- The Women and Child development ministry is considering a proposal to make it mandatory for men to share a certain percentage of their income with wives if they stay at home and do the household chores. This has generated substantial debate from all quarters centering around difficulty in implementation and the issue of social empowerment. With any policy being proposed in a free market, it is important to go to the root principle of economics in general – Incentives.
- A policy basically frames incentives that direct behavior. The question to be asked is, are the incentives directing behaviour in the correct direction? Is the policy a short term solution to a long term problem? The problem with Indian policy making is the lack of focus on pure economics and extensive focus on social lines – policies are made on caste lines, regional lines, religious lines, gender lines and so on. In the education sector for instance, take reservation as an example. The core problem was lack of access to quality education for certain sections of the population. The long term solution for this would have been a policy encouraging the setting up of more colleges in affected areas, allowing tax rebates and concessions to such colleges to keep the fees in check and allowing a liberal licensing regime to ensure that the supply of seats increases. Instead the government made no direct attempt to increase the overall supply of seats but simply carved out a massive chunk and handed it over to the affected sections on the basis of caste lines. The result? Accentuated caste identity and resentment between castes due to excessive competition over few seats. Therefore when it comes to examining the proposal put forward by the government, I shall set aside social concerns and examine the core economic problem.
- The overall problem? Lack of women empowerment, suppression and lack of financial independence among women leading to a higher level of dependence on the male. The core economic problem? Lack of employable skills and appropriate opportunities. If an analyst goes back through the annals of economics, the most basic concept that emerges was the Division of Labour. Essentially division of labour allowed specialistion. If everyone did what they were best in, everyone would be better off. If one examines the household chores performed by a housewife, a major portion of these chores can be outsourced to a person who can do it more efficiently. If these chores are outsourced, a housewife can work and earn on her own. For the best part of the last decade, analysts have been discussing India’s population and how the human resources would eventually yield a divided. The housewives constitute a massive portion of India’s human resources and are sadly also the most major component of the under-utilised human resources of the nation.
- It would be naive to assume that housewives do not face any constraints. They certainly do; a majority of the chores can be outsourced but the responsibility of child rearing is one that most women wish to undertake. In this case there can be no outsourcing of such responsibility. What do I suggest? It is important to understand the constraints being faced by women. When I said that women lack employable skills, I was in no way suggesting that women are illiterate. However there a wide range of economic activities that women can undertake on a part time/work at home/combination of both basis. What is essential is that women be empowered with the right kind of employment skills that allow them to work while respecting their constraints.
- Why do I dislike the policy?
- Essentially the policy is adding no value to the economy. As in the education sector example, the policy is not adding income to a household, it is simply taking the present income and slicing it up. The pie is not getting any bigger, its simply being divided into pieces with the intention of asking the pie-owner to share. When we talk about the system of incentives, this policy is basically setting an incentive for a woman to sit at home and do the household chores. Incentivisation is a powerful concept. In this case, a positive incentive is being given for a woman to sit at home. Is that what the economy needs? Certainly not. The vast work force of women that are housewives can definitely engaged in economic activity that adds value to the economy and the household. Not only does the household pie get bigger, each contributor to the pie has a more rightful stake in it now. So a policy should set in place a framework whereby skill training centres are set up to impart skills that encourage employment that respects the constraints. Software coding and data entry for example are skills that would allow a woman to sit at home, respect the constraints and yet add value to the economy. Tax breaks and liberal licensing will encourage firms to employ more women. Sticking firmly to the principle of liberal economics however, eventually the government should aim reach a stage whereby no encouragement is required for firms to hire women who work part time or from home. For example, even after the tax breaks for the Information Technology sector expired, the IT sector is still booming. Similarly once women are able to see the positive effects of skill development and companies are able to analyse the employment of housewives as a value proposition, the market will set itself at an equilibrium without government intervention.
- Conclusion: I know my proposal will take more time than the Ministry’s. It might seem easier to just slice up the pie. But eventually that will be exposed as a short term solution. For any policy to be affected in the long run, the root economic problem – lack of skills and lack of a formal and developed work at home environment – must be weeded out and the aim should be to gradually reduce government intervention completely so that the markets can attain a free and natural equilibrium.
