LABOUR ECONOMICS

Q2. Define Labour Economics. E !"ain #$e na#ure an% sco!e of Labour Economics. E !"ain #$e c$arac#eris#ics of Labour& Labour Economics'(

Ans' (

Labour Economics may be defined as a study of the organization, institutions and behavior of the labour market in an industrising or industrial economy. Accor%in) #o Do"e *o%er'( Labour economics or manpower economics is primarily concerned with efficient utilization and conservation of manpower and resources. It studies and seeks to understand the processes by which manpower is applied and utilized in modern society. It is concerned of natural resources in the land. Sco!e of Labour Economics'( Labour economics has to deal with may be stated as manpower planning, labour organization, labour relations and public policy wage and employment theory, collective bargaining theory and practice of social security and welfare etc. ccording to !r. ".#.$inha, the following areas of study may be listed to fall under the preview of labour economics%& I. Institutional framework of the particular economic system. II. $ize and composition of the labour force and labour market. III. Labour as a factor of production& productivity and efficiency condition of work&industrial relation standard of living I'. Labour(s risk and problems. '. )rade unionism 'I. Labour(s status and position in society 'II. Labour legislation. I. II. III. I'. nother different area of labour economics are%& dvance theory of labour economics Labour laws #rinciples of personnel management and *ob evaluation #rinciple and practice of labour welfare

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'. )heory and practice of trade union management. Na#ure of Labour Economics'( Labour economics is in the process of development, its definition tends to vary and change according to the nature of the economy and is supposed to indicate the criteria for delimiting its scope and enumerating and classifying the problems. I. )he theoretical section II. )he institutional section A. 1$e 1$eore#ica" Sec#ion'( )he theoretical section of labour economics is concerned with building up of models of economic behavior by making different sets of assumption. B. 1$e Ins#i#u#iona" Sec#ion'( )he institutional section of labour economics is concerned with studies of labour problems in an institutional historical content. )he nature of the labour problems changes with the change in the institutional framework of the economic systems. C$arac#eris#ics of Labour'( ccording to !r. lfred +arshell, labour may be defined as ny e,ertion of mind or body undergone partly or wholly with a view to have some good other than the pleasure derived directly from the work. -haracteristics are as follows%& .. Labour cannot be separated from the person who labours& In other words we can say that labour cannot be separated from labourer body and personality. )hus, the environment and the working conditions in which the worker has to work are of utmost important in the supply of labour. /. )he worker sells his work services but he himself remains his own property% & In the words of +arshell, )he worker sells his work but he himself remains his own property. )hus, the supply of labour along with other things depends
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upon the forethought and selflessness of those who bring up the labourer. 0. Labour is perishable commodity, therefore it does not last and cannot be stored for future& If a worker does not work for a particular day, that day is lost for ever and he would never be in a position to make use of his lost services. 1. s the seller of labour are commonly poor and have no reserve fund, therefore they cannot with held labour from the market.

2. )he supply of labour cannot be decreased or increased with fall or rise of wage& 3ence, a paid ad*ustment of the supply of labour to its demand is not possible. 4. Labour is not mobile as capital% & )he difference in environments, languages, customs etc at different places is hinderences to the mobility of the worker from one place to another. 5. )he marginal productivity of labour is comparatively less than capital. 6. 7inally, labour is a living thing and that makes all the differences.

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Q2.

3$a# is mean# b4 #$e #erm 5a)es& 6o5 5ou"% 4ou %is#in)uis$ be#5een 7Nomina" 3a)es8 an% 7Rea" 3a)es8& E !"ain #$e fac#ors inf"uencin) rea" 5a)es. 3a)es'(

Ans' (

)he price paid for the services of labours in production is called wages. )he labourer is generally paid a certain sum of money per day or week or month. Be$am defined a wage as sum of money paid under contract by an employer to a worker for services rendered. 3owever, in economics, payment made for all kinds of services, whether by way of salaries or in any other way is included in wages. !ifferences between 8ominal wages and 9eal wages%& Nomina" 3a)es'( )he amount of money that a labourer gets in e,change of his services is called money wages or nominal wages. If a labourer gets 9s./::, a day for his work, his money or nominal wages will be 9s. /::. 3owever, mere money payment does not reflect the real earnings of the labourer. )hey do not reveal the standard of living or the goods and services which labourer can buy and consume. Rea" 3a)es'( )he amount of goods and services that labourer can get with his nominal wages is called real wages. 9eal wages refer to the goods and services, which the money wages can buy, and advantages and disadvantages associated with the *obs. Labourer is not so much interested in money wage as they are in real wages because their standard of living depends on real wages. ccording to ;icksell, real wages means real income. 9eal Income< +oney income=#rice Level

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7ollowing are the factors or items that are generally taken into account while calculating >9eal ;ages( of a worker as compared to his nominal wages. -. ,urc$asin) !o5er of mone4'( 9eal wages ?i.e. wages in terms of goods and services@ depend on purchasing power of money, which means on the prevailing price level at particular place where a worker is working and living. 2. Inci%en#a" a%:an#a)es an% benefi#s'( ;hile calculating real wages, e,tra benefits or advantages a worker may be getting must be taken into consideration. )hese e,tra benefits may take the form of free or subsidized transport facility. )hese incidental benefits generally known as >7ringe Aenefits( or >#erks( if available must be added while comparing and calculating real wages 2. 3or;in) Con%i#ions'( ;hile considering real wages, working conditions must be considered. Ay working conditions are meant number of working hours per day, healthy atmosphere free from pollution, availability of facilities like drinking water and rest house etc. 9. ,ossibi"i#4 of e #ra earnin)s'( #ossibilities of e,tra earnings must be taken into account while calculating and comparing real wages of workers. $ome *obs ?like professors and teachers@ en*oy the opportunities of making e,tra income by writing books, undertaking tuitions etc. <. Na#ure of =obs'( ;hile considering real wages of a worker nature of *ob must be taken into account whether the *ob is in*urious to health, whether there e,ists great hazards, whether it involves freBuent traveling etc. >. ,ossibi"i#ies of !romo#ion an% success'( #ossibility of Buick promotions, foreign tours etc. must be taken into account while calculating real wages. ?. Socia" !res#i)e an% s#a#us'( 7or e,ample, some *obs carry higher social status and prestige than some other. )his must be taken into account while
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calculating real wages of workers and comparing real wages of two workers doing two *obs in different occupations. @. 1rainin) e !enses'( )raining e,penses involved in the case of different *obs must be taken into account while calculating real wages and especially while real wages of two *obs. A. 1ra%e an% office e !enses'( $ome *obs like doctor(s and pleader(s involves trading e,penses like maintaining an office and a clerk etc. while certain *obs do not involves such e,penses. )his must be taken into account while determining and comparing real wages.

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Q9.

3$a# %o 4ou un%ers#an% b4 #$e #erm 73a)e %ifferen#ia"s8& 6o5 %o 4ou accoun# for 5a)e %ifferences in %ifferen# in%us#ries an% occu!a#ions an% in #$e same in%us#r4& 3$4 %o 5a)es %iffer be#5een ma"e an% fema"e "abour& 3a)e Differen#ia"s'(

Ans' (

In the real world however, it is seldom seen that uniform level of wages is established even in long run. Cn the contrary, one witnesses apparently permanent differences in the wages paid in different occupations with hardly any significant movement of labour form low paid occupations to highly paid ones. ;age difference is also found between male and female workers. ;age differences may be horizontal and vertical. 3orizontal wage difference is found among workers who have the same amount of skill training and efficiency. 'ertical wage differences on the other hand denote the differences ?in wages@ in different grade of an occupation. ;age difference between different industries and occupations because of many underlying factor%& 1. Difference in s;i"" an% efficienc4'( ;here different skill and efficiency norms are involved in different industries wage must be different. 2. 1ra%e Unions'( ;here powerful trade unions e,ist in some industries wages in those industries will be higher than in others where such trade unions do not e,ist. 3. ,rofi#abi"i#4 of #$e Or)aniBa#ion'( In those industries, which have high profitability in comparison to those industries where profitability is lesser, wages will be higher. 4. S#a#us of #$e Or)aniBa#ion'( ;ages are normally higher in organization, which have a higher status. 7oreign companies and multinational corporations normally pay higher wages merely because of status norm. 5. Na#ure of 3or;'( ;ages also differ based on nature of work. 9isky employments normally involve higher wages or compensations in comparison to less risky *obs.
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6. I)norance'( ;hen workers suffer from ignorance, they suffer from lower wages. ;age differs between male and female labour%& 7emale labourer is paid much less than male workers. )he reasons for this disparity are& .. In certain occupations, there is an over crowding of female workers. 7or instance, *obs such as teaching, domestic servants, nursing etc. /. Cwing to lower physical strength and other factors, the productivity of female labourers is believed to be low. 0. )he trade union movement is not very strong and has not taken deep roots in case of female labour. 1. It is believed that the necessity for the earnings by man is greater than that of a woman. "enerally, females are not sole breadwinner of the family. 2. )he mobility of female worker is also low because of family ties and domestic responsibilities. 7emale workers would not like to change *obs even if a change of *ob has better prospectus for them. !ifferences in wages based on differences in se, are not *ustified. +any countries have tried to eliminate them based on principle of EBual pay for eBual work. )he international labour organization had laid down in its constitution that men and women should receive eBual remuneration for eBual work.

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Q<.

Ci:e an i%ea abou# %ifferen# conce!#s of 73a)es8.

Ans' (

3a)es

)he price paid for the services of labourers in production is called wages. )he labourers are generally paid a certain sum of money per day or week or month. Aenham defines a wage as%& sum of money paid under contract by an employer to a worker for services rendered. Aenham definition covers only the payment made for the use of manual labour. It does not include the payment made in the form of salaries to individuals working as clerks, accountants and white colored workers. Differen# conce!#s of 5a)es'( Minimum 3a)e Li:in) 3a)e /air 3a)e )he problem of wage is the most controversial sub*ect in industrial relations. )he reason of its significance is that wages provide worker with certain standard of living and they form a high proportion of the employers cost of production. Minimum 3a)e )he concept of +inimum ;age stands for different standard of different countries. )he fair wage committee in India has observed that in India the level of the national income is so low at present that it is generally accepted that the country cannot afford to prescribe by law a minimum wage must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the worker. )hus, a minimum wage is one, which may be sufficient to enable B worker to live in reasonable comfort having regard to all obligations to which an average worker would ordinally be sub*ect.

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1$e ob=ec#i:e of minimum 5a)e .. )o prevent e,planation of workers and secure a wage eBual to work load. /. )o raise the wages in the industries where they are low, thus prevent sweating in industry. 0. )o promote peace in industry by guaranteeing a wage rate this will enable them to meet their minimum reBuirements. 1. 9aise the standards of living and efficiency of workers. Li:in) 3a)e ccording to the committee in fair wages, )he living wage represented the higher level of wage and it would include all amenities which a citizen living in a modern civilized society could afford. fter considering various observations made by Indian authorities, the committee on 7air wages observed, the living wages should enable to male earner to provide for himself and his family the bare essential of food, clothing and shelter but a measure of frugal comfort including duration for the children, protection against ill health reBuirement of essential social needs and a measure of insurance against the more important misfortunes including old age. /air 3a)e )o bring improvement in the relations between labour and management the industrial truce resolution was passed in .D15, which provided for the payment of fair wages of labour, govt. of India appointed a 7air wages committee in .D16, and the committee report was published in .D1D. +arshell and #igou have defined fair wages. +arshell $ays, In any given industry wages are fair relatively to wage in industry in general. Lower limit of fair wages must be the minimum wage for workers and upper limit will be the industry capacity to pay. 3owever, between these two limits following factors have to be considered )he productivity of labour
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 )he prevailing rate of wages in the same or neighboring locality )he place of the industry in the economy )he level of national dividend and its distribution

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)he concepts of minimum, fair and living wages should not be treated as water tight compartments, s the level of wages actually prevailing a country would depend largely on the level of economic development. Eet the task of wage regulating and wage fining machinery can go a long way to evolve a wage structure which is fair and also commensurate with the level of economic activity in the country.

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Q>.

Define Labour mar;e#. 3$a# are #$e main c$arac#eris#ics of "abour mar;e#& E !"ain #$e ma=or im!erfec#ions in "abour mar;e#. Labour Mar;e#'(

Ans' (

Labour market may be defined as process by which supplies of particular type of labour and demands for that type of labour balr seek to obtain a balance. )he labour market is the place for operation of this process. It is the only device for sorting out worker with varying skills and interest among the multitude of different *obs in the economy. )he labour market is also an area or place where relative wage levels for different plants, industries occupations and d regions are determined. C$arac#eris#ics of Labour Mar;e#'( +ain characteristics of labour market are as follows%& .. Fnlike a commodity market, relationship between a buyer and seller in a labour market ?e,pecting a casual labour market@ is not temporary and is e,pected to continue for some limit. /. Labour market is essentially local in character% & )he concept of labour market stands for the buyer and sellers of labour who are in contact with each other for the purchase and sale of workers services. )hus, labour market is normally local markets in the sense of the demand for the supply of labour being confined to a particular locality. 0. Lack of mobility% & Lack of mobility is an important characteristic of a labour market owing to various reasons. Labour obviously cannot move with the same ease and facility with which commodities are transported from place to place and the buyers of labour as well. 1. labour market is essentially an imperfect market% & Labour market is an imperfect market where one does not find a normal wage rate to which the market rate naturally tends. )here is a diversity of wage rate in a labour market for the same types of work different wage are paid% a feature, which may last for a long period and may even be regularized.

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2. +onopoly%& +onopoly in labour market is e,tremely rare e,cepting when the skill of a particular type of e,tremely rare or when a very powerful trade union e,ercise a complete control over the supply of labour in a given industry or in a given area. 4. +ost of the labour markets in the world do not *ustice to the workers in the matter of the division of the proceeds of industry as between the employers and workers. In other words, the labour markets are usually the buyers market. Im!erfec#ions in #$e "abour mar;e#'( )here are certain peculiarities of labour market, which distinguish it from the market of other commodity. )hese peculiarities also make labour market imperfect 1. 8o eBuilibrium between demand for and supply of labour% & In the markets of other commodities prices keeps on changing till demand is eBual to supply. In other words, the other markets are normally cleared. 3owever, in labour market wages are not freely fle,ible. )herefore, as 3icks pointed out, the effect of incre0ase in demand for labour on wage rate is felt only after a long passage of time. 2. ;age differentials%& In a perfectly competitive market for a commodity, all units of the commodity are homogeneous and price tends to be uniform. In fact, "eorge $tigler defined the mar1ket of a commodity as all those places where the price of that commodity tends to be uniform after allowance for transport cost. 3owever, in the actual market the wage differentials are often due to imperfections in the labour market. a) 8o perfect knowledge% & ;orker and employers do not have perfect knowledge about the conditions in the labour market. )herefore, the wage differences prevail. b) Lack of perfect mobility of labour% & )here is no perfect mobility of labour from one industry top another or from one locality to another. c) Aarriers to the entry of labour% & )here are barriers to the entry of new workers in specific occupations and so the artificial storage of such workers is maintained and so the wages of such workers continue.
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d) Employer(s monopsony% & )he labour market may have monopsony employer of labour power and he can follow the policy of wage discrimination by paying different wages to different workers for the same work. e) Institutional forces in determining wages% & In the market of the other commodities, mainly the market forces of demand and supply determine the price. )herefore, there cannot be an economic e,planation of wage rates based purely on demand and supply conditions.

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Q?.

Discuss #$e fac#ors inf"uencin) %eman% for an% su!!"4 of "abour. Deman% /or Labour'(

Ans' (

In labour market, demand for labour is made by individual firms, which want to employ labour to carry out their production. It means a firm is a buyer in the labour market. Fnlike demand for consumer goods, demand for labour is a derived demand. !emand for labour by firms depends on the following factors%& 1. Deman% for commo%i#ies !ro%uce% b4 "abour'( ;hen demand for commodities increases, firms wants to sell more, for which they have to increase production. In such cases, they need labour as a factor of production. 2. A:ai"abi"i#4 of Ca!i#a"'( Largely capital and labour are complementary factors of production. If more capital is available, private firms want to invest more. ;hen they increase investment and set up new production units, they need more labour and so demand for labour increases because of increase in supply of capital. 3. Subs#i#u#ion be#5een "abour an% mac$iner4'( Labour and capital can also be substituted for each other. If work done by labour can also be performed by machinery i.e. capital, it means producers have choices between labour and machinery. 4. Mo#i:es of #$e firms'( In modern economy, private firms are *oint stock companies. )hey are run by professional managers. )he management follows many different motives. $ometimes firms have motives of ma,imum growth rate. )o achieve this goal they keep investment and producing more. It creates larger demand for labour. 5. Labour !ro%uc#i:i#4'( Gust as demand for a commodity by a consumer depends on its utility, demand for labour as a factor of production depends on the productivity. If labour productivity is low, it becomes costlier to employ labour and so it is not profitable to increase demand for labour.

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6. 3a)e ra#e'( #rice of labour is nothing but wage rate per unit of labour. 8ormally there is inverse relation between wage rate and demand for labour. )he inverse relation between wage rate and demand for labour until marginal product is eBual to wage rate. Su!!"4 of Labour'( $upply of labour refers to the number of labour units offering themselves for work. $upply of labour is normally measured as the number of person&hours ?or person&days@ which workers are willing to offer at the market wage. 7actors, which influence the supply of labour in a country or to the economy as a whole%& 1. SiBe of !o!u"a#ion'( #otential labour force in a country depends upon the size of the population and its growth. )hinly populated countries like -anada, ustralia have less supply of labour. 2. Ra#e of 5or;in) !o!u"a#ion #o #o#a" !o!u"a#ion'( )hough supply of labour depends primarily on the size of population of the country. ;e must also remember that not all people are available for work. 3. Se Ra#e'( )he ratio of males to females in the working age group is determining factor in the supply of labour. 4. 3or;in) 6ours'( ;orkers can give continuous and sustained work only if the working hours are reasonable. Fnreasonable long working hours means fatigue and inefficient work. 5. A)e of Re#iremen#'( ;orkers retire at a certain age. In some cases, the retirement age is 22 years. In some other places, it is 26 to 4: years of age. 6. Socia" A##i#u%e'( In certain occupations, se, and caste are taken into consideration. )his restricts the mobility and availability of labour.

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7. 3a)e Le:e"'( Labour supply is related to the wage level in a country. 3igh wage level contracts the supply of labour and lower wage level forces the worker to work more due to economic compulsions. 8. ,o#en#ia" Desire #o 3or;'( )he actual labour supply depends not only on how many workers are there in the working age group. 3owever, it also depends on their enthusiasm towards work. 9. 1rainin) ,erio%'( If labour is educated and trained then the period of education and training will be an important factor in influencing supply of labour.

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Q@.

3$a# is mobi"i#4 of Labour& Discuss #$e fac#ors $in%erin) mobi"i#4 of "abour. Mobi"i#4 of Labour'(

Ans' (

>)he ability and willingness of a worker to move from one place to another place or from one occupation to another occupation to get a *ob is called mobility of labour(. Im!or#ance of mobi"i#4 of "abour'( +obility is of great advantage to the worker himself. It is advantageous to them to move from the place of less demand to place where their services are mere demanded or opportunities available. +obility of labour is advantageous from the point of view of the industrial structure. Industrial structure has undergone lot of changes. E am!"e' ( 7rom agriculture, we reached to industrial stage. In industrial field too from traditional industries to modern and now automation. Fnemployment is kept at bay by the mobility of labour. labour move from place where it is not demanded is there. /ac#ors $in%erin) mobi"i#4 of "abour'( mong all factors of production, labour is least mobile. Land is geographically immobile and in an e,ception. -apital may be money or machine. It is a life less they and is transported to the place where reBuired which much ease and less difficulty. 3owever, in case of labour, it is different. 3e is not merely actuated by economic or monetary consideration. 3e has practically a fi,ed place in the society and does not liked to be rooted out from the known surroundings. 3ence it is rightly remarked that among all sorts of luggage, man is the most difficult to be transported. )he factors, which hinder or inhibit the mobility of labour, can be listed as follow%& .. 8ew -limate /. -ost of )ransport and -onveyance 7acilities 0. #roblem of accommodation
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1. Language barriers 2. dmission of children to schools or colleges. 4. !iet and food habits 5. ge and time of transfer and psychological conditions. 6. d*ustment with new environment and surroundings and locations D. education and training .:.#olitical, social disturbance ...-ost of living ./.9acial differences .0.7amily attachment .1.8ew customs and rituals conventions .2.;ages=pay scale .4.#roblem of ad*usting with new culture and surroundings, atmosphere etc.

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Q--. 3$a# %o 4ou un%ers#an% b4 #$e #erm 7Efficienc4 of Labour8& E !"ain #$e fac#ors affec#in) "abour efficienc4. Su))es# #$e measures #o im!ro:e efficienc4 of "abour. Ans' ( Meanin) Of Efficienc4 Of Labour

8ormally though efficiency of labour means the ability or1 fitness of a worker to produce goods and services in proper Buantity and of the right Buality which is a given period. )he ability can be measured in terms of number of units of a commodity produced by a worker with in a given period. )hus, one factor worker producing more number of a commodity with in a given time than the other worker is considered more efficient. Efficiency of labour is thus an important determinant of the study of labour in a productive sense. It determines the size of real productive labour force in a country. country labour supply will be substantially augmented if it possesses a relatively small labour force possessing a high degree of efficiency. 7actors affecting the efficiency of labour are as follows%& .. 9acial $tock% & +an acBuires some physical Bualities from the racial stock to which he belongs. )he $ikhs and Gats are very strong and are capable of hard work. /. ;ages% & If a labourer get a low wage, he can(t maintain his efficiency, if wages are low, labour productivity will also be low. 0. -limate% & In temperate and cold climate, people can work hard. 3ot climate is not conductive to very hard work. In hot climate, labourers cannot work as hand as labourer in cool climate can. 1. 3ours to ;ork% & )he efficiency of labour is affected by the working hours. If a labourer works for long hours, work becomes monotonous and the labourers worse only half heartily. 3e cannot give the best.
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2. ;orking -onditions% & If the factory building is dirty and not well&ventilated workers cannot hard work. 3owever, if factory building is clean and well ventilated and if the atmosphere is pleasant, workers like to work hard. 4. Education and )raining% & Education and )raining impact technical knowledge, sense of responsibility and improve the efficiency of labour. )rained labourer can use modern machinery efficiency. 5. ;elfare ctivities% & $ocial security measures like medical facilities and maternity benefits help laborer to maintain their health and efficiency. Measures #o im!ro:e efficienc4 of "abour'( Efficiency of labour can be improved by eradicating the cause of low efficiency. )his can be done particularly through proper education, training improvement in machines and betterment in working living conditions. )hus, labour efficiency can be improved with respect of following points%& .. Ay linking about labour efficiency and by wages and incentive bonus, it is possible to motivate labour. /. Labour efficiency can be raised by mutual argument between management and workers regarding distribution of benefits of raising labour productivity. 0. Improving industrial relations can raise labour efficiency. 1. -omprehensive planning and introducing input is creating Buality consciousness in production and in cost control, that efficiency can be raised. 2. Aringing improvement in plan lay out material handling and better internal management in a factory has positive effect on labour efficiency.

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4. Ay providing modern training course to those in personnel department who handle worker such trained personnel will be able to create an atmosphere of better effort by workers. 5. #roviding training to workers and taking measures to improve labour welfare. 6. Ay introducing modern methods of organization, labour efficiency can be raised. Q-2. E !"ain #$e conce!# of socia" securi#4. Brief"4 re:ie5 #$e Socia" securi#4 Measures a%o!#e% b4 #$e )o:ernmen# in In%ia. Ans' ( Socia" Securi#4

$ocial security as at present understood is one of the dynamic concepts of the modern age, which has deeply influenced the social and economic policy of many countries in the world. )he idea of social security is that the state shall make itself responsible for ensuring a minimum standard of material welfare to all its cities on a basis wide enough to cover all the main contingencies of life. )he social security system aims to help individual in such times of dependency. )he main risk of insecurity, to which human life is liable and in relation to which organized society can afford relief to the helpless individual are incidents of life occurring right from childhood up to old age and death and include mainly sickness, maternity invalidity accident and industrial disease unemployment, old age, death of bread winner and other such emergency. Socia" securi#4 measures in In%ia'( In an industrial economy, the worker is sub*ected to periodic unemployment due to cyclical fluctuation in business, sickness industrial accidents and old age. )here is nothing more serious to worker to his=her family than unemployment. $ickness suspends earning capacity of a worker temporarily industrial accidents may disable him=her permanently or partially and old age put a stop to his=her ability to earn support himself=herself and the family. 8aturally, the state has the obligation to help the worker and provide them security. In western countries, "ovt.
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started various measures to protect workers in time of sickness and unemployment and provide relief in case of accident and old age. ll these measures are collectively known as social security schemes. 'arious security measures adopted in India is divided into two categories%& Before In%e!en%ence Af#er In%e!en%ence

Before In%e!en%ence'( ;orkmen(s -ompensation act%& In .D/0, the "ovt. of India passed the ;orkmen(s -ompensation ct in order to provide for compensation to the workers in case of industrial accidents and in*ury. )he act now covers workers employed in factories, mines plantation, mechanically propelled vehicles construction workers and certain other hazardous occupations. Fnder this act, the amount of compensation depends upon the nature of the in*ury and the salary of worker concerned. )he ct is however not applicable to the persons who are covered by Employee $tate insurance ct, .D16. Af#er in%e!en%ence(1$e em!"o4ee8s s#a#e insurance ac#0 -A9@. )he employee(s state insurance act was passed in .D16 with the ob*ective of providing compulsory and contributory health insurance of workers. )he act provides for medical care and treatment cash benefits during sickness, maternity and employment in*ury, pension to the dependent on death. A%minis#ra#ion

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)he act of .D16 set up the autonomous Employee(s state corporation, which has the responsibility of administering the body of 1: people representing the union and the state "overns, the parliament, employees and employer(s organization and the medical profession. /inance an% Con#ribu#ion )he act of .D16 provided for the setting up of a fund known as the Employee(s $tate Insurance 7und. )he rate of contribution by the employer, which was earlier fi,ed at 1H, has been raised to 1.52H and that of employee rose from ..2H to ..52H of the wage. )he state "ovt. share the e,penditure on the provision of medical care to the e,tent of ./.2H. Aesides the employer, employee contribution the central and state "ovt. also provides grants for the working of the scheme. Q-2. 3ri#e s$or# no#e on'( +9. 14!es of Unem!"o4men# an% Unem!"o4men# in In%ia. +-D. /ac#ors affec#in) %eman% for "abour Ans -2+9.'( 14!e of Unem!"o4men#

Fnemployment of some kind has always been a running problem of modern societies whether developed or underdeveloped. )he various types of unemployment may be classified are as follows%& .. /. 0. 1. 2. 4. 5. 6. D. 'oluntary Fnemployment 7rictional Fnemployment -asual Fnemployment $easonal Fnemployment $tructural Fnemployment )echnological Fnemployment -yclical Fnemployment -hronic Fnemployment !isguised Fnemployment Arief descriptions of various type of unemployment are as follows%& -. Eo"un#ar4 Unem!"o4men#
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In every society, there are some people who are unwilling to work at the prevailing wage rate and there are some who do not want to work. $uch type of unemployment in any society is known as 'oluntary Fnemployment. 2. /ric#iona" Unem!"o4men# 7rictional unemployment is a temporary phenomenon. It may take place in various ways. ;hen some workers are temporarily out of work while changing *ob it called 7rictional Fnemployment. 2. Casua" Unem!"o4men# In industries such as building construction catering or agriculture where workers are employed on a day&to&day basis, there are chances of casual unemployment occurring due to short&term contract. 9. Seasona" Unem!"o4men# )here are some industries and occupations such as agriculture, the catering trade in holiday resorts, some agro&based industries activities such as sugar mills and rice mills etc. in which production activities are seasonal in nature.

<. S#ruc#ura" Unem!"o4men# !ue to structural changes in economy, structural unemployment may take place. $tructural unemployment is caused due to a decline in demand for the production in a particular industry. >. 1ec$no"o)ica" Unem!"o4men# kind of structural unemployment may take place in an economy because of technological improvement. $uch unemployment may be described as technological unemployment. ?. C4c"ica" Unem!"o4men# -apitalist biased, advanced countries are sub*ect to trade cycles. )rade cycles, especially during recession and depression phase cause cyclical unemployment in these countries. $ince cyclical phase cannot be #ermanente, cyclical unemployment remains only as a short&term phenomenon. @. C$ronic Unem!"o4men# ;hen unemployment tends to be a long&term feature of a country, it is called -hronic Fnemployment. Lack of developed resources and their utilization.
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A. Dis)uise% Unem!"o4men# Fnemployment may be classified into ?i@ Cpen and ?ii@ !isguised )he term&disguised unemployment commonly refers to a situation of employment with surplus manpower. !isguised unemployment in the strict sense implies underemployment of labour. Unem!"o4men# !rob"ems in In%ia'( In developed countries, unemployment of labour is mostly cyclical or frictional in nature. -yclical unemployment can be cured by increasing aggregate demand for goods. Causes of unem!"o4men# in In%ia'( 1. ,o!u"a#ion )ro5#$' ( In India during the planning period, population has increased at the average rate of /.2H but employment opportunities owe not increase accordingly. 2. C$an)e in a)e s#ruc#ure of !o!u"a#ion' ( It is estimated that when population increases by /.0H per year, the population belonging to the working age group increase by more than 1.2H per year. 3. Increase in "abour force !ar#ici!a#ion ra#e' ( It shows that percent of working population is actually ready to work at e,isting wage rate. It is found that people now want the income as income of one person in family is not enough I hence unemployment increases. Ans -2 +-D.'( /ac#ors affec#in) %eman% for "abour'(

In labour market, demand for labour is made by individual firms, which want to employ labour to carry out their production. It means a firm is a buyer in the labour market. Fnlike demand for consumer goods, demand for labour is a derived demand. !eterminants or factors affecting demand for labour%& 1. Deman% for commo%i#ies !ro%uce% b4 "abour' ( ;hen demand for commodities increases, firms wants to sell more for which they have to increase production. In such case, they need labour as a factor of production. )hus in growing countries, the demand for labour goes on increasing.

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2. A:ai"abi"i#4 of Ca!i#a"' ( largely capital and labour are complementary factors of production. If more capital is available, private firms want to invest more. ;hen they increase investment and set up new production, they need more labour. 3. Subs#i#u#ion be#5een "abour an% mac$iner4' ( Labour and capital can also be substituted for each other. If work done by labour can also be performed by machinery, demand for labour well reduces. 4. Mo#i:es of #$e firm' ( In modern economy, private firms are *oint stock companies. #rofessional managers run them. )hey have many different motives. $ometimes firms have motives of ma,imum growth rate. )o achieve this goal they keep investing and producing more. It creates larger demand for labour. 5. 3a)e Ra#e' ( #rice of labour is nothing but wage rate per unit of labour. 8ormally there is inverse relation between wage rate and demand for labour. If wage rate increase cost of employing labour also increases. 3ence, firms reduce demand for labour.

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