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Investment Institute

Why women are pivotal to boosting growth and helping Asia’s demographics

  • 24 August 2023 (7 min read)

Earlier this year, the United Nations calculated that in April, India’s population would reach 1.425 billion - “matching and then surpassing” mainland China’s populace.1

The UN indicated that India’s citizenry is set to expand for several decades while China has already peaked, as it experienced a decline in 2022, and could fall below one billion before the end of the century.

The implications of India dethroning China as the world’s most populated country are of course significant. And as much as the absolute numbers are important, so are the demographic changes within. In many countries, the size of working age populations – those aged between 15 and 64 – are experiencing a more pronounced change.  

Globally, over the 2018 to 2030 period, those aged 60 and above are expected to rise by 42%, to 1.4 billion - five times faster than the growth in population of the under 60s. And the over 60s demographic is expected to account for 16% of the global population by 20232 , with Asia having among the fastest-ageing populations in the world. Working age population growth is undoubtedly in decline.

Broadly, the demographic transition includes first an increase and then a decrease in the share of working-age people in the total population. The initial increase occurs following a sustained reduction in fertility, which lowers the portion of children and youth in the population. The subsequent decrease in the relative size of the working-age population is driven by rapid growth in the proportion of older persons.

To address the problem, while policies and programmes aimed at influencing fertility warrant attention, perhaps even more urgency should be applied to raising the participation rate of female workers. Notably, a low female labour force participation doesn’t mean women do not want to work but rather they are in many instances denied the opportunity to join the formal workforce. As a result, their skills and talents aren’t fully utilised to maximise their, and society’s, full economic potential.

Employment and social policies need to make it both possible and desirable for women to have children while remaining in the labour market and continuing to develop their careers. These could include, among many others, the provision of subsidized childcare, maternal and paternal leave, tax credits and supportive corporate frameworks. 

Japan, for example, has witnessed a sharp rise in female employment in recent years, though it remains below that of many developed economies, partly because of government efforts like the expansion of childcare facilities and the removal of tax disincentives.

In some Asian economies, Vietnam, mainland China and Thailand, the female participation rate is relatively high while by enlarge in South Asia it remains remarkably low. Putting the numbers into perspective, if the female labour force participation rate in India - currently under 20% - could be raised to that of the Philippines, at almost 44%, it would provide the economy with an additional 115 million workers – the equivalent of the combined workforces of Japan and Korea.

In developed and developing countries alike, gender gaps persist in education, health, work, wages, and political participation. At macroeconomic level, female education is a vital source of support for long-term economic growth, and impartially, education is key to gender equality. Educating girls and women leads to higher wages; a greater likelihood of working outside the home; reduced maternal and child mortality; and better health and education. The impact is felt not only in women’s lifetimes, but also in the health, education, and productivity of future generations. It has been linked to higher productivity; higher returns on investment; better agricultural yields; and a more favourable demographic structure.

The economic growth that results from higher education feeds a virtuous cycle, supporting continued investments in education and extending the gains to human capital and productivity. In the BRICs and so-called N11 countries, greater investments in female education could yield a ‘growth premium’ that raises trend GDP growth by about 0.2% per year. Narrowing the gender gap in employment—which is one potential consequence of expanded female education—could push income per capita as much as 20% higher by 2030.3

The challenge in education is twofold – first to widen access in an equitable and continuous manner; second, to develop quality and effective learning methods. Progress and development in this space hinge on wide-ranging and comprehensive policy responses at the national and multilateral levels. But socially-aware investors and companies have a role to play. Ultimately, all economic activity is a result of human behaviour which in turn impacts human welfare – on that basis the ‘S’ of ESG – environmental, social and governance – is arguably a powerful and paramount dimension.

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