EMPLOYMENT – GROWTH INFORAMALISATION AND RELATED ISSUE

Introduction

WHY DO PEOPLE WORK?

Work plays an important role in our lives as individuals and as members of society. It is clear from the following.

1. People work for ‘earning’ a living which helps them and their families to survive.
2. Employment gives a feeling of self-worth and self-esteem.
3. Every working person is contributing to national and development of the country.

Basic Concepts

• Worker : A worker is an individual who is doing some productive employment to earn living. A worker contributes to the process of GDP by rendering his productive activities. Ex. farmers, managers, doctors etc.
• Gross Domestic Product (GDP). Sum total of the goods and services produced in the economy during a year is called GDP. A worker or an individual engaged in production activity contributes to the process of GDP by rendering his services.
• People included in workers : The term workers include all those people who’re engaged in work, whether for other (paid workers) or for themselves (self-employed workers).
• Economic Activities : All activities which contributes to GNP through production of goods and service are caused economic activities.
• Labour Force or Labour Supply : All persons, who’re working (have job) and thosen’t working but’re seeking an available for work’re deemed to be in the labour force. The team labour force is the total of employed and unemployed persons

Labour force = Persons working + Persons seeking

• Work Force : The no. of persons who’re actually employed at a particular time are known as work force. It includes all those persons who’re actually engaged in productive activities. Unemployed = labour force – Work force

Note: Children below 15 years and old persons above 60 years of age’re excluded from the labor force.

• Employment : Employment is an activity which enable a person to earn means of living. Full employment refers to a situation in which all the workers who’re capable of working and willing to work, get an employment at prevailing wage rates.

Type of Workers :

• Self-employment : An arrangement in which a worker uses his own resources, to make a living is known as self-employed. In case of selfemployment a person make uses of his own land, labour, capital, entrepenurship to make a living for ex-shopkeeper, traders, businessman etc.
• Hired Workers : Those people who’re hired by others and are paid wages or salaries as a reward for their services’re called hired workers.

Hire workers can be of two types.

• Casual workers : Those people who’re not hired by their employers on a regular / permanent basis and do not get social security benefits’re said to be casual workers Ex-Construction workers. As a reuslt, casual workers do not have : (a) Regual income (b) Protection or regulation from the government (c) Job security and (d) Social benefits. Casual workers account for 33 percent of India’s workforce.
• Regular workers : Those people who’re hired by their employers on a permanent basis and get social security benefits’re said to be regular workers Ex-teachers, Chartered Accountants, etc.
• Rate of Unemployment

No. of unemployed persons

Rate of unemployment = ^100

Labor force • Workforce participation Rate (or ratio)

Wage Force

Participation Ratio = ^100

Total Population

Working Population in India 2013 – 14

Sex	Working Participation Rate
	Total	Rural	Urban
Men	74.4	71.6	70.9
Women	25.8	27.2	16.2
Total	44.9	52.1	44.6

Wage Employment

An arrangement in which a worker sells his labor and earns wages in return is known as wage employment. Under wage employment, the worker is known as the employee and the buyer of labor is termed as an employer. In the case of wage employment, workers do not have any other resources (land, capital, and entrepreneurship) except their own labor. For example, a doctor running his own clinic is an example of self-employment. It includes both regular workers and casual workers.

Participation of People in employment

It refers to the participation of people in employment and is measured by the ‘Worker-Population ratio’. The worker-Population ratio is calculated by dividing the total number of workers between India by the population in India and multiplying it by 100.

Q. Distribution of Employment by Gender

1. Self-employment is a major source of livelihood for both men (51%) and women (55%).
2. Casual workers is the second major source for both men (31%) and women (37%).
3. In case of regular salaried employment, men are found in greater proportion (18%), whereas women form only 8 per cent. The reason for this could be skill requirement as regular salaried jobs require skills and a higher level of literacy.

Q. Distribution of Employment by region

1. Self employment is a major source of livelihood in both urban areas (42%) and rural area (56%). But, in case of rural area, self-employed workers are greater as majority of rural people are engaged in farming on their own plots of land.
2. In case of rural areas, casual workers is the second major source of employment with 37% of work force. Casual workers in urban areas account for 18%.
3. In urban areas, regular salaried employees is the second major source with 40% of work force Urban people have a variety of employment opportunities because of their educational attainments and skills. However, only 7% of rural people are engaged as regular salaried employees due to illiteracy and lack of skills.

Distribution of Workforce by Industry 2013 – 14 (in %)

Industrial Category	Place of Residence	Sex	Total
Rural	Urban	Male	Female
Primary Sector	60.8	8.2	45	57.3	46.9
Secondary Sector	19.2	30.4	19.1	14.9	22.2
Tertiary (or service)	20.0	61.4	35.9	27.8	30.9
Total	100	100	100	100	100

Q. Distribution of Employment in Different Sectors

In the course of the economic development of a country, labor flows from agriculture and other related activities to industry and services. In this process, workers migrate from rural to urban areas. All the working persons can be clubbed into three major sectors :

1. Primary sector includes agriculture, mining and quarrying, forestry and fishing.
2. Secondary sector includes manufacturing, electricity, gas and water supply.
3. Tertiary sector includes trade, transport and storage, and services like banking, insurance, etc.

1. Primary sector is the main source of employment (60.4 per cent), for majority of workers in India.
2. Secondary sector provides employment to only 15.8 per cent of work force.
3. 23.8 per cent of workers are engaged in the service sector. Trends in Employment Pattern (Industry) 1972 – 2014 (in %)

Year	Industrial Sectors
Primary	Secondary	Tertiary	Total
1972-1973	74.3	10.9	14.8	100
1983	68.6	11.5	16.9	100
1993-1994	64.0	16.0	20.0	100
1999-2000	60.4	15.8	23.8	100
2009-2010	53.2	21.5	25.3	100
2013-2014	46.9	22.2	30.9	100

Q. Distribution of Rural-Urban Employment in the different sectors is depicted through

a. Employment in Rural Areas

1. More than three-fourth of the workforce (76.7 per cent) in rural areas are engaged in primary sector (agriculture, mining and quarrying, etc.)
2. 10.8 per cent of rural workers are working in secondary sector (manufacturing industries, construction and other divisions).
3. Service sector or Tertiary sector provides employment to 12.5 per cent of rural workers.

b. Employment in Urban Area

1. In case of urban areas, primary sector has the least share with just 9.6 per cent. So, activities like agriculture or mining are not the major source of employment in urban areas.
2. The secondary sector gives employment to about 31.3 per cent of urban workforce.
3. People are mainly engaged in the service sector with 59.1 per cent of urban workers.

Q. Distribution of Employment (Male-Female) in Different Sectors

Male Employment

1. More than half of male population (53.8 per cent) are concentrated in the primary sector.
2. 17.6 per cent of male workers are engaged in the secondary sector.
3. Service sector provides employment to 28.6 per cent of male workers.

Female Employment

1. Women workers concentration is also very high in the primary sector. More than three-fourth of the female workforce is employed in the primary sector, whereas only half of males work in that sector. It happens because men get opportunities in both secondary and service sectors.
2. Only 11.8 per cent of female workforce are employed in the secondary sector.
3. The tertiary sector gives employment to about 13.1 per cent of female workers.

Q. Define Jobless Growth :

Ans.Jobless Growth

Economic growth occurs when GDP rises. It implies an increase in the level of output. An increase in the level of output is achieved in two ways:

(i) through greater employment, and/or (ii) through better technology. In poor countries like India where there is staggering unemployment, economic growth becomes meaningful only when it is associated with greater opportunities for employment. so that poverty is combated. If economic growth is driven only by innovative technology, it fails to improve the level of employment in the economy. Such growth is called ‘jobless Growth’. Indian experience during the recent past suggests the occurrence of jobless growth. Since the beginning of economic reforms in 1991, our economy has certainly become more vibrant than ever before.

Opportunities of employment have failed to rise proportionately to the GDP growth. The reason is this: Our growth process is being increasingly hijacked by MNCs. (multinational companies). These companies specialise in achieving high growth through efficient technology rather than through greater use of manpower.

Q. Define Casualisation of Workforce

The process of moving from self-employment and regular salaried employment to casual wage work is known as the casualisation of the workforce. Distribution of Workers by category of Employment 1972 – 2014 (in %)

Year	Category of Employment
Self –	Regular salaried	Casual wage	Total
	employed	Employees	Workers
1972-1973	61.4	15.4	23.2	100
1983	57.3	13.8	28.9	100
1993-1994	54.6	13.6	31.8	100
1999-2000	52.6	14.6	32.8	100
2009-2010	51.0	15.6	33.5	100
2013-2014	49.5	16.5	30.9	100

Q. What’re the reasons for increasing Casualisation?

Ans. Reasons for increasing casualization are :

1. Self employed small and marginal farmers’re becoming casual worker due to low scope of earning in agricultural activities.
2. Displacement of workers from large industries has shifted the status of regular workers to the casual workers.
3. Slow growth of employment in the organised sector is also a reason for workers taking up casual jobs.
4. Increase in the demand for casual labour in expanding construction, trade and service activities in rural areas also lead to casualisation of work force.

Q. Explain Informalisation of Workforce

It refers to a situation whereby the proportion of the workforce in the informal sector to the total workforce increases. In short, formalization means irregularity of jobs. The employment structure in India can be divided into 2 types :

1. Formal / organised sector
2. Informal / unorganised sector

1. Formal /Organised Sector : All the public and Private enterprises establishments which employ 10 or more hired workers are called formal sector establishments. Formal workers enjoy social security benefits and earn more than those in the informal sector. There condⁿ of work and employment’re safeguard by labour laws and they can form trade union to protect their interest.
2. Informal / Unorganised Sector : In includes all those private enterprises which hire-than 10 workers. For ex. Farmers, agriculture labour, owners of small enterprises etc. Worker in these enterprises donot get regular income and they don’t have any protection or regular from the govt. i.e., they can be dismissed witout any compensation.

Employment in Organised and Unorganised sectors

Sector	Employment (Million)
1983	1994	1999-00	2009-10
Total Employment	302.75	374.45	397.00	460.17
Organized sector employment	24.01	27.37	28.11	29
Public Sector	16.46	19.44	19.41	18
Private Sector	7.55	7.93	8.70	11
Unorganized sector employment	278.7	347.08	368.89	431

Q. Explain Meaning of Unemployment

Unemployment refers to a situation in which people are willing and able to work at the existing wage rate, but do not get work.

Q. Explain Nature of Unemployment

In developed countries, unemployment is temporary because everybody gets work in due course of time. But in developing countries like India, it is never-ending. It is largely due to the slow growth of capital formation as compared to the increase in the labor force.

Q. Explain the types of unemployment in rural areas?

Rural Unemployment

1. Disguised (Hidden) Unemployment : It refers to a state in which more population are engaged then they’re really needed. Even if extra workforce is withdrawn the total production will remain unaffected. For ex. if two workers’re needed on a piece of land and five workers’re enganged on the same job then 3 workers’re disguished unemployed.
2. Seasonal Unemployment : It occurs simply because agriculture is a seasonal occupation. Crop’re grown according to respective season. They’re no work to do. The volume of seasonal unemployment depends upon the condⁿ and methods of cultivation in different states.
3. Open Unemployment. In the agricultural sector, there are large number of landless workers who are openly looking for work, Open unemployment or chronic unemployment is a situation where a largenumber of labour force does not get work opportunities which will get them regular incoming.
4. Explain the types of Unemployment in Urban areas ?
5. Industrial unemployment : It refers to the unemployment among the illiterate, who wish to work in industrial establishments. Problem of unemployment in industrial sector has also increased because of rapid increase in population. Also rural population rush to urban areas in search of employment when they find nowork in agriculture, but industry in India hasn’t expanded so much as to absorb the ever increasing labour force. Volume of unemployment in industrial sector therefore increases when all job-seekers don’t get employment.
6. Educated unemployment: It refers to the unemployment among the educated people. Even expansion of the educational institutions, viz, universities, colleges, schools, the no. of educated persons has substantially increased. The education system in India isn’t job-oriented, it is just degree oriented. Educated persons often fail to find jobs. In India, employment opportunities have not increased as much as the no. of educated persons. No wonder, the no. of educated unemployed registered with employment exchange has been on the increase. Technological Unemployment. Technological up-gradation is taking place in all spheres of activity. People who have not updated their skills in the latest technology become technologically unemployed.

Define Youth Unemployment?

It implies unemployment among the population in the age group of 1529 years. This type of unemployment exists both in rural and urban areas and is more among the educated looking for white-collar jobs. Unemployment among the youth is the root cause of their frustration which often drives them towards anti-social activities.

Explain other Types of Unemployment prevailing both in rural and urban areas?

Open Unemployment: Open unemployment refers to that situation whose in although the worker is willing to work and he has the necessary ability to work yet he doesn’t get work. He remains unemployed full-time. He is totally dependent on the other earning members of the family.

Structural Unemployment: Structural unemployment occurs due to structural changes in the economy. Structural charges are broad of two types :

1. Changes in technology : As a result of which old technocrafts’re no longer needed, they’re rendered unemployed.
2. Changes in the pattern of Demand : Because of which certain industries’re closed down of the workers’re thrown out.

3. Frictional unemployment : Frictional unemployment is a temporary phenomenon. It results when some workers’re temporarily out of work while changing jobs. It can also be due strikes or lockouts.
4. Cyclical unemployment : It is the most common type of unemployment in the development economices. It is associated with the downward and depression phases of business cycle.

Measurement of Unemployment

There are three sources of data on unemployment:

1. Reports of Census of India,
2. National Sample Survey Organisations reports on employment and unemployment situation, and
3. Directorate General of Employment and Training data of registration with employment exchanges.

Q. Explain Causes of increasing unemployment in India

1. Slow economic growth : In underdeveloped econmics the rate of economic growth is very low. This slow growth rate fails to provide enough employment opportunities to the rising population. Supply of labour is much more than the available employment opportunity.
2. Rapid growth of population : Constant increase in population has been one of the main causes of unemployment.
3. Agriculture a seasonal occupation : Agriculture offers seasonal employment. It is the primary occupation of our country and a large chunk of the population depends upon it, but it seasonal character doesn’t provide work to the farmers all the year round most of the farmers remain idle for three to four months in the year.
4. Lack of irrigation facilities : Irrigation facilities’re provided only to 34% of agriculture area for want of irrigation only one crop is grown in a year on a large part of agriculture land. Consequently, the farmers remain unemployed for quite sometime during the year.
5. Joint family system : It encourages disguished unemployment. In big families’ve large business, many such persons’re found who don’t have any work and depend on the joint income of the family. Joint family system is more prevalent in rural areas, hence a highdegree of disguished unemployment exists there.
6. Low savings and investments : There is shortage of capital in India and even the scarce capital hasn’t been wisely invested. Bulk of the capital has been invested in large-scale industries with high capital ratio.
7. Defective Educational System : The prevailing education system in India is full of defects as it fails to make any provision for imparting technical and vocational education. As a result, educated people are unable to meet the requirements of the firm. Mismatch of manpower quality and manpower requirement leads to unemployment among the educated.
8. Slow Growth of Industry : The slow growth of industrial sector has contributed to unemployment among the industrial workers. Due to shortage of capital and lack of modem and advanced technology, industrial sector could not gain its momentum and could not generate sufficient employment opportunities in the country.
9. Decline of Cottage and Small-scale Industries : A number of traditional village and cottage industries have declined over the years due to change in the demand preferences and emergence of more efficient modern industries. As a result, a large numberof people have become unemployed.

Adverse Effects of Unemployment in India

Adverse Effects of Unemployment

1. Economics Effects :
   1. Loss of Human Resource. Human resource is valuable. In an unemployment situation, able and willing people do not get work. It is a waste of manpower and loss of valuable human resource.
   2. Loss of Output. The economy loses its level of output, national income and rate of growth because human resources are not utilised. Due to underutilisation of manpower, economy cannot produce at desired level.
   3. Low Capital Formation. Capital formation in a country depends upon investment and investment depends upon saving, Saving depends upon ability to save i.e. income, willingness to save and opportunity to save.Therefore, capital formation ultimately depends upon income. Unemployed people do not earn, hence, there are no savings and capital formation falls.
   4. Low Productivity. Due to lack of employment opportunities, growth of population, decay of small and cottage industries, etc., the pressure is felt on land. It results in low productivity. Low productivity leads to low per capita output which causes low per capital income i.e., low growth rate in the economy.
2. Social Effects
   1. Rise in Poverty. Unemployment and poverty are related problems. Generally, a person without a job contributes nothing to the production activity Unemployed person is dependent upon others for satisfying his basic needs. In this way unemployment leads to poverty.
   2. More Income Inequality. Higher the level of unemployment, greater the extent of inequality in the distribution of income and wealth in the economy. This becomes an important cause of failure of objective of ‘growth with social justice’ of economic planning.
   3. Low Standard of Living. Unemployment lowers Quality of life. Unemployed persons are not able to meet their requirements of day to day life. It implies a state of perpetual suffering.
   4. Social Unrest. Unemployment adversely affects peace of a society Unemployment leads to theft, dacoity, deception, gloom, etc.
   5. Class Struggle. Unemployment divides the society into two groups: rich and poor. It creates problems like glass conflicts.
   6. Cause of Depression. Unemployment is a curse and a calamity. An able-bodied person willing to work but unable to get a job creates a sense of unwontedness and frustration for the unemployed person. Unemployment results in starvation for the family of the unemployed person.

Measures of to solve Unemployment Problem

The unemployment prob. can be solved with the help of the following measures :

1. Population control : There is need to control the growth rate of population. So that the number of new entrants to the labour market can be reduced.
2. Development of Agriculture sector : Acceleration of agriculture growth is important to increase labour productivity equality of employment for large number of the existing labour force.
3. Development of village and small industries (VSI) : VSI are less capital intensive. They employ more labour per unit of capital. Thus, development of VSI will help to solve the prob. of unemployment in both rural and urban areas.
4. Special employment programmes : They aimed at providing wage employment and self employment opportunities should be implemented.
5. Creation of self employment opportunities : Govt. should provide various facilities like financial assistance, training of skills, supply of inputs etc. to generate more self employment opportunities.
6. Improvement in infrastructure : The infrastructural facilities like, health, education, irrigation , electricity, roads etc are critical for overall development of the economy.
7. Accelerating Growth rate of GDP : The aggregate employment problem can be solved through the process of accelerated growth which wouild create additional for labour and also provide the increase in labour productivity.

Q. Government Policies and Employment Generation

Govt. efforts can be broadly categorized into two aspects :

1. Direct employment : Govt. provides direct employment by employing population in various departments for administrative purposes and in different inductries, hotels, transport companies etc. run by govt.
2. Indirect employment : With increase in output of goods and services of govt. enterprise, private entrprises. Providing row material to govt. enterprises will also raise their output. As a result, the number of employment opportunities in the economy will increase. This increase is known as indirect employment by government.

Q. Raj is going to school. When he is not in school, you will find him working on his farm. Can you consider him as a worker? Why?

Ans. Raj is disguisedly unemployed.

Q. All establishment with four hired workers is known as

(formal/informal) sector establishment.

Ans. Informal.

Q. Compared to urban women, more rural women are found, Working.

Why?

Ans. The participation rate for women is higher in rural areas compared with urban areas. It is because, in rural areas, poverty forces women to seek employment. Without education, women in rural areas find only less productive jobs and get low wages, In urban areas, men are able to earn high incomes. So they discourage female members from taking up jobs.

Q. Meena is a housewife. Besides taking care of household chores, she works in the cloth shop which is owned and operated by her husband. Can she be considered a worker? Why?

Ans. Meena is a self-employed worker. She is working in her husband’s cloth shop. She will not get a salary.

Q. Find the odd man out (i) rickshaw puller who works under a rickshaw owner (ii) mason (iii) mechanic shop worker (iv) shoeshine boy.

Ans. Shoeshine boy

Q. The following table shows the distribution of the workforce in India for the year 1972-73. Analyze it and give reasons for the nature of workforce distribution. You will notice that the data is pertaining to the situation in India 30 years ago.

Place of Residence	Workforce (in million)
	Male	Female	Total
Rural	125	70	195
Urban	32	7	39

Ans. In 1972-73, out of a total workforce of 234 million, 195 million were in rural areas and 39 million in urban areas, It shows 83% workforce

lived in rural areas. Gender differences were also observed. In rural areas, males accounted for 125 million workforce and women 70 million of Workforce. In urban areas, 32 million males formed the workforce whereas the women workforce was only 7 million. In the country, only 77 million female workers were there as compared to 157 million male workers. In other words, 32% of female workers were there and 68% male workers were there in the country in 1972-73, The data shows:

1. pre dominance of agriculture.
2. more male workers both in urban and rural areas.
3. less female workers in both rural and urban areas. Also, female workers were much lesser in urban areas.

Q. The following table shows the population and worker population ratio for India in 1999-2000. Can you estimate the workforce (urban and total) for India?

Q. Why are regular salaried employees more in urban areas than in rural areas?

Ans. In urban areas, a considerable section is able to study in various educational institutions. Urban people have a variety of employment opportunities. They are able to look for an appropriate job to suit their qualifications and skills. But in rural areas, people cannot stay at home as they are economically poor.

Q. Why are fewer women found in regular salaried employment?

Ans. Female Workers give preference to self-employment than to hired employees. It is because women, both in rural and urban areas, are less mobile and thus, prefer to engage themselves in self-employment.

Q. Analyse the recent trends in the sectoral distribution of workforce in India.

Ans. 1. The data of occupational structure for the year 2011-12 is as follows:

(a) Industry-wise the distribution is:

1. 48.9% of Workforce is engaged in primary sector.
2. 24.3% of workforce is engaged in secondary sector.
3. 26.8% of Workforce is engaged in tertiary sector.

(b) Area wise the data is:

1. In rural areas:

77% of the Workforce is in the primary sector. 11% of the workforce is in the secondary sector; 12% of Workforce is in the tertiary sector.

1. In urban areas:

10% of the workforce is in the primary sector.

31% of the workforce is in the secondary sector.

59% of the workforce is in the tertiary sector.

2. The data reveals that:
   1. Economic backwardness in the country as 60% of workforce is engaged in agricultural activities. A large proportion of population depend on agriculture for their livelihood.
   2. In urban area, tertiary sector account for 59% of workforce. It shows development and growth in the tertiary sector and the tact that this sector is able to generate sustainable employment and provide livelihood to 59% of the workforce.
3. It can be concluded mat in the urban areas, tertiary sector is the main source of livelihood for majority of workforce.

Q. Compared to the 1970s, there has hardly been any change in the distribution of the workforce across various industries. Comment.

Ans. It is true that not much change is observed in the distribution of the workforce across various industries. It is because the plans did not emphasize the need for the development of:

1. non-agricultural rural employment industries.
2. small scale, village and cottage industries,

Q. Do you think that in the last 50 years, employment generated in the country is commensurate with the growth of GDP in India? How?

Ans. Jobless growth is defined as a situation in which there is an overall acceleration in the growth rate of GDP in the economy which is not accompanied by a commensurate expansion in employment opportunities.

This means that in an economy without generating additional employment we have been able to produce more goods and services. Since the starting of economic reforms in 1991, our economy is experiencing a gap between GDP growth rate and employment growth rate – that is, jobless growth.

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