Class: XII Economics

Employment: Growth, Informalisation and other issues

Basic concepts

• The term workers include all those who are engaged in work, whether for
others(paid workers) or for themselves (self employed workers)

• Labour force

– All persons, who are working and though not working, are seeking and
available for work are termed to be in labour force.

• Labour force participation rate

– The ratio of labour force to total population. About 40% of population

belonged to the labour force. (2011-12)

• Work force

• The number of persons, who are actually employed at a

particular time.

• Calculation of unemployed people

– Unemployed people =Labour force- workforce

– Indicates the status of workers in the society and their working

conditions.

Nature of Employment in India is Multifaceted

• Some get employment throughout the year while some remained employed
only for few months.

• Many workers do not get fair wages for their work.

• All Workers who are engaged in economic activities are called as ‘employed’.

Composition of Indian Workers

• India has 473 million workers (2011 – 12)

• Nearly three fourth (75%) of them are in rural areas

• Men constitute 70% of our work force.

• In rural areas women constitute one third of the workers.

• In urban areas women constitute one fifth of the workers.

 • Women who are engaged in household activities like cooking, washing,
cleaning etc. are not considered workers because these are unpaid jobs.

Worker population ratio

– It is the proportion of population that is engaged in economic activities

and produce GDP.

– Worker Population Ratio =

𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑊𝑜𝑟𝑘𝑒𝑟𝑠

X 100
𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

– Worker Population Ratio in India is 35.

– It is 34 in urban areas and 35 in rural areas.

Importance of Worker population ratio

– It is useful to determine the proportion of active population who are

involved in productive activities.

– Higher the ratio, higher is the proportion of people engaged in

economic activities and vice versa.

Some facts and figures about worker- population ratio

• Higher proportion of male workers. Males earn high income which

discourages female members to take up jobs

• More female workers in rural areas. Here women can’t stay at home due to
their poor economic condition.

• Underestimation of women workers. Many activities undertaken by them are

not recognised as productive work. So, they are not paid and are not
considered as workers.

Worker Population Ratio is High in Rural Area and Low in Urban Area.

• Income earned by the rural workers is low. So, more members of the family
work to earn a living.

• Many children leave the educational institutions and join the workforce to
support their families.
 • Urban workers earn higher incomes. So, their children are able to complete
education before joining work.

Worker- population ratio of Women is Low

• In families where men earn high income, women are discouraged from
working outside.

• Women do a lot of work in houses. These works are not considered

employment as they are not rewarded in the form of money.

WORKER POPULATION RATIO AMONG RURAL WOMEN IS HIGHER THAN

THAT OF URBAN WOMEN

• (I) Income of rural workers is low. So, to run the family women should also
work.

• (ii) Urban workers earn higher incomes. So, women are discouraged from
working.

• (iii) Women’s education is neglected in India. Agricultural works in rural

areas do not require education. So, women easily get jobs.

Meaning of Employment

• It is an activity which enables a person to earn means of living.

• This can be in the form of wage employment or self employment.

Self employment Wage employment

An arrangement in which An arrangement in which a
a worker uses his own worker sells his labour and earn
resources to make a wages in return.
living. 50% of workforce Under worker is known as
belongs to this category. employee and buyer of labour is
Example: shopkeeper, known as employer.
traders, business men etc
Here a person makes use Here workers don’t have any
of his own land, labour, other resource other than his
capital and own labour. They lend their
entrepreneurship to make labour in return of wages.
a living.
 Wage employment- Types

Regular Workers (regular salaried Casual workers

employees)

When a worker is engaged by someone or Workers who care casually engaged

by an enterprise and is paid wages on and in return get remuneration for the
regular basis. Such workers are called as work done are termed as casual
regular workers workers.
No regular income- no job security

They are hired on a permanent basis and They are not hired on permanent
so they enjoy social security benefits basis and so they do not enjoy social
benefits.

They account for 14.6% of India’s They account for 32.8% of India’s
workforce, workforce

Example: Professors, engineers, managers Example: construction labourer

etc

Regular Salaried Employees are found more in Urban areas than in Rural areas

• Big Enterprises that employ workers on a regular basis are found mainly in
urban areas.

• In rural areas people are mostly employed in farming. Many of them are
landless. Work is not regular.

Less number of women is found in regular salaried employment

• Women are less educated

• Very less number of women gets higher education and advanced skill training.

• Regular salaried jobs require higher education and advanced skills.

So, proportion of women in regular salaried employment is less.

CASUALISATION OF WORKFORCE

• People have been moving from regular salaried jobs and self employment to
casual work. It is called casualisation of workforce. Several people have lost
their jobs in IT sector recently due to recession.
• WORKERS ARE GROUPED IN TO THREE SECTORS- primary sector ,
secondary sector and tertiary sector

OCCUPATIONAL STRUCTURE OF INDIA

• Primary Sector is the main source of employment for majority of

workers of India.

• Secondary sector provides employment to about 24% of the workers.

• Tertiary sector provides employment to nearly 27% of the workers.

• In rural areas 64% of the workers are in primary sector. 20% workers
are in Secondary Sector and Service Sector employs 16% of rural
workers.

• Nearly 60% of the workers in urban area are in Service Sector.

Secondary Sector employs 35% of the workers. Only 5% are in primary
sector.

• Women workers are found mostly in rural areas.

Growth and changing structure of employment

• During 1960-2000, GDP of India grew positively and was higher than the
employment growth.

• There was fluctuation in the growth of GDP, but employment grew at a stable
rate of 2%.

• Late 1990s, employment growth started to decline and reached a place where
India was before the early stage of planning .

• These years, the gap between the growth of GDP and employment widened.
This trend is called jobless growth.

• Jobless Growth refers to a situation when the economy is able to produce

more goods and services without a proportionate increase in employment
opportunities.

• A substantial shift from farm work to non farm work.

• Secondary and service sectors are showing promising future.

• Casualisation of work force- the process of moving from self employment and
regular salaried employment to casual wage work.

• Self employment still continues to be the major employment provider but has
declined its share
 • Regular salaried persons share has stagnated-marginal fall too.

• Casual workers share increased.

Informalisation of work force

• 3/5th of Indian Workforce depends on agriculture.

• A situation where by the proportion of workforce in the informal sector to total

work force increases.

• Quality of employment deteriorated. Social security benefits denied.

• Employees in private sectors are paid low compared to that of public sector.

Employment structure in India

Formal Sector or Organised sector Informal sector or Unorganized sector

All the public sector establishments and private All those private enterprises which hire less
sector establishments which employs 10 or more than 10 workers.
hired workers. Workers working under this sector
are called as formal sector workers.

Workers working under this sector are called as Workers working under this sector are called
formal sector workers. as informal sector workers. Eg; farmers,
shop keepers (small), agricultural labourers.
Their standard of living is low.
Enjoys social security benefits and earn more than Do not enjoy social security benefits. No
those in the informal sector regular income

Govt protects them various ways through labour Do not have any protection or regulation
laws and can form trade unions to protect their from govt. Risk of dismissal without
interests. compensation.

This sector provides job for 7% of the total work 90% empt in this sector. Male workers
force. accounts for 69% of the workforce

Distribution of workforce in formal and informal sector

 • As economy grows- more workers in formal and less in informal.
(Refer text book for figures)

• In India more workers are in informal sector.

• Due to failure of formal sector in generating employment, India

started paying attention to enterprises and workers in the informal
sector.

• Govt initiated

– modernisation of informal sector enterprises.

– Provision of Social Security benefits

Meaning of Unemployment

• It refers to a situation in which people are willing and able to work

at the existing wage rate, but do not get work.

• It is confined to both skilled and unskilled workers

• Unempt is temporary. They are forced to do odd jobs in unhealthy

and unclean environment.

• How unemployment affects an economy? (lock down period)

– Inefficient utilisation of human resources

– Lower production

– Lower standard of living

Unemployment causes poverty. Burden of debt increases

Sources of Unemployment data

• Report of Census of India

– Collects info on the economic activity.

• NSSO

– Give annual estimate of employment and unemployment

• DGET
 – Provides info about the structure of employment,
occupational compositions and educational profile of
employees through Employment Market Information (EMI)
Scheme

Types of Unemployment in India

• Disguised unemployment

– Meaning

– Most prominent form of unemployment in the Agri. Sector

– Here marginal productivity of the surplus labour is zero;

which means contribution of extra workforce is zero.

• Seasonal Unemployment

– Mostly in agri sector.

– Workers work during agri seasons and migrate to cities in

search of job for rest of the months and will return back once
farming activities starts.

– Period of seasonal unempt varies from state to state,

depending upon the methods of farming, the condition of soil
and number of crops.

• Open unemployment

– It refers to that economic phenomenon in which persons are

able and willing to work at the prevailing wage rate but fail to
get work.

– Open unempt- totally idle workers

– Disguised unempt- workers seem to be working and do not

seem to be idling away their time.

Causes of unemployment

• Slow rate of economic growth- empt created under the plans could
not keep pace with the additions to the labour.

• Population Explosion- not able to absorb the large growing labour.

• Underdeveloped agriculture- primitive methods.

• Defective educational system- fail to make provision for imparting

technical and vocational education

• Slow growth of Industry- failed to generate empt due to shortage of

capital and lack of modern and adv tech.

• Decline in cottage industries- affected due to change in the

demand preference and emergence of efficient modern industries

• Faulty planning- could not stop migration, failed to emphasis on

empt generating programmes.

• Inadequate empt planning- low priority for empt objective in plan-

absence of any legal provision to implement empt generating
scheme.

• Low capital formation-job creation capabilities of agri and industrial

sectors adversely affected.

CAUSES of unemployment

• Slow rate of economic growth

• Population Explosion

• Underdeveloped agriculture

• Slow growth of Industry

• Defective educational system-

• Inadequate empt planning

• Faulty planning

REMEDIAL MEASURES of unemployment

• Accelerating eco. Growth

• Population control

• Development of agricultural sector

• Encouragement in small scale industries

• Improvement in infrastructure

• Spl empt programmes

• Creation of self employment opportunities

• Reform in education system

• Manpower planning

GOVT POLICIES AND EMPLOYMENT GENERATION

• Govt has taken many initiates to generate acceptable empt,

ensuring atleast minimal safety and job satisfaction

• Their efforts can be divided into

– Direct employment

– Indirect employment

• Govt provides direct employment by employing people in various

departments for administrative purpose.

• With increase in output of goods and services of govt enterprise ,

then pvt enterprises providing raw materials to govt enterprises will
also raise their output. As a result empt opportunity increases. This
is called indirect empt.

• Empt generation programmes

– NREGA, PMRY etc. to eliminate poverty through such empt

generation programmes