Employment-Growth, Informalisation and

Related Issues
A worker is an individual, who is involved in some productive activity, to earn a living.

An economic activity refers to the activity performed by people to earn the living. The main three types of
economic activities are consumption, production and distribution.

Production activity refers to all those activities which are under taken to produce goods and services for
generation of income.

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

Work force: The number of persons, who are actually employed at a particular time are known as
workforce. It includes all those persons who are actually engaged in productive activities. This includes
person between age group of 15-60 years.

Labour supply: It refers to various amount of labour that workers are willing to work, corresponding to a
particular wage rate.

Work Force Participation Rate(Ratio):- It is measured as the ratio between workforce and total
population of a country.

Jobless Growth: It is defined as a situation where GDP grows faster than the employment opportunities
resulting in unemployment.

Casualisation and informalisation of employment: Casualisation refers to a situation when the

percentage of casually hired workers in the total workforce tends to rise over time.

Informalisation: Refers to a situation when people tend to find employment more in informal sector of the
economy, and less in formal sector of the economy.

Unemployment: It is a situation where a person is ready and willing to work at the prevailing wage-rate
but doesn’t get work.
Unemployment Rate: It is calculated as percentage of labour force who are unemployed, not as

percentage of total population.

Types of unemployment:
1. Rural unemployment
a. Seasonal Unemployment
b. Disguised Unemployment

2. Other types of unemployment

Majority of workers in India are self employed, casual wage labourers and regular salaried employees
together account for less than half the proportion of India’s workforce.

About three fifth of India’s workforce depends on agriculture and other allied activities as the major source
of livelihood.

Jobless Growth: It is defined as a situation where GDP grows faster than the employment opportunities
resulting in unemployment.

Casualisation and informalisation of employment: Casualisation refers to a situation when the

percentage of casually hired workers in the total workforce tends to rise over time.

Informalisation: Refers to a situation when people tend to find employment more in informal sector of the
economy, and less in formal sector of the economy.

Unemployment: It is a situation where a person is ready and willing to work at the prevailing wage-rate
but doesn’t get work.

Unemployment Rate: It is calculated as percentage of labour force who are unemployed, not as

percentage of total population.

Types of unemployment:
1. Rural unemployment
a. Seasonal Unemployment
b. Disguised Unemployment

2. Other types of unemployment

a. Open
b. Frictional
c. Structural
d. Cyclical

3. Urban Unemployment
a. Industrial Unemployment
b. Educated Unemployment
c. Technological Unemployment

• Frictional unemployment is defined as the unemployment that occurs because of people moving
or changing occupations.

• Structural unemployment is defined as unemployment arising from technical change such as

automation, or from changes in the composition of output due to variations in the types of
 products people demand. For example, a decline in the demand for typewriters would lead to
structurally unemployed workers in the typewriter industry.

• Cyclical unemployment is defined as workers losing their jobs due to business cycle fluctuations in
output, i.e. the normal up and down movements in the economy as it cycles through booms and
recessions over time.

• Open Unemployment refers to that situation wherein the worker is willing to work and has the
necessary ability to work yet he does not get work and remains unemployed for full time.

• Seasonal Unemployment:- It refers to a situation where a number of person that are not able to
find a job in a particular season.

• Disguised unemployment is a kind of unemployment in which some people look like being
employed but are actually not employed fully. This situation is also known as Hidden
Unemployment. In such a situation more people are engaged in a work than required.In other
words it refers to a situation of employment with surplus manpower in which some workers have
zero marginal productivity. For example in rural areas, this type of unemployment is generally found
in agricultural sector.

•
Technological Unemployment:- A somewhat structural unemployment may take place in an
economy as a result of technological improvement. Such unemployment may be described as
technological unemployment. Due to the introduction of new machinery, improvement in methods
of production, labour-saving devices etc., some workers tend to be replaced by machines. Their
unemployment is termed as “technological unemployment.”

• 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. Educated
unemployment may be either open or underemployment.

Types of Workers
Broadly, workers can be categorised into self-employed and hired workers. They are
discussed below

• Self-Employed The workers who own and operate an enterprise to earn their livelihood
are known as self-employed.
For example, a farmer working on his own farm. This category accounts for more than
50% of the workforce.
• Hired Workers Those people who are hired by others and are paid wages or salaries as a
reward for their services are called hired workers.

Hired workers can be of two types

 • Casual Workers Those people, who are not hired by their employers on a
regular/permanent basis and do not get social security benefits are said to be casual
workers.
For example, construction workers.
• Regular Salaried Workers When a worker is engaged by someone or by an enterprise
and paid his or her wages on a regular basis, they are known as regular salaried
employees or regular workers.
For example, teachers, chartered accountants, etc.

Self-Employed and Hired Workers in India

1. According to Region (Rural and Urban)

• 41% of workers are self-employed and 59% of workers are hired in urban areas.
• 54% of workers are self-employed and 46% of workers are hired in rural areas.

The above chart shows that the self-employed and casual wage labourers are found more in
rural areas than in urban areas. It is -because in urban areas, people are skilled and work
for jobs in offices and factories. But in rural areas, people work on their own farms.

2. According to Gender

• 50% of male workers are self-employed and 50% of male workers are hired.
• 53% of female workers are self-employed and 47% of female workers are hired.
Distribution of Employment by Gender The above chart shows that self-employment and
hired employment are equally important for male workers. But female workers give
preference to self-employment than to hired employment. It is because women, both in
rural and urban areas are less mobile and thus, prefer to engage themselves in self
employment.

So, it can be concluded that self-employment is a very important source of livelihood for
people in India. Size of Workforce in India. India has a workforce of nearly 40 crore of
people.
The data on the size of workforce In India are as follows

• About 70% of the workforce comprises of male workers, only 30% are female workers,
• Nearly, 70% of workforce is found in rural areas i and only 30% is in urban areas.
• Percentage of female workforce In rural areas is nearly 26% while it is only 14% in
urban areas.

Informalisation of Indian Workforce

Development planning in India is always focused to provide decent livelihood to its people. It
was thought that the industrialisation strategy would bring surplus workers from agriculture
to industry with better standard of living as in developed countries. Over the years, the
quality of employment has been deteriorating. A small section of Indian workforce is getting
regular income. The government through its labour laws, enable them to protect rights in
various ways. This section of workforce forms trade unions, bargains with employers for
better wages and other social security measures.
Workforce can be classified into two categories

Formal Sectors All the public sector establishments and those private sector establishments
which employ 10 hired workers or more are called formal sector establishments and those
who work in such establishments are formal sector workers.
Informal Sectors All other enterprises and workers working in those enterprises form the
informal sector. Informal sector includes millions of farmers, agricultural labourers, owners
of small enterprises and people working in those enterprises as also the self employed who do
not have any hired workers.

Unemployment
In every section of society there will be a large number of unemployed persons. It is a
situation, in which all those who, owing to lack of work are not working but either seek
work through employment exchanges, intermediaries, friends or relatives or by making
applications to prospective employers or express their willingness or availability for work
under the prevailing condition of work and remunerations.

There are a variety of ways by which an unemployed person is identified. As per the view 4)f
some economists, unemployed person is one who is not able to get employment of even one
hour in half a day.
One can get the data of unemployed persons through below stated sources

• Reports of Census of India

• NSSO’s (National Sample Survey Organisations) reports of employment and
unemployment situation
• Directorate General of Employment and Training Data of Registration with
Employment Exchanges.

Types of Unemployment in India

There are a variety of ways by which an unemployed person is identified. As per the view 4)f
some economists, unemployed person is one who is not able to get employment of even one
hour in half a day.
One can get the data of unemployed persons through below stated sources

• Reports of Census of India

• NSSO’s (National Sample Survey Organisations) reports of employment and
unemployment situation
• Directorate General of Employment and Training Data of Registration with
Employment Exchanges.
Types of Unemployment in India

1. Rural Unemployment
Around 70% of India’s population lives in village. Agriculture is the single largest source of
their livelihood. Agriculture suffers from a number of problems like dependence upon rainfall,
financial constraints, obsolete techniques, etc.
Rural unemployment can be of following three types

• Open Unemployment It refers to that situation wherein the worker is willing to work
and has the necessary ability to work yet he does not get work and remains
unemployed for full time. ”
• Seasonal Unemployment It refers to a situation where a number of a persons are not
able to find a job in a particular season. It occurs in case of agriculture, ice-cream
factories, woollens factories, etc.
• Disguised Unemployment It exists when marginal physical productivity of labour is zero
or sometimes it becomes negative. Important features of disguised unemployment are as
under
• Marginal physical productivity of labour is zero.
• There is disguised unemployment among wage earners.
• Disguised unemployment is invisible.
• It is different from industrial unemployment.

2. Urban Unemployment
In urban areas, unemployed people are often registered with employment exchanges.
Between 1961 and 2008, the number of unemployed registered in employment exchanges
has increased more than eight-fold.
Urban unemployment is of three types

• Industrial Unemployment It includes those illiterate persons who are willing to work in
industries, mining, transport, trade and construction activities, etc.
Problem of unemployment in industrial sector has become acute because of increasing
migration of rural people to urban industrial areas in search of employment.
• Educated Unemployment In India the problem of unemployment among the educated
people is also quite grave. It is a problem spread across all parts of the country, because
the massive expansion of the education facilities have contributed to the growth of
educated persons who are on the look out for white collar jobs.
• Technological Unemployment Technological upgradation is taking place in all spheres of
activity.
People who have not updated their skills in the latest technology become technologically
unemployed.

Causes of Unemployment in India

1. Slow Economic Growth In Indian economy, the rate of economic growth is very slow. This
slow growth rate fails to provide enough employment opportunities to the rising population.
Supply of labour is much more than the available employment opportunities.
2. Rapid Growth of Population Constant increase in population has been a grave problem of
India. It is one of the main causes of unemployment. The number of unemployed has actually
increased instead of decreasing during the plan period.
3. Faulty Employment Planning The Five Year Plans in India have not been designed for
employment generation. A frontal attack to solve the problem of unemployment is missing.
It was thought that economic growth will take care of unemployment problem.
4. Excessive Use of Foreign Technology Lack of scientific and technical cosearch at home, due
to its high cost has resulted in excessive use of foreign technology which has led to technical
unemployment in our country.
5 Lack of Financial Resources The expansion and diversification programme of agriculture
and small scale industries have suffered because of lack of financial resources. This has been
accompained by increasing government control of economic activities.
6. Increase in Labour Force The population explosion stage of Indian economy has added
young people to the labour force who are seeking employment.

Government and Employment Generation

In 2005, the government had passed an act in parliament known as the National Rural
Employment Guarantee Act, 2005. It promises 100 days of guaranteed wage employment
to all rural households who volunteer to do unskilled manual work. This scheme is one of the
important measure adopted by government to generate employment for those who are in
need of jobs in rural areas.

Since independence, the Union and State Government have played an important role in
generating employment or creating opportunities for employment generation. Their efforts
can be broadly categorised into two i.e., direct and indirect.

• Direct Employment, In this government employs people in various departments for

administrative purposes. It also runs industries, hotels and transport companies and
hence provides employment directly to workers.
• Indirect Employment It can be understood as when output of goods and services from
government enterprises increases, then private enterprises which receive now materials
from government enterprises will also raise their output and hence increase the number
of employment opportunities in the economy. This is the indirect generation of
employment opportunities by the government initiatives in the economy.

Employment Generation Programmes

Many programmes that governments implement with the aim of alleviating poverty through
employment generation are called employment generation programmes.

These programmes aim at providing not only employment but also services in areas such as
primary health, primary education, rural drinking water, nutrition, assistance for people to
buy income and employment generating assets, development of community assets by
generating wage employment, construction of houses and sanitation, assistance for
constructing houses, laying of rural roads, development of waste lands/degraded lands.