Employment: Growth, Informalisation and Other Issues Revision Class 11 Notes CBSE Economics Chapter 6 (Free PDF Download)

Worker

A worker is a person who earns a living by engaging in some form of productive activity.

Types of Workers:

a. Self-Employed: Workers who own and operate a business for a living are referred to as self-employed. Consider a farmer who is working on his own farm. More than half of the workforce falls into this category.

b. Hired Workers: Hired workers are persons who are hired by others and are given wages and salaries in exchange for their services. The two types of hired workers are:

• Casual Workers: Casual workers are those who are not engaged on a regular/permanent basis by their companies, and are given wages on an hourly/ day basis, and do not receive social security benefits.

• Regular Workers (Salaried): Regular salaried employees or regular workers are those who are employed by someone or an organisation on a regular basis and are paid their salaries on a regular basis.

Economic Activity

It refers to the activity performed by people to earn a living. Consumption, production, and distribution are the three primary forms of economic activities.

a. Production Activity

It refers to all those activities which are undertaken to produce goods and services for generation of income.

b. Consumption Activity: The usage of products and services by a household is characterised as consumption. It is used to calculate the Gross Domestic Product (GDP). Consumption is commonly used by macroeconomists as a proxy for the total economy.

c. Distribution Activity: Work directly associated with the construction, operation, and routine maintenance (other than major overhauls) of substation plant, overhead mains, underground cabling and jointing, pole inspection and street lighting, customer emergency services, and tree trimming and removal within minimum approach distances to energised conductors currently performed by Distribution Activities.

Labour Force

All persons, who are working (have a job) and those who are not working but are able and willing to work at the existing wage rate constitute the labour force.

Labour Force = Persons working + persons seeking and/or available for work.

Labour Supply

It refers to the amount of workers who are willing to work, corresponding to a particular wage rate.

Work Force

• The number of persons who are actually employed at a particular time are known as the workforce. 

• It encompasses all individuals who are actively engaged in productive endeavours. This includes people between the age group of 15-60 years.

Work Force Participation Ratio (WPR)

• It is calculated as the ratio of a country's workforce to its entire population.

$WPR = \dfrac{{{\text{ Total number of workers }}}}{{{\text{ No}}{\text{. of work population in India }}}} \times 100$

• It aids in determining the percentage of a country's population that actively participates in the creation of products and services.

• The rate of participation in metropolitan areas is around 35%.

• The rate of involvement in rural areas is around 41%.

• In metropolitan regions, men participate at a rate of 54.3 percent and women at 13.8 percent.

• In rural areas, men participate at a rate of 54.7 percent and women at a rate of 26.1 percent.

• The country's overall participation percentage is around 39.2 percent.

Employment In Firms, Factories And Offices

• The migration of labour from agriculture and other related sectors to industry and services during the course of a country's economic development Workers migrate from rural to urban areas as part of this process.

• In general, we categorise all producing activities into the following industrial divisions:

• Agriculture, forestry, and logging, as well as ashing , mining, and quarrying, are all part of the primary sector.

• Manufacturing, building, electricity, gas, and water delivery are all examples of the secondary sector.

• Trade, transportation, storage, and services are all part of the tertiary sector.

Jobless Growth

It is characterised as a condition in which the economy's growth outpaces job prospects, resulting in unemployment.

a. Casualisation of Employment

Casualisation is a term used to describe a situation in which the percentage of workers hired on a temporary basis increases over time. People start working as casual labourers due to a lack of chances in the organised sector. Furthermore, the freedom in terms of working conditions, as well as the lack of particular enforcement of labour laws, encourages businesses to hire more casual workers.

b. Informalisation of Employment

Refers to a situation when people tend to find employment more in the informal sector of the economy, and less in the formal sector of the economy. Workers transitioning from permanent employment to casual and fixed-term contracts, outsourcing, and employment through labour brokers are all examples of informalisation. Many individuals who have previously worked in a formal job will most likely re-enter the workforce as an atypical employee.

Unemployment

It occurs when a person is ready and willing to work at the current wage rate but is unable to find work.

Unemployment Rate

It is calculated as the percentage of the labour force who are unemployed, not as a percentage of total population. It is calculated as:

$\dfrac{{{\text{ Number of person unemployed }}}}{{{\text{ Size of labour }}}}  \times 100$                

Types of Unemployment

• Rural unemployment: It is defined as unemployment that occurs in rural areas. There are two types:

• Seasonal Employment: It describes a situation in which a large number of people are unable to obtain work during a specific season. Agriculture, ice cream factories, woollen mills, and other industries are examples.

• Disguised Employment: When the marginal physical productivity of labour is zero or negative, it is referred to as "disguised employment."

• Urban Unemployment: It refers to the employment occurring in urban areas. There are three types:

• Industrial Unemployment: This category includes illiterate people who want to work in industries, mining, transportation, trading, and construction, among other things.

• Educated Unemployment: Among the educated people, apart from open unemployment, many are underemployed because their qualification does not match the job. Faulty education system, mass output, preference for white collar jobs, lack of employable skills and dwindling formal salaried jobs are mainly responsible for unemployment among educated youths in India.

• Technological Unemployment: As a result of technological advancements, an economy may experience some structural unemployment. Such unemployment may be described as technological unemployment. Some workers are being replaced by machines as a result of the introduction of new machinery, improvements in manufacturing procedures, labor-saving technologies, and so on.

• Causes of Unemployment

1. Slow Economic Growth: In the Indian economy, the rate of growth is very slow. This poor rate of growth does not give adequate job possibilities for the growing population. Supply of labour is much more than the employment opportunities.

2. Rapid Growth of Population: Constant increase in population has been a grave problem in India.It is one of the primary reasons for unemployment. The number of unemployed have increased instead of decreasing during the plan period.

3. Inadequate Employment Planning: India's five-year plan was not created with the goal of creating jobs in mind. The unemployment problem was assumed to be solved through economic expansion.

4. Over Use of Foreign Technology: Due to the expensive expense of indigenous technology, excessive use of foreign technology has resulted in technical unemployment in the country.

5. Shortage of Financial Resources: A lack of financial resources has hampered the expansion and diversification of agriculture and small-scale industry. This has been accompanied by a tightening of government control over the economy.

Government and Employment Generation

• The National Rural Employment Guarantee Act, 2005 was passed by the government in parliament in 2005. 

• It provides all rural households who volunteer to conduct unskilled manual labour 100 days of guaranteed paid employment. 

• This programme is one of many that the government has put in place to help persons who are unemployed in rural areas find work. 

• Since the country's independence, the federal and state governments have played an essential role in creating jobs or chances for job creation. 

Their efforts can be divided into two categories:

a. Direct Employment: In this case, the government hires employees for administrative purposes in several departments. It also owns and operates factories, hotels, and transportation companies, providing direct employment to individuals.

b. Indirect Employment: When the output of goods and services from government enterprises increases then private enterprises which receive raw materials from government enterprises will also raise their output and as a result, the number of job opportunities in the economy will expand.

Employment: Growth, Information, and Other Issues Class 11 Notes

Importance of Employment

Work or employment plays an important role in our lives as individuals and as members of society. People aim to get engaged in work for earning and living. A very few people who get or inherit money are not working for it. This does not completely satisfy everybody. It is well understood that being employed in work gives us a sense of self-worth and enables us to relate ourselves expressively with others.

Every working person is actively contributing to national income and therefore, the development of the country, by engaging in various economic activities that are the real meaning of earning a living.

We do not work for ourselves only; we also develop a sense of achievement when we work to meet the requirements of those who are dependent on us as our family. Having recognized the importance of work, it is imperative to understand that education and training should be given much importance to self-reliance.

Studying the working class of people gives us insights into the characteristics and nature of employment in India and helps in understanding and planning our human resources. It also helps us to analyze the contribution made by different industries and sectors towards national income. Studying about working people helps us to deal with many social issues like exploitation of marginalized sectors of the society.

Basic Concepts

First and foremost, let us understand some basic concepts relating to employment such as worker, labour force, and workforce.

Worker

A worker is an individual who is engaged in some kind of economic activity to earn a livelihood.

• A working individual contributes to the process of gross domestic product (GDP) by rendering his productive activities.

• Farmers, managers, labourers, doctors, barbers, professors, etc. are some examples of workers.

Who is Included in ‘Workers’?

It is generally believed that people who render their service and are paid by an employer are workers. However, it is not entirely true.

Workers also include those people who are self-employed like shopkeepers, barbers, painters, etc. It also includes those people who are out of work temporarily due to illness or physical disability or some other reasons. It also includes those individuals who help the main workers in whatever capacity they have.

Nature of Employment in India

The nature of employment in India is versatile. Some workers get paid throughout the year, some are seasonal workers, and i.e. they are paid only for a few months in a year. Some workers do not get fair wages for their work. However, every individual who is engaged in some kind of economic activity is called employed.

Labour Force

The Labour Force includes all those individuals who are engaged in some work in whatever capacity-high or low, and who are seeking and are available for work.

Labour force = Individual working + Individual seeking and/ or available for work.

In other words, the Labour Force includes both employed and unemployed individuals. 

The Labour Force does not include the work by women at home as cooks, fetch water, grocery, etc. or participate in farms because they are not paid for them. 

WorkForce

The WorkForce includes those individuals who are engaged in both economic and non-economic activities. The workforce includes women working at home carrying their household chores. 

Participation of People in Employment

Worker Population Ratio is an indicator, which is used to evaluate the employment situation in the country. It is calculated by dividing the total number of workers in India by the total number of population and then multiplying by 100.

WPR =

Totalnumberofworkers/No.ofPopulationinIndia

Totalnumberofworkers/No.ofPopulationinIndia X  100

The worker population ratio is very useful in formulating the proportion of the population that is actively contributing to the production of goods and services of a country. Higher ratios notify that a high proportion of its population is involved in economic activities and medium ratios notify that fewer people are engaged in economic activities.

It also indicates the status of the workers in society and their working conditions. By understanding the status of the workers, it is possible to determine the quality of employment in a country.

Meaning of Employment

Employment is an activity that enables an individual to earn some means of livelihood. It refers to an arrangement by which a person earns income or ways of living. Employment is of two types:

1. Self Employment

2. Wage Employment

Self-Employment

Self-Employment is an activity where a worker uses his own resources to make a living, is known as self-employment. Workers or individuals who operate an enterprise and work on their own to earn a living are called Self-employed.

• Around 52% of the workforce belongs to the category of self-employment.

• In the case of self-employment, an individual makes use of his own land, labour, capital, and entrepreneurship in order to earn a livelihood like shopkeepers, barbers, traders, etc.

Wage Employment

Wage Employment is an activity in which a worker renders his labour and earns remuneration in return. Under this employment, a worker is known as an employee and the person who buys labour is called an employer like doctors running his own clinic is an example of self-employment but if the doctor is employed by a hospital, then it will be wage employment.

• Workers under wage employment don’t possess any other resources like land, capital, and entrepreneurship except their own labour. They offer their labour service in return to get remuneration.

Wage Employment is of Two Types:

I. Regular workers

II. Casual workers

Regular Workers

When a worker is hired or engaged by someone or by an enterprise and is paid remuneration on a regular basis then such workers are called regular salaried employees.

Example: Professors, teachers, Engineers, etc.

Casual Workers

Workers who are casually engaged in some activity or work and get remuneration in return for the work done are called casual workers.

Distribution of Employment in Different Sectors

As the country is developing economically, the labour is flowing from the agricultural sector to other industrial and service sectors. In this process of distribution of employment, people migrate from rural to urban places in search of work. Eventually, to accommodate the number of workers, the industrial sector enters into rapid expansion. This shift can be understood in the terms of the distribution of employment in other sectors.

The sectors other than agriculture are manufacturing, construction, transport and storage, mining, electric, gas and water supply, trade, and services.

• The Primary Sector that includes agriculture, mining, etc. holds the majority of workers in India.

• Secondary Sector like Manufacturing, Electricity, gas, and water supply and construction provides employment to 24.3% of the workforce.

• The Service Sector provides employment to 26.8% of workers.

Growth and Changing Structure of Employment

In the last five decades, the development of the county always aimed at expansion of the economy through an increase in national product and employment. In the last fifty years, the GDP of India grew exponentially and higher than the employment growth. There had always been a fluctuation in the GDP’s growth but employment steadily grew at the rate of 2%.

However, in the 1990s, the growth of employment started to decline and reached the stage that India had in the early stages of planning. During these years the gap widened between the GDP and employment. This means that in the Indian economy, there was an increase in the growth rate of GDP without the expansion in employment opportunities. This trend is termed Jobless Growth.

Jobless Growth

This term refers to a situation when the economy of the country is able to produce more goods and services without a proportionate expansion in employment opportunities.

Casualisation of Workforce

The process of shifting from self-employment and regular salaried employment to casual wage work is called the Casualisation of the workforce. 

Informalisation of Indian WorkForce

This refers to a situation wherein an individual makes a shift in the workforce from the formal sector to the informal sector resulting in a decline in the proportion of the workforce in the formal sector and simultaneous acceleration in the informal sector’s workforce.

The reasons for Informalisation of WorkForce are:

1. There is a drastic decline in employment in the organized sector due to privatization and liquidation.

2. Existing industrial units are reducing the labour force to remain competitive in the market.

3. The organized sectors are adopting new technologies that are automated to ensure competitiveness, thus not creating many job opportunities.

4. The strict labour laws have forced the organized sector to Informalisation of labour resulting in a decline in employment opportunities.

5. Migratory nature of the workforce.

Due to the above reasons, there is a slow expansion in employment opportunities in the organized sector.

Meaning of Unemployment

Unemployment is the most serious issue found in most developing countries in the world.

Unemployment is a situation wherein an individual is willing and able to work at the existing wage rate but does not get work. It is not only confined to unskilled workers but also to skilled workers who fail to get jobs for long periods.

Types of Unemployment in India

The major types of unemployment in India are Disguised Unemployment, Seasonal Unemployment, and Open Unemployment.

Disguised Unemployment

When more people are engaged in a particular work than really needed, then it is termed as Disguised Unemployment.

If two workers are needed to work on one piece of land but five workers are engaged for the same work then the remaining three workers are disguised employees. In this situation, all workers seem to be employed but the contribution of the excess workers towards productivity is nil.

Seasonal Unemployment

Seasonal Unemployment occurs when the workers are employed for only a few months in a year and they become unemployed for the other months.

In the agricultural sector, the work is seasonal and there are no other employment opportunities for people in rural areas for the entire year. So when there is no work in the fields then people come to urban areas in search of work.

Open Unemployment

Open Unemployment refers to an economical phenomenon in which persons are willing to and able to work at the prevailing wage rate but fail to get work. It is called open unemployment because such unemployment can be seen and counted in terms of the number of unemployed people.

Open Unemployment is different from Disguised Unemployment because, in open unemployment, workers are totally redundant whereas, in the case of disguised unemployment, workers appear to be working and do not seem to be idling away their time.

Industrial Unemployment

Industrial Unemployment refers to unemployment among them illiterates who wish to work in the industrial sector. With the increase in the migration of workers from rural to urban areas, industrial unemployment in the country is increasing.

Educated Unemployment

Educated Unemployment refers to unemployment wherein educated people are not employed or jobless. The rapid growth in education in India has given a steep rise in educated people but not many opportunities for employment can be generated.

Structural Unemployment

Structural unemployment refers to the unemployment in which people remain unemployed because of a mismatch between the demand for specific work and the unskilled worker.

Causes of Unemployment

The reasons for unemployment in India are due to many factors. They are:

1. Slow Rate of Economic Growth: The growth of the Indian economy is very slow and has not increased as expected in the last five decades. This means income that is contributed to the national income generated through the creation of employment opportunities is not enough.

2. Population Explosion: Rapid growth of population is another factor responsible for rising unemployment in India. It has not been possible to generate so many employment opportunities to accommodate such a large growing labour force.

3. Underdeveloped Agriculture: Agriculture is the primary occupation in the rural areas. Most of the people in rural regions are engaged directly or indirectly with agricultural activities. Agriculture is a seasonal occupation in India, so most of the workers become unemployed after the seasonal months.

4. Defective Educational System: The prevailing education system in India is not adequate and has many defects. It fails to provide technical and vocational education.

5. Slow Growth of Industry: The industrial sector does not gain much momentum due to a lack of modern and advanced technology. Hence, sufficient employment opportunities are not generated in the country.

6. Decline of Cottage and Small-Scale Industries: A lot of small scales and cottage industries have declined in the last few decades due to the change in the preferences of people and thus has created unemployment for many.

7. Faulty Planning: The government failed in its plans to stop the migration of people from rural to urban areas. Their plan could not encourage the use of labour-intensive techniques of agriculture and industrial production. Improper infrastructure facilities have greatly hampered the expansion of work opportunities.

8. Low Capital Formation: Low capital rate formation has affected severely the growth potential in the agricultural and industrial sectors.

Remedial Measures for Unemployment

The problem of unemployment in India can be solved with the help of the following measures:

1. Accelerating growth rate of GDP.

2. Control of population growth.

3. Development of the agricultural sector.

4. Encouragement to small-scale industries.

5. Improvements in Infrastructure.

6. Special Employment Programs.

7. Improvement of Employment Exchanges.

8. Creation of self-employment opportunities.

9. Reform of Educational System.

10. Manpower Planning.

Government Policies and Employment Generation

The Government of India is making efforts to generate sufficient employment opportunities for unemployed people indirectly and directly.

Directly, the government is providing job opportunities by employing people in various sectors for administrative purposes, industries, hospitality services, transport corporations, etc. Indirectly, the government has provided plenty of employment opportunities to millions of entrepreneurs to start their own production through the new Policy of Liberalization, Privatization, and Globalization formed in 1991.

There are many self-employment programs that aim at providing financial assistance to self-help people and create employment opportunities for self-employed and wage employed individuals like Swarnajayanti Gram Swarozgar, Swarnajayanti Shahari Rozgar.

Conclusion

There has been a change in the structure of the workforce in India with the expansion of the service sector and the advent of new technologies. Now small-scale enterprises and individual enterprises can work with multinational companies. Outsourcing work like housekeeping and sanitation functions has created employment opportunities. With the advent of the Internet, many people have started to work from home. The GDP has increased rapidly in the last two decades but not many employment opportunities are getting generated. The government is taking many initiatives in generating employment opportunities, especially in rural regions.