How C0VID-19 Affected Women Entrepreneurs
India’s working-age population is projected to increase to 58.8% by 2031 from 55.8% in 2021. This implies an addition of nearly 97 million people in the workforce, thereby making India the country with the largest working-age population in the world by 2031. The demographic dividend, coupled with a well-educated populace, has the potential to boost India’s economic and social growth.
As per the World Bank estimates, women constitute 35% of India’s working-age population and 75% of those working-age women do not have any paid work. A recent survey carried out by Bain & Company and Google finds that in 2018, out of the approximately 432 million working age women in India, about 324 million are not even a part of the labour force-both formal as well as informal. Moreover, as shown by the diagram below, women’s labour force participation rate (LFPR) in India is one of the lowest in the world and alarmingly, continues to decline even further.
It is evident from the above discussion that the status of women in the Indian job scenario before the Covid pandemic was already in a dismal state. The pandemic exacerbated the situation even more.
The impact of any global crisis is rarely gender neutral and COVID-19 is no exception. The catastrophic pandemic disproportionately affected women not only in India but across the world. Women bore the brunt of the economic and social repercussions of the pandemic; they faced a dramatic increase in the domestic workload along with loss of livelihoods. The pandemic and the ensuing lockdowns left an approximate 17 million to 19.3 million women unemployed, just in March and April, 2020. As per a working paper published by the Azim Premji University, male employment fell by only 30% of its pre-lockdown level while female employment fell by 43%.
MSMEs and Women
Unequivocally, MSMEs are one of the most important growth accelerators of the Indian economy, contributing to about 30% of the country’s GDP and 40% of total exports. Moreover, as per the Statista Research Department, women own a little over 20 percent of all MSMEs across India.
The diagram shown below portrays the distribution of micro, small and medium enterprises owned by women across India.
IMPACT OF COVID-19
- Impact on Revenue
In order to delve deeper into the impact of COVID-19 on women-led MSME enterprises, Krea University researchers surveyed 2,083 non-agricultural enterprises in Bihar, Chhattisgarh, Madhya Pradesh and Odisha. The enterprises were divided as per the nature of their operations- production, service and trading.
As shown in the diagram below, the pandemic and lockdowns had an adverse impact on the revenue earned by these businesses.
As is evident from the graph above, the monthly median revenue of women-led MSME enterprises fell from Rs. 3,000 in February, 2020 (assumed as a proxy for pre-Covid times) to Rs. 0 in April, 2020 and increased to Rs. 800 in June and July, 2020. Similarly, the monthly mean revenue fell from Rs. 7,921 in February, 2020 to Rs. 2,534 in April, 2020 and increased to Rs. 4,240 in the months of June and July, 2020.
In the months of March, April and May, the enterprises registered the lowest revenues since the nation-wide lockdown was in full effect, supply chains were heavily disrupted, demand for various non-essential commodities plunged and there was immediate cash flow crunch due to lower sales and delayed payments. In June and July, the revenues saw a slight increase as the lockdown was gradually eased.
Another survey of 350 women solopreneurs and small business owners conducted by Bain & Company showed consistent results, as shown below.
Around 17% of the surveyed women entrepreneurs saw less than 25% decrease in revenue as compared to pre-lockdown levels, about 35% of them saw a decrease of 25%-75% and 21% of the surveyees had their revenue almost wiped out as their revenue decreased by more than 75%.
Two notable things that the survey brought forth are:
- Businesses that were mainly dependent on offline delivery models experienced a much greater decline than those businesses which operate online.
- Gradual increase in revenue was driven by two major factors: increased relevance of specific products and services during the crisis; and a rapid restructuring of the business model to address the changing needs.
2. Business Closures
A negative externality of the stringent lockdowns was business closures. In the research by Krea University, 44.6% of the businesses were partially interrupted, 36% of them were temporarily closed and 10.9% of them had fully shut down during the initial lockdown period itself (March, 2020-May,2020).
Further, as shown in the diagram, nearly 46% of the surveyed women whose businesses were permanently closed did not intend to start another business, 27.8% of the women were not sure, and 26.4% of the surveyees were affirmative about starting a new business. These figures are relevant because they depict the potential impact that such market shocks (here, induced by the COVID-19 pandemic) have on further marginalising women’s representation in the entrepreneurial ecosystem.
3. Deprioritization of Business
As per research on the gendered impacts of the Covid-19 outbreak, the lockdowns and closures have had a compounding effects on women’s physical and mental health as they were compelled to undertake additional caretaking responsibilities and do much more household chores, with little or no support from male members of the family. As a result, they got less time to spend on their businesses, thereby resulting in the deprioritization of their businesses within the household: for 48.4% of the surveyees, their business was the primary source of income for the household, but due to COVID-19, the numbers plummeted to 36.2%.
As shown by the diagram above, about 43% of the women entrepreneurs surveyed believed that the time spent on household chores had increased while 38% of them reported that the time spent on unpaid care work had risen due to the lockdown.
As a consequence, the time spent on business activities dramatically decreased during the pandemic. More than half of the surveyees (about 59%) reported a decrease in the time spent on their businesses, as is evident from the diagram below.
THE WAY AHEAD
The intersection of gender and entrepreneurship has received significant attention in recent years, but there has been very little progress when it comes to offering solutions with a gender lens. As the economy returns to normalcy post Covid-19, it is imperative to capitalize on some structural shifts that the pandemic has presented:
- There is an urgent need to bring women into the fold of opportunity creation. The Government has a pivotal role to play in recognising and elevating women entrepreneurship so as to boost economic activity. Priority initiatives include:
- A state-led “clarion call” for women to actively participate in the economic rebuilding effort, underpinned by government-led digital interventions to attract and empower women-run enterprises. For example,initiatives under Digital India, such as the engagement of women-owned MSMEs and the Aatmanirbhar Bharat Innovate Challenge, should be tailored to give an impetus to women.
- Sector-focused incentives, policies and programmes that focus on encouraging women’s participation in sectors where the demand has skyrocketed during the pandemic such as PPE manufacturing, childcare and healthcare training.
- Developing and expanding targeted mentorship models may also prove effective for women entrepreneurs. Through informal and formal programmes, mentorship must endeavour to enable women to swiftly and successfully pivot their business models in accordance with the current scenario. For instance, virtual as well as real-time mentorship platforms can be provided to women entrepreneurs so that they can connect with professionals of their field or industry.
- Accelerating financial inclusion for women entrepreneurs may be beneficial to address the ever-widening gender disparity in access to finance.
SYBSc Div-2 (2020-2023)