers are not trained in the use of digital technologies (Erumban et al. 2019, Krishna et al. 2016b). These barriers are even more acute for working women – 85% of whom are informally employed – as they tend to move among low-paying marginal jobs rather than climbing the job ladder and persisting in high-wage work (Bhandari et al. 2018). Notably, only 2.2% of employed women in India work in business services (Serrano-Quintero 2021).

This underlines that India’s unconventional structural transformation path is not gender-neutral due to persistent gender segregation in employment across sectors. As Indian women are left out of the services-led growth experience, there is room for policy intervention to address the friction of digital gender divide that constrains the mobility of the female labour force towards business services.

India’s digital gender divide

The digital gender divide refers to gender differences in resources and capabilities to effectively utilise ICT, which amount to gender gaps in the access and use of digital technologies, digital skills, and digital finance (Organisation for Economic Co-operation and Development (OECD), 2018). These gaps widen on account of non-technological barriers such as inadequate economic resources, lack of training, and socio-cultural norms about women’s roles and place in society. Gender gaps in digital inclusion consequently spill over into gender inequalities in the labour and financial markets, which further put women at a disadvantage. Moreover, even as young women attend educational institutions, they do not enter (or are not allowed to enter) the labour force once they reach marriageable age, which might indicate either the non-availability of adequate opportunities (Chatterjee et al. 2015) or the greater involvement of women in unpaid household work, or adherence to social and cultural norms (Eswaran et al. 2013, Choudhuri 2021).

Data from the Global System for Mobile Communications Association (GSMA) (2023) and Oxfam (2022) helps put together a broad picture of women’s access and usage of the internet in India. GSMA data show that even as the gender gap in mobile ownership narrowed to 11% in 2022 relative to the previous year, mobile internet adoption among women remains at 30%, further expanding the gender gap to 40%. Further, mobile internet awareness among women has still not surpassed 60%. The gender divide with regard to digital skills is also stark, with only 30% of women knowing how to use the internet to find necessary information, operate mobile money or access apps and e-services (GSMA, 2023, Oxfam, 2022). Constrained by the complexities of using sophisticated handsets, Indian women are 33% less likely than men to use mobile internet, with applications limited to a smaller range of digital services, primarily voice and SMS (Oxfam, 2022).

However, these women-centric challenges are largely overlooked in the ‘Digital India’ initiative, launched by the Government of India in 2014. The programme document does not specify any explicit gender-disaggregated training targets for bridging the digital divide, given the lower uptake of the internet usage among Indian women (Gurumurthy and Chami 2018). It also fails to recognise that women’s rate of internet usage may not increase in tandem with increase in national deployment of digital technologies: the lack of digital literacy and skills to capitalise on the benefits of participating in the information economy further widens the existing divide.

Leveraging digital technologies to unblock the road to women’s work

With services-led growth in India, labour market friction caused by the digital gender divide impedes the ability of women to take advantage of opportunities in ICT jobs, which not only traps them in low-wage work, but also slows down the speed of growth-enhancing structural transformation in the economy.

In order to overcome these challenges, digital technologies present two types of linkages that can potentially raise women’s paid work. First, new forms of work in ICT services are likely to benefit women as the shift towards non-routine occupations offers flexibility in the number of work hours and the ability to work from remote locations, including from home. New opportunities in online work are compatible with continuing demands from the household, while overcoming gendered mobility constraints including safety concerns, and longstanding occupational segregation faced by women. For instance, 73% of Indian women who are willing to take up a job prefer regular part-time work, while only 22% prefer regular full-time jobs – reflecting responsibilities pertaining to marriage and childbearing (Fletcher et al. 2017).

Second, digital job platforms enable the matching of jobs and workers, by increasing information flows and reducing the transaction costs – constraints that are more binding for women seeking work in the formal sector. Although enhancing women’s access to digital technologies and digital skills training can enable them to use these platforms effectively, the impact of such new job search technologies may not be gender-neutral in the context of labour markets in developing countries. Here, it is also crucial to harness women’s friends-based peer networks to boost female employment in conservative settings (Afridi et al. 2022).

In general, policy efforts directed towards digital gender gaps can lead to other potential positive spillovers for women, such as in the form of control over financial resources through the use of mobile money that accelerates in their financial inclusion (Suri and Jack 2016).

Gender-disaggregated ICT data

With faster movement from agriculture into services, female employment in India may not follow historical patterns along the U-shape¹ as the digital gender divide interferes with this process through the misallocation of female labour. As India leapfrogs towards the high-productive ICT-services, women face mobility barriers to move to and persist in high-paying jobs due to the specific friction arising in the form of lack of digital access and skills. Since the upward movement in FLFP along the U-shape is not automatic for India, policy interventions are needed to address this gap. This can be directed through ICT data, e-governance, and digital skilling interventions, which provide crucial links for improvements in female labour market outcomes.

In India, a major inadequacy lies in the non-existence of gender-disaggregated ICT statistics that limits an in-depth assessment of the digital gender divide. It is therefore imperative to devise a robust, nationally representative dataset that identifies and documents variations in the application of ICTs at an individual level by women and men. This begins with defining, collecting and analysing gender-based statistics pertaining to ICT, which is a necessary prerequisite to inform national policy, develop gender-specific indicators of ICT, and evaluate the impact of policy efforts. A convenient starting point could be to collect the individual-level ICT statistics through existing surveys such as population censuses or labour force surveys that allow for disaggregation by sex, where the variables on ICT questions such as awareness, access options, and utilisation can be included and measured, without the need for allocating additional resources.

Collaborating with grassroots women’s collectives

Moreover, women’s self-help groups (SHG) can provide a platform for administering a range of digital strategies to support grassroots women’s collectives, while also overcoming regional imbalances in the digital gender divide. Such a bottom-up, collaborative approach can also address information gaps with respect to ICT access and usage by women at the local level.

Some of the successful digital skilling interventions through the SHG linkage include Kudumbashree Mission that reaches out to over 4.3 million women across municipalities in Kerala, which has resulted in computerisation of village-level offices that employ or serve women at the grassroots, introduction of digital accounting systems, and deployment of digital technologies for information and public services (Gurumurthy and Chami 2018). Such initiatives can also be channelised through the nationwide Digital India programme to integrate and mobilise gender-oriented interventions by imparting digital skills training to women tailored to the requirements of ICT services.

Through innovative digital solutions, women can be made to connect with each other, which provides a medium of forming a cadre of digitally trained women who in turn train other women through community networks and group activities (for instance, Internet Saathi initiative, the collaboration between Google and Tata Trusts).

Gaining insights on how female labour market frictions with respect to digital divide impact gender wage gaps and employment outcomes in India and other low-income countries offer profitable avenues for future research, while also shedding light on important policy implications for bridging this gap in developing economies.

This post is based on the I4T (Ideas for Transformation) paper ‘The Rise of Business Services and Structural Transformation in India, Kenya and South Africa: Role of Female Labour Supply’ written using a grant from the CEPR-led research programme ‘Structural Transformation and Economic Growth’ (STEG), funded by the United Kingdom’s (UK) Foreign, Commonwealth & Development Office (FCDO), as part of the UK aid effort (Contract reference STEG_LOA_211_Gupta).

Note:

The U-shaped relationship between women’s involvement in market work and economic development has been documented over time for the United States and other developed economies (Goldin 1995, Boserup et al. 2013, Olivetti 2014). In the initial stages of development, FLFP declines as jobs move away from home to factories that are deemed inappropriate for women. With higher incomes and more financial resources at the household level, the income effect induces female employment to decline, considering that childcare responsibilities typically lie with women. However, at later stages of development, as structural transformation of the economy shifts towards the growth of services, female employment swings up again because now, not only are women better educated, but with the movement towards ‘brain-based’ work in services, female workers gain a comparative advantage in mentally intensive service jobs compared to the physically intensive jobs of previous stages, which raises the opportunity cost of staying at home and thereby, leads to increased FLFP along the rising part of the ‘U’ (Heath and Jayachandran 2016).