How Interventions Can Boost Women’s Income and Productivity

Millions of women around the world go to work every day without a formal contract, a steady paycheck, or any social protection. They sell vegetables at street markets, stitch garments from their homes, harvest crops on other people’s land, and run small roadside stalls. This is the informal economy – and it is where nearly 60 percent of women’s employment globally is concentrated, rising to over 90 percent in low-income countries. Despite being such a massive part of how economies function, women in this space earn less, own less, and receive far less support than their male counterparts. Closing this gap requires deliberate, targeted action. This is where interventions become critical – structured efforts designed to enhance women’s income, expand their skills, and improve their economic productivity in ways that the market alone has consistently failed to deliver.

Understanding the need for interventions 🔗

The word “intervention” can sound clinical, but in practice it refers to anything from a government loan scheme to a community savings group – any deliberate effort to change the conditions that hold women back economically. The reason these efforts are necessary comes down to a simple reality: women do not start on a level playing field.

Research from the World Bank shows that informal women-owned businesses have around 15.6 percent lower mean labor productivity than those owned by men. This gap is not accidental. It is driven by unequal access to education, managerial experience, vehicles, electricity, and financial resources. Women consistently enter economic life with fewer of the tools that generate productivity, and without deliberate action to address this, the gap simply reproduces itself from one generation to the next.

The economic stakes extend well beyond individual women and their families. UN Women estimates that closing the gender gap in farm productivity and the wage gap in agrifood-system employment alone could increase global GDP by roughly one percent – nearly one trillion US dollars. That figure makes the case for intervention not just as a matter of fairness, but as a straightforward investment in economic growth.

The deeper issue is structural. Women’s lower productivity in the informal sector is not simply about personal capability – it reflects what researchers call an “endowment effect”: women systematically lack access to the very resources that make businesses productive. Without targeted interventions to address these gaps, the informal economy will continue to function as a space where women work hard but accumulate little.

Challenges of informal sector employment for women 🔗

To understand why interventions are needed, it helps to look clearly at what women in the informal economy are actually dealing with on the ground.

Low and unstable incomes 🔗

Informal work is structurally low-paid. Women in the informal sector work without the protection of labor laws, social benefits such as pensions, health insurance, or paid sick leave, and routinely earn lower wages than men doing comparable work. In fact, evidence suggests women earn only around 52 percent of men’s wages within the informal sector itself – a pay gap that exists even before factoring in the broader gender wage gap between formal and informal employment.

The instability compounds the problem. Informal work tends to be seasonal, part-time, or piece-rate. When a woman who does home-based piecework has to stop to care for a child or prepare a meal, her income drops immediately. There is no paid leave, no sick day, and no guaranteed minimum wage to cushion her.

Limited skills and resources 🔗

A core reason women’s informal businesses lag behind men’s is the gap in what economists call productive endowments. The World Bank’s analysis identifies lower levels of education, limited managerial experience, and restricted access to physical assets like vehicles and reliable electricity as the primary drivers of the productivity gap. In many contexts, women also face barriers to formal business registration, which limits their credit history, restricts growth, and cuts them off from business development services.

Skills training is therefore not a luxury – it is one of the most direct routes to improving productivity. Without knowledge of pricing, bookkeeping, marketing, or technical production processes, even a well-intentioned business idea struggles to become economically viable.

Invisibility and lack of protection 🔗

Many women work in areas of informal employment – home-based production, domestic work, subsistence farming – where their economic activity is largely invisible to the state. A UK government guidance note on women in the informal economy points out that this invisibility reduces women’s capacity for collective bargaining and increases their exposure to exploitation. Without contracts or organized worker structures, they have little recourse when conditions deteriorate.

VSO’s analysis adds that more than half of women in informal work are considered “ineligible” for social protection because they lack formal contracts. This exclusion limits their ability to build professional skills needed for formal employment and keeps many trapped in cycles of economic dependency.

The “sticky floor” problem 🔗

Perhaps one of the most telling findings from recent research is what the World Bank calls the “sticky floor” effect. The gap in productivity between women and men is largest at the bottom of the distribution – meaning women find it hardest to move up from the lowest levels of economic activity. Once they do cross a certain threshold of productivity, competition with male counterparts becomes more manageable. The implication is clear: interventions that target women at the entry level of the informal economy – those who are most economically vulnerable – are likely to have the greatest impact.

The role of self-help groups (SHGs) 🔗

Among the many types of interventions that have been tried, Self-Help Groups – small, community-based collectives where women pool savings and access small loans – have emerged as one of the most widespread and influential models for improving women’s economic standing, particularly in South and Southeast Asia.

What SHGs are and how they work 🔗

SHGs typically consist of 8 to 20 women who engage in regular savings and lending activities. Members make small, consistent deposits into a group fund. From this fund, loans are extended to members in need – often at much lower interest rates and with far fewer barriers than those imposed by commercial banks. Over time, many SHGs become linked to formal banking institutions, giving them access to larger pools of credit that can support more substantial income-generating activities.

Today, there are over 9 million SHGs operating in India alone, involving more than 100 million women. The model has been adopted at the national policy level through India’s National Rural Livelihoods Mission (NRLM) since 2011, and similar structures exist across Sub-Saharan Africa, Latin America, and parts of South Asia.

SHGs as a pathway to credit and financial inclusion 🔗

Access to credit is one of the most fundamental barriers women in the informal sector face. Traditional banks typically require collateral, formal income documentation, or a credit history – things that most women in the informal economy simply do not have. SHGs have evolved as an essential means to provide microcredit to impoverished rural women, enabling them to engage in entrepreneurial activities and establish income-generating ventures that would otherwise be impossible to finance.

The group-lending model is central to why this works. Because all members are jointly accountable for repayments, the group itself functions as collateral. This lowers the risk for lending institutions and creates an internal system of accountability that encourages responsible borrowing. For women who never imagined owning or running a business, access to this initial capital often becomes the critical first step toward economic independence.

Beyond credit: skills, networks, and social capital 🔗

The impact of SHGs goes well beyond financial transactions. SHGs have played a crucial role in bringing women together, creating networks where they share ideas, access government schemes, and leverage resources that would otherwise be out of reach. Members gain exposure to financial literacy, leadership, and in many programs, vocational training in areas like tailoring, handicrafts, food processing, and agriculture.

Research from Cooch Behar District in India found that participation in SHGs and related microcredit programs significantly improved the socioeconomic development of rural women, helping them accumulate savings and initiate entrepreneurial ventures – while also contributing to the achievement of multiple Sustainable Development Goals including poverty reduction, food security, and gender equality.

A systematic review of the literature on SHGs in South Asia identified three immediate outcomes of group membership: improved access to credit, training, and resources; exposure to peer support; and the accumulation of social capital. These in turn produce intermediate outcomes including increased income and savings, reduced debt, and greater autonomy – all of which compound over time into lasting economic change.

Limitations and honest trade-offs 🔗

SHGs are not a perfect solution. Research has raised several important concerns. One is the time burden – SHG membership requires regular meetings and active participation, which can compete with women’s existing caregiving responsibilities. Another is the risk of debt: when group members lack control over how loans are used within households, or when income-generating plans fail, microcredit can deepen financial vulnerability rather than alleviate it.

Studies have also found heterogeneous results depending on intra-household bargaining power – meaning that whether a woman benefits from SHG membership often depends significantly on the power dynamics within her home and community. Where women have little control over how loans are spent, the economic benefits of credit access can be captured by other household members rather than reinvested in women’s own enterprises.

Nonetheless, the weight of evidence points toward SHGs as a net positive force when implemented thoughtfully. When paired with skills training, market linkages, and financial literacy programs – rather than credit alone – the outcomes improve considerably for women and their families.

Why targeted interventions matter – not just general economic growth 🔗

A common assumption is that economic growth automatically lifts all boats – that as countries develop, women’s economic status will improve on its own. The evidence does not support this. Research on women’s economic empowerment and inclusive growth shows that the informal economy is highly stratified along gender lines, with men dominating the upper tiers and women concentrated at the bottom – a pattern that persists even as economies expand.

This means that growth without deliberate gender-targeted intervention simply reproduces existing inequality at a larger scale. The case for specific interventions – whether skills training, credit programs, childcare support, documentation assistance, or collective models like SHGs – rests on the recognition that structural disadvantage does not dissolve on its own. It must be actively addressed.

As the Gates Foundation argues, investing in child care, expanding collective lending, and improving data disaggregated by sex are among the most concrete steps governments and development agencies can take to unlock the economic potential of informal women workers. These are not peripheral policy considerations – they are foundational to any serious strategy for inclusive economic development.

The broader point is this: when women in the informal economy are better supported – through credit, skills, collective organization, and legal recognition – they do not just benefit personally. Their households become more food-secure, their children are more likely to stay in school, and the communities around them become more economically stable. The returns on investing in women’s economic productivity ripple outward in ways that standard economic metrics often fail to capture.

What do you think? Given that women in the informal economy face both structural barriers and deeply personal constraints like unpaid care work, do you think economic interventions like SHGs are sufficient on their own – or do they need to be paired with broader policy changes to create lasting change? And if you were designing an intervention for women in your own community, which challenge would you prioritize tackling first: access to credit, skills training, or social protection?

References

1. https://www.unwomen.org/en/news/in-focus/csw61/women-in-informal-economy
2. https://blogs.worldbank.org/en/developmenttalk/understanding-gender-gaps-informal-sector
3. https://www.unwomen.org/en/what-we-do/economic-empowerment/facts-and-figures
4. https://assets.publishing.service.gov.uk/media/5dc0284340f0b6379cde83fe/Promoting-Economic-Empowerment-Women-Informal-Economy-Oct19.pdf
5. https://www.vsointernational.org/news/blog/how-can-we-empower-women-working-in-informal-sectors
6. https://pmc.ncbi.nlm.nih.gov/articles/PMC8350316/
7. https://voxdev.org/topic/institutions-political-economy/womens-microcredit-groups-empower-women-politically
8. https://innovation-entrepreneurship.springeropen.com/articles/10.1186/s13731-024-00419-y
9. https://www.smsfoundation.org/microfinance-and-self-help-groups-shgs-fueling-womens-entrepreneurship-in-rural-areas-of-india/
10. https://hir.harvard.edu/financial-feminism-the-evolution-of-microfinance-and-self-help-groups-in-india/
11. https://www.sciencedirect.com/science/article/pii/S2666660X24000392
12. https://pmc.ncbi.nlm.nih.gov/articles/PMC8350313/
13. https://www.tandfonline.com/doi/full/10.1080/19452829.2018.1454407
14. https://www.womenindisplacement.org/sites/g/files/tmzbdl1471/files/2020-10/Womens%20Economic%20Empowerment%20and%20Inclusive%20Growth.pdf
15. https://www.gatesfoundation.org/ideas/articles/how-to-economically-empower-informal-women-workers