Chapter 7. Employment: Growth, Informalisation and Other Issues

Workers and Employment
• Employment is an activity from which a person earns means of livelihood.
• total money value of all final goods and services produced in a country in a year is known as its gross domestic product for that year.
• When we consider what we pay for our imports and get from our exports we find that there is a net earning for country which may be positive [if we have exported more in value terms than imported] or negative [if imports exceeded exports in value terms] or zero [if exports and imports were of same value].
• When we add this earning [plus or minus] from foreign transactions, we get country’s gross national product for that year.
• Those activities which contribute to gross national product are known as economic activities.
• All those who are engaged in economic activities, in whatever capacity — high or low, are workers.
• Even if some of them temporarily abstain from work due to illness, injury or other physical disability, bad weather, festivals, social or religious functions, they are workers.
• Workers include all those who help main workers in these activities. We usually think of only those who are paid by an employer for their work as workers. It is not so. Those who are self-employed are workers.
• nature of employment in India is multifaceted. Some get employment throughout year; some others get employed for only a few months in a year. Many workers do not get fair wages for their work.
• While estimating number of workers, all those who are engaged in economic activities are included as employed.

Participation of People in Employment
• Worker – Population ratio is calculated by dividing total number of workers in India by population in India and multiplying it by 100.
• Worker-population ratio is an indicator that is used for analysing employment situation in country.
• This ratio is useful in knowing proportion of population that is actively contributing to production of goods and services of a country.
• If ratio is higher, it means that engagement of people is greater; if ratio for a country is medium, or low, it means that a very high proportion of its population is not involved directly in economic activities.
• Population is defined as total number of people who reside in a particular locality at a particular point of time.
• Compared to females, more males are found to be working. difference in participation rates is very large in urban areas: for every 100 urban females, only about 14 are engaged in some economic activities. In rural areas, for every 100 rural women about 18 participate in employment market.

Self-employed and Hired Workers
• Workers who own and operate an enterprise to earn their livelihood are called self-employed. Thus, cement shop owner is self-employed. About 52% workforce in India belongs to this category.
• Wage employment is of two types – Regular Workers & Casual Workers
• construction workers are called casual wage labourers; they account for about 25% of India’s workforce.
• Workers like civil engineer working in construction company account for 23% of India’s workforce.
• When a worker is engaged by someone or an enterprise and paid his or her wages regularly, they are called regular salaried employees.

Employment in Firm, Factories & Offices
• Generally, we divide all economic activities into eight different industrial divisions. They are: [i] Agriculture [ii] Mining and Quarrying [iii] Manufacturing [iv] Electricity, Gas & Water Supply [v] Construction [vi] Trade [vii] Transport and Storage and [viii] Services.
• For simplicity, all working persons engaged in these divisions can be clubbed into three major sectors viz., [a] primary sector which includes [i] and [ii], [b] secondary sector which includes [iii], [iv] & [v] and [c] service sector which includes divisions [vi], [vii] & [viii].
• Primary sector is main source of employment for majority of workers in India. secondary sector employs only about 24% of workforce. About 31% of workers are in service sector.
• Agriculture is not a major source of employment in urban areas where people are mainly engaged in service sector.
• Though both men and women workers are concentrated in primary sector, women workers’ concentration is very high there.

Informalisation of Indian Workforce
• All public sector establishments and those private sector establishments which employ 10 hired workers or more are known as formal sector establishments and those who work in such establishments are formal sector workers.
• All other enterprises and workers working in those enterprises form informal sector.
• This means that informal sector is made up of millions of farmers, farm workers, small business owners, and self-employed people who work in small businesses that don’t have any hired employees. It includes all non-farm casual wage workers who work for more than one employer, like construction workers and headload workers.
• Those who are working in formal sector enjoy social security benefits. They earn more than those in informal sector.
• Workers and enterprises in informal sector do not get regular income; they do not have any protection or regulation from government. Workers are dismissed without any compensation.
• technology used in informal sector enterprises is outdated; they do not maintain any accounts. Workers of this sector live in slums and are squatters.

Growth and Employment Generation
• Mahatma Gandhi 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. scheme based on this Act is one of many measures government has implemented to generate employment for those who need jobs in rural areas.
• Since Independence, Union & State Governments have played an important role in generating employment or creating opportunities for employment generation. Their efforts can be broadly categorised into two — direct and indirect.
• In first category, government employs people in various departments for administrative purposes. It runs industries, hotels & transport companies, and hence, provides employment directly to workers.
• When government businesses make more goods and services, private businesses that get their raw materials from government businesses will also make more goods and services. This will increase number of jobs in economy. It is a way that government initiatives in economy indirectly create jobs.

• National Statistical Office [Previously it was called National Sample Survey Organisation] defines unemployment as 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 prevailing condition of work and remunerations.
• Economists define an unemployed person as one who is not able to get employment for even one hour in a half-day.
• There are three sources of data on unemployment: Reports of Census of India; National Statistical Office’s Reports of Employment and Unemployment Situation; Annual Reports of Periodic Labour Force Survey, and Directorate General of Employment and Training data on Registration with Employment Exchanges.
• Economists call unemployment prevailing on Indian farms as disguised unemployment. For example, if a farmer has four acres of land and he needs only two workers and himself to carry out various operations on his farm in a year, but if he employs five workers and his family members such as his wife and children, this situation is called disguised unemployment.
• When there is no work to do on farms, people go to urban areas and look for jobs. This kind of unemployment is called seasonal unemployment. It is a common form of unemployment prevailing in India.

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