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chapter 6 Employment : Growth, Informalisation And Other Issues
People engage in various types of work, contributing to the economy and society. Work provides income, a sense of self-worth, and enables meaningful relationships. It contributes to national income and development. Understanding employment helps us analyze human resources, sectoral contributions to income, and address social issues like exploitation and child labor. Mahatma Gandhi emphasized work-based education and training. Examining the nature and quality of employment is crucial for understanding a country's development.
Introduction
People perform diverse types of work, from farming and factory jobs to work in offices, shops, and homes. Modern technology has expanded the types of work that can be done from home. Work is essential for earning a living, but also provides individuals with a sense of self-worth and allows them to contribute to society and national income. Working to meet the needs of dependents provides a sense of accomplishment. Understanding employment helps analyze labor force quality, sectoral contributions to national income, and social issues.
Variety Of Work
Work encompasses a wide range of activities in various settings.
Why Do People Work?
People work for income, self-worth, social connection, and to support dependents.
Sense Of Self-worth And Contribution
Work contributes to individual well-being and national development.
Studying About Working People
Analyzing employment patterns provides insights into human resources, economic contributions, and social issues.
Workers And Employment
Understanding who is considered a worker is fundamental to analyzing employment. Economic activities are those that contribute to the country's **Gross National Product (GNP)** (total value of goods and services produced domestically plus net income from abroad). The money value of goods and services produced within a country in a year is its Gross Domestic Product (GDP).
Definition Of Employment
Being engaged in economic activities is considered employment.
h3 class="yellowheading">Economic Activities Contribute To Gross National Product (GNP)
Activities that add value to the national product are economic.
h3 class="yellowheading">Definition Of Workers
All individuals engaged in economic activities, regardless of their capacity or whether they are paid, are considered workers. This includes those temporarily absent due to illness or other reasons, as well as self-employed individuals and those assisting main workers.
h3 class="yellowheading">Nature Of Employment In India
Employment in India is diverse, with some having year-round jobs and others only seasonal work. Fair wages are not always guaranteed.
h3 class="yellowheading">Workforce In India (2017-18)
In 2017-18, India had a workforce of approximately 471 million people. The rural workforce constitutes about two-thirds of this total. Men form the majority (77%) of the workforce, while women are about one-fourth in rural areas and one-fifth in urban areas. However, many women's unpaid household and farm work is not recognized as economic activity and they are not counted as workers, leading to an underestimation of the female workforce.
h3 class="yellowheading">Proportion Of Rural Workforce
A larger share of the workforce resides in rural areas.
h3 class="yellowheading">Majority Of Men In Workforce
The workforce is predominantly male.
h3 class="yellowheading">Women Workers Proportion And Unpaid Work
Many women's contributions, especially unpaid domestic and farm work, are not included in official worker counts.
Participation Of People In Employment
The **worker-population ratio** is a key indicator for analyzing employment levels, showing the proportion of the population actively involved in producing goods and services. A higher ratio indicates greater engagement in economic activities.
Worker-population Ratio As An Indicator
This ratio helps assess the extent of people's participation in the economy.
h3 class="yellowheading">Definition Of Population
Population refers to the total number of people in a specific location at a given time.
h3 class="yellowheading">Calculating Worker-population Ratio
It is calculated as (Total Number of Workers / Total Population) * 100.
Differences In Participation Rates (Rural Vs Urban)
In 2017-18, India's worker-population ratio was about 34.7 overall, 35 in rural areas, and 33.9 in urban areas (Table 6.1).
Worker-Population Ratio in India, 2017-2018:
| Sex | Rural | Urban | Total |
|---|---|---|---|
| Men | 51.7 | 53.0 | 52.1 |
| Women | 17.5 | 14.2 | 16.5 |
| Total | 35.0 | 33.9 | 34.7 |
h3 class="yellowheading">Reasons For Differences
The higher ratio in rural areas is attributed to limited alternative income sources, prompting people to join the workforce earlier and drop out of education. Urban areas offer more educational opportunities and a greater variety of jobs, leading people to seek employment matching their qualifications.
h3 class="yellowheading">More Males Working Than Females
Men have significantly higher participation rates than women. The difference is more pronounced in urban areas, where only about 14 urban females per 100 are working compared to 18 rural females per 100. Reasons for lower female participation include societal expectations (especially where male income is high) and the non-recognition of unpaid household work as productive labor, leading to underestimation of the female workforce.
h3 class="yellowheading">Large Difference In Urban Areas
The disparity in participation rates between genders is particularly wide in urban settings.
h3 class="yellowheading">Reasons For Women Not Working
Societal norms, family income levels, and the definition of 'work' influence women's participation.
h3 class="yellowheading">Underestimation Of Women Workers
Excluding unpaid work leads to an inaccurate count of the female workforce.
Self-employed And Hired Workers
Analyzing workers' status in an enterprise provides insights into the quality of employment and their relationship with their job and employer. Workers are classified into three main categories based on their status.
Knowing Worker's Status
Understanding a worker's position helps assess employment quality.
h3 class="yellowheading">Definition Of Self-employed
Individuals who own and operate their own enterprise for livelihood are self-employed (e.g., shop owner).
h3 class="yellowheading">Proportion Of Self-employed In India
About 52% of India's workforce is self-employed (2017-18).
h3 class="yellowheading">Casual Wage Labourers
These workers are casually employed in others' enterprises and receive payment for the work done (e.g., construction worker paid daily).
h3 class="yellowheading">Regular Salaried Employees
Workers hired by someone or an enterprise and paid regular wages (e.g., civil engineer in a company) are regular salaried employees.
Distribution of Employment by Status, 2017-2018:
| Sex | Self-employed | Regular Salaried Employees | Casual Wage Labourers | Total |
|---|---|---|---|---|
| Male Workers | 52% | 23% | 25% | 100% |
| Female Workers | 52% | 21% | 27% | 100% |
h3 class="yellowheading">Self-employment As Major Source
Self-employment is the largest category for both men and women (52%).
h3 class="yellowheading">Casual Wage Work As Second Major Source
Casual wage labor is the second largest source (25% for men, 27% for women).
h3 class="yellowheading">Distribution In Rural And Urban Areas
Comparing distributions (Chart 6.2), self-employed and casual wage laborers are more prevalent in rural areas, while self-employment and regular salaried jobs are higher in urban areas.
Distribution of Employment by Region, 2017-2018:
| Status | Rural Workers (%) | Urban Workers (%) |
|---|---|---|
| Self-employed | 58% | 38% |
| Casual Wage Labourers | 29% | 15% |
| Regular Salaried Employees | 13% | 47% |
h3 class="yellowheading">Greater Proportion Of Self-employed In Rural Areas
Majority in rural areas depend on farming their own land.
h3 class="yellowheading">Different Nature Of Work In Urban Areas
Urban areas have more diverse and structured employment needs, leading to a higher proportion of regular salaried workers.
Employment In Firms, Factories And Offices
Economic development involves a shift of labor from primary sectors (agriculture) to secondary (industry) and tertiary (services) sectors, accompanied by rural-urban migration. Later stages see a shift from industry to services.
Labour Flows In Economic Development
Workers move between sectors as the economy develops.
h3 class="yellowheading">Shift From Agriculture To Industry And Services
Initial development involves movement from farming to manufacturing and services.
h3 class="yellowheading">Later Shift To Service Sector
The service sector grows rapidly in later stages, absorbing labor from industry.
h3 class="yellowheading">Understanding Shift By Distribution Of Workers By Industry
Analyzing the distribution of the workforce across industries reveals these shifts.
h3 class="yellowheading">Eight Industrial Divisions
Economic activities are broadly categorized into eight divisions.
h3 class="yellowheading">Three Major Sectors (Primary, Secondary, Service)
These divisions are grouped into three main sectors: primary (agriculture, mining), secondary (manufacturing, utilities, construction), and service (trade, transport, services).
Distribution of Workforce by Industry, 2017-2018:
| Industrial Category | Rural (%) | Urban (%) | Men (%) | Female (%) | Total (%) |
|---|---|---|---|---|---|
| Primary Sector | 59.8 | 6.6 | 40.7 | 57.1 | 44.6 |
| Secondary Sector | 20.4 | 34.3 | 26.5 | 17.7 | 24.4 |
| Tertiary/ Service Sector | 19.8 | 59.1 | 32.8 | 25.2 | 31.0 |
| Total | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
h3 class="yellowheading">Primary Sector As Main Source Of Employment
The primary sector employs the largest proportion of workers (44.6% in 2017-18).
h3 class="yellowheading">Secondary Sector Provides Employment
The secondary sector employs about 24.4%.
h3 class="yellowheading">Service Sector Provides Employment
The service sector employs about 31%.
h3 class="yellowheading">Distribution In Rural India
Rural employment is dominated by the primary sector (about 60%).
h3 class="yellowheading">Agriculture Not Major Source In Urban Areas
Agriculture is not a primary source of jobs in urban areas.
h3 class="yellowheading">Distribution In Urban Areas
Urban employment is concentrated in the service sector (about 60%) and secondary sector (about one-third).
h3 class="yellowheading">Concentration Of Men And Women Workers
Both men and women are significantly employed in the primary sector, but women's concentration there is higher (57% female vs 40.7% male). Men have more opportunities in secondary and service sectors.
Growth And Changing Structure Of Employment
India's planned development aimed to expand the economy through increased output (GDP) and employment. However, the growth of employment has not kept pace with GDP growth.
h3 class="yellowheading">Two Developmental Indicators (Growth Of Employment And GDP)
Analyzing the relationship between GDP growth and employment growth reveals patterns of development.
h3 class="yellowheading">Planned Development Aims At Expansion
Economic planning focused on increasing both national output and employment.
h3 class="yellowheading">GDP Growth Higher Than Employment Growth (1950–2010)
India's GDP grew faster than employment over several decades (1950-2010), with employment growth not exceeding 2%.
h3 class="yellowheading">Fluctuation In GDP Growth
GDP growth rates were not always steady.
h3 class="yellowheading">Employment Growth Declining
Employment growth started declining in the late 1990s, returning to early planning levels (Chart 6.3).
h3 class="yellowheading">Widening Gap Between GDP And Employment Growth
This indicates that the economy produced more goods and services without generating proportional employment.
h3 class="yellowheading">Jobless Growth Phenomenon
This trend is referred to as **jobless growth**.
h3 class="yellowheading">Impact On Different Sections Of Workforce
Understanding how growth affected different sections of the workforce reveals the types of employment generated.
h3 class="yellowheading">Types Of Employment Generated
The nature of jobs created is important.
h3 class="yellowheading">India As Agrarian Nation
India's workforce structure is heavily influenced by its agrarian nature.
h3 class="yellowheading">Developmental Strategies Aim At Reducing Dependence On Agriculture
Policies have aimed to shift people away from agriculture.
h3 class="yellowheading">Distribution Of Workforce By Industrial Sectors Shows Shift
Analysis shows a notable shift from farm to non-farm work over five decades (Table 6.3).
Trends in Employment Pattern (Sector-wise and Status-wise), 1972-2018 (in %):
| Item | 1972-73 | 1983 | 1993-94 | 2011-2012 | 2017-2018 |
|---|---|---|---|---|---|
| Primary Sector | 74.3 | 68.6 | 64 | 48.9 | 44.6 |
| Secondary Sector | 10.9 | 11.5 | 16 | 24.3 | 24.4 |
| Services | 14.8 | 16.9 | 20 | 26.8 | 31.0 |
| Total | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
| Status | 1972-73 | 1983 | 1993-94 | 2011-2012 | 2017-2018 |
|---|---|---|---|---|---|
| Self-employed | 61.4 | 57.3 | 54.6 | 52.0 | 52.2 |
| Regular Salaried Employees | 15.4 | 13.8 | 13.6 | 18.0 | 22.8 |
| Casual Wage Labourers | 23.2 | 28.9 | 31.8 | 30.0 | 25.0 |
| Total | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
h3 class="yellowheading">Shift From Primary To Secondary And Service Sectors
The share of primary sector employment declined from 74.3% in 1972-73 to 44.6% in 2017-18, while secondary and service sectors' shares increased.
h3 class="yellowheading">Trends In Employment Pattern (Sector-wise And Status-wise)
Employment patterns show shifts in both industrial sectors and worker status.
h3 class="yellowheading">Movement From Self-employment And Regular To Casual Wage Work
From 1972-94, there was a movement towards casual wage work (casualisation), increasing worker vulnerability. The share of regular salaried employment declined initially but rose moderately between 2011-18.
h3 class="yellowheading">Self-employment Continues To Be Major Provider
Despite shifts, self-employment remains the largest category.
h3 class="yellowheading">Casualisation Of Workforce (1972-94)
The trend towards casual labor increased vulnerability.
h3 class="yellowheading">Moderate Rise In Regular Salaried Employees (2017-18)
Recent data shows a slight increase in regular jobs.
Informalisation Of Indian Workforce
The proportion of hired work is increasing, raising concerns about the quality of employment. Development planning aimed to shift workers to formal sector jobs with better living standards, but this hasn't happened for the majority.
h3 class="yellowheading">Increasing Proportion Of Hired Work Jobs
More people are working for others rather than being self-employed.
h3 class="yellowheading">Objective Of Development Planning
A goal was to provide decent livelihoods for all citizens.
h3 class="yellowheading">Industrialisation Strategy And Standard Of Living
The hope was that industrialization would improve living standards for workers.
h3 class="yellowheading">Dependence On Farming As Major Livelihood
More than half of the workforce still depends on agriculture.
h3 class="yellowheading">Quality Of Employment Deteriorating
Economists argue that job quality has worsened over time.
h3 class="yellowheading">Lack Of Social Security Benefits
Many workers lack benefits like maternity leave, provident fund, and pension, even after long service.
h3 class="yellowheading">Lower Salary In Private Sector
Workers in the private sector often earn less than public sector counterparts for the same work.
h3 class="yellowheading">Small Section Of Workforce Getting Regular Income
Only a minority of the workforce has regular income and social security benefits.
h3 class="yellowheading">Government Through Labour Laws
Labor laws aim to protect workers' rights.
h3 class="yellowheading">Trade Unions
Formal sector workers can form trade unions to negotiate for better conditions.
h3 class="yellowheading">Classification Of Workforce (Formal And Informal Sectors)
The workforce is classified into formal (organized) and informal (unorganized) sectors to understand employment quality.
h3 class="yellowheading">Formal Sector Establishments And Workers
Includes public sector and private establishments with 10 or more hired workers (Box 6.1). About 6% of the workforce is in the formal sector (2011-12).
h3 class="yellowheading">Informal Sector Includes
Includes farmers, agricultural laborers, small enterprise owners, self-employed without hired workers, and casual non-farm laborers. About 94% of the workforce is in the informal sector.
h3 class="yellowheading">Other Ways Of Classification
Other classifications of workers exist.
h3 class="yellowheading">Social Security Benefits In Formal Sector
Formal sector workers enjoy benefits like social security, while informal sector workers do not. Informal sector workers lack regular income, government protection, and may use outdated technology. The informal sector includes vulnerable workers who may live in slums.
h3 class="yellowheading">Earnings In Formal Vs Informal Sector
Formal sector workers generally earn more.
h3 class="yellowheading">Proportion Of Workers In Informal Sector
The vast majority of Indian workers are in the informal sector.
h3 class="yellowheading">Gender-wise Data On Formal-informal Employment (2011-12)
Women's proportion in the formal sector is lower than in the informal sector (Chart 6.4).
h3 class="yellowheading">Attention To Informal Sector Enterprises And Workers
Given the limited growth in formal sector employment, attention to the informal sector is increasing. The International Labour Organisation (ILO) and the Indian government are making efforts to modernize informal enterprises and provide social security to informal workers.
h3 class="yellowheading">Lack Of Regular Income And Protection
Informal workers face instability and lack legal safeguards.
h3 class="yellowheading">Dismissal Without Compensation
Workers can be easily terminated without benefits.
h3 class="yellowheading">Outdated Technology And Lack Of Accounts
Many informal businesses use older methods and lack proper accounting.
h3 class="yellowheading">Living Conditions
Informal sector workers often live in difficult conditions.
h3 class="yellowheading">International Labour Organisation (ILO) Efforts
The ILO promotes better conditions for workers globally.
h3 class="yellowheading">Modernisation Of Informal Sector Enterprises
Efforts are being made to improve technology and practices in the informal sector.
h3 class="yellowheading">Provision Of Social Security Measures
Initiatives aim to provide some form of social protection for informal workers.
Informalisation In Ahmedabad (Case Study)
The decline of textile mills in Ahmedabad in the 1980s and 1990s led to massive job losses for formal sector workers, pushing them into the informal sector, resulting in economic hardship and social distress (Box 6.2).
Unemployment
Unemployment is a situation where people are willing and available to work but unable to find it. Data on unemployment comes from sources like the Census, NSO reports, and employment exchange registrations. There are different types of unemployment.
h3 class="yellowheading">People Looking For Jobs
Unemployed individuals actively seek work through various channels.
h3 class="yellowheading">Sources Of Job Search
These include newspapers, friends/relatives, standing in designated areas, applying to employers, and registering with employment exchanges.
h3 class="yellowheading">People Staying Home When No Work
In rural areas, people may not actively seek work when agricultural work is unavailable but remain unemployed.
h3 class="yellowheading">Registration With Employment Exchanges
Employment exchanges list notified vacancies.
h3 class="yellowheading">Definition Of Unemployment (National Statistical Office)
NSO defines unemployment as being without work but actively seeking or available for it under prevailing conditions.
h3 class="yellowheading">Identifying Unemployed Person (Economists Definition)
Economists define an unemployed person as someone unable to find work for even one hour in half a day.
h3 class="yellowheading">Sources Of Data On Unemployment
Census, NSO (now NSO), Periodic Labour Force Survey, and Employment Exchanges provide data.
h3 class="yellowheading">Estimates Provide Attributes And Variety Of Unemployment
These sources offer insights into the characteristics and types of unemployment.
h3 class="yellowheading">Different Types Of Unemployment
Various forms of unemployment exist in the economy.
h3 class="yellowheading">Open Unemployment
This is the situation where people are actively seeking but unable to find work.
h3 class="yellowheading">Disguised Unemployment (In Indian Farms)
Common in Indian agriculture, disguised unemployment occurs when more people are employed on a farm than are actually needed, so removing the surplus labor would not affect output (Fig. 6.6).
h3 class="yellowheading">Seasonal Unemployment (Work In Agriculture Is Seasonal)
This occurs when people are employed only during certain seasons (e.g., agricultural laborers during harvest/sowing) and are without work for the rest of the year. They may migrate to urban areas for seasonal jobs.
h3 class="yellowheading">People Cannot Remain Completely Unemployed For Long
In India, economic hardship often compels people to take any available job rather than remaining fully unemployed for extended periods.
h3 class="yellowheading">Forced To Accept Undesirable Jobs
People may be forced into unpleasant or dangerous jobs due to economic desperation.
h3 class="yellowheading">Government Initiatives To Generate Employment
Central and state governments implement various measures to generate employment and improve living conditions for low-income families.
Government And Employment Generation
The Indian government plays a significant role in employment generation through direct and indirect means. Schemes like MGNREGA guarantee wage employment in rural areas.
h3 class="yellowheading">Mahatma Gandhi National Rural Employment Guarantee Act 2005
MGNREGA is a major government initiative guaranteeing employment.
h3 class="yellowheading">Promises Guaranteed Wage Employment
It assures 100 days of work to rural households volunteering for unskilled manual labor.
h3 class="yellowheading">Measures To Generate Employment
This Act is one of many government efforts to create jobs.
h3 class="yellowheading">Role Of Union And State Governments
Both levels of government contribute to employment generation.
h3 class="yellowheading">Categorisation Of Efforts (Direct And Indirect)
Government efforts are classified into direct and indirect methods.
h3 class="yellowheading">Direct Employment Generation
The government directly employs people in its departments, industries, hotels, and transport companies (Fig. 6.7).
h3 class="yellowheading">Indirect Generation Of Employment Opportunities
When government enterprises increase output, it leads to increased output and employment in private enterprises that use their products, thus indirectly generating jobs.
h3 class="yellowheading">Employment Generation Programmes
Many poverty alleviation programs also serve as employment generation programs, providing jobs and services in health, education, rural infrastructure, housing, etc.
h3 class="yellowheading">Aim Of Programmes
These programs aim to provide both employment and essential services.
Conclusion
India's workforce structure is changing, with emerging jobs primarily in the service sector. The expansion of this sector and high technology enable small enterprises and specialized workers to exist alongside multinationals. Outsourcing is increasingly common, altering the traditional workplace notion as homes become workplaces for many. However, this shift has led to more informal employment with limited social security. Despite rapid GDP growth, employment growth has not kept pace, prompting government initiatives to generate jobs, especially in rural areas.
h3 class="yellowheading">Change In Structure Of Workforce
The composition of jobs and sectors employing the workforce is evolving.
h3 class="yellowheading">Newly Emerging Jobs In Service Sector
Most new employment opportunities are appearing in the services.
h3 class="yellowheading">Competitive Existence For Small Enterprises And Specialist Workers
Small entities can thrive alongside large ones due to changes in the economy.
h3 class="yellowheading">Outsourcing Becoming Common Practice
Contracting services to external providers is a growing trend.
h3 class="yellowheading">Traditional Notion Of Workplace Altered
The concept of where work takes place is changing.
h3 class="yellowheading">Home Becoming The Workplace
For many, particularly in IT-related fields, work is increasingly done from home.
h3 class="yellowheading">Nature Of Employment More Informal
Jobs are becoming less secure with fewer benefits.
h3 class="yellowheading">Limited Availability Of Social Security Measures
Social protection for many workers is inadequate.
h3 class="yellowheading">Rapid Growth In GDP Without Employment Increase
Economic growth has not generated sufficient jobs, leading to jobless growth.
h3 class="yellowheading">Government Initiatives In Generating Employment
The government is taking steps to address the lack of employment opportunities.
Recap
Summary of the chapter's key points:
h3 class="yellowheading">Definition Of Workers
Workers are all individuals engaged in economic activities contributing to GNP.
h3 class="yellowheading">Proportion Of Population In Economic Activities
About two-fifths of India's population is economically active.
h3 class="yellowheading">Men As Major Section Of Workforce
The workforce is predominantly male, especially rural men.
h3 class="yellowheading">Majority Of Workers Self-employed
Self-employment is the largest employment category.
h3 class="yellowheading">Dependence On Agriculture
About three-fifths of the workforce depends on agriculture and allied activities.
h3 class="yellowheading">Employment Growth Decelerated
Growth in employment has slowed down in recent years.
h3 class="yellowheading">Employment Opportunities In Service Sector (Post-reform)
The service sector is creating new jobs, often in the informal sector.
h3 class="yellowheading">Government As Major Formal Sector Employer
The government is the largest employer in the formal sector.
h3 class="yellowheading">Disguised Unemployment In Rural India
This type of unemployment is common in rural agriculture.
h3 class="yellowheading">Change In Structure Of Workforce
The composition of India's workforce has changed over time.
h3 class="yellowheading">Government Initiatives For Employment Generation
Government takes direct and indirect measures to create jobs.