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7115414 Labour Economics

7115414 Labour Economics

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Q2. Define “Labour Economics”. Explain the nature and scope of Labour Economics. Explain the characteristics 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”. According to Dole Yoder:“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”. Scope 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. According to Dr. G.P.Sinha, 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. Size 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 IV. Labour’s risk and problems. V. Trade unionism VI. Labour’s status and position in society VII. Labour legislation. Another different area of labour economics are:I. Advance theory of labour economics II. Labour laws III. Principles of personnel management and job evaluation IV. Principle and practice of labour welfare

LABOUR ECONOMICS(Page 1) Name : (PL. FILL IN), Enrolment No.( PL. FILL IN)

V. Theory and practice of trade union management. Nature 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. The theoretical section II. The institutional section A. The Theoretical Section:The theoretical section of labour economics is concerned with building up of models of economic behavior by making different sets of assumption. B. The Institutional Section:The institutional section of labour economics is concerned with studies of labour problems in an institutional historical content. The nature of the labour problems changes with the change in the institutional framework of the economic systems. Characteristics of Labour:According to Dr. Alfred Marshell, labour may be defined as “Any exertion of mind or body undergone partly or wholly with a view to have some good other than the pleasure derived directly from the work”. Characteristics are as follows:1. Labour cannot be separated from the person who laboursIn other words we can say that labour cannot be separated from labourer body and personality. Thus, the environment and the working conditions in which the worker has to work are of utmost important in the supply of labour. 2. The worker sells his work services but he himself remains his own property: - In the words of Marshell, “The worker sells his work but he himself remains his own property. Thus, the supply of labour along with other things depends
LABOUR ECONOMICS(Page 2) Name : (PL. FILL IN), Enrolment No.( PL. FILL IN)

Enrolment No. FILL IN). languages. therefore it does not last and cannot be stored for future. Labour is perishable commodity. that day is lost for ever and he would never be in a position to make use of his lost services. Labour is not mobile as capital: . 4. 6. Finally. a paid adjustment of the supply of labour to its demand is not possible. 8. LABOUR ECONOMICS(Page 3) Name : (PL. customs etc at different places is hinderences to the mobility of the worker from one place to another. therefore they cannot with held labour from the market. 7. 3. The supply of labour cannot be decreased or increased with fall or rise of wage. FILL IN) . 5.upon the forethought and selflessness of those who bring up the labourer.Hence.The difference in environments. The marginal productivity of labour is comparatively less than capital.( PL.If a worker does not work for a particular day. As the seller of labour are commonly poor and have no reserve fund. labour is a living thing and that makes all the differences.

According to Wicksell. Real Income= Money income/Price Level LABOUR ECONOMICS(Page 4) Name : (PL. his money or nominal wages will be Rs. FILL IN). real wages means real income. which the money wages can buy. However. They do not reveal the standard of living or the goods and services which labourer can buy and consume. Differences between Nominal wages and Real wages:Nominal Wages:The amount of money that a labourer gets in exchange of his services is called money wages or nominal wages. What is meant by the term wages? How would you distinguish between ‘Nominal Wages’ and ‘Real Wages’? Explain the factors influencing real wages. Beham defined a wage as “A sum of money paid under contract by an employer to a worker for services rendered”. Real wages refer to the goods and services. Labourer is not so much interested in money wage as they are in real wages because their standard of living depends on real wages. 200.200. If a labourer gets Rs. The labourer is generally paid a certain sum of money per day or week or month. in economics. Enrolment No. and advantages and disadvantages associated with the jobs. payment made for all kinds of services.Q3. Wages:- Ans: - The price paid for the services of labours in production is called wages. whether by way of salaries or in any other way is included in wages. a day for his work. Real Wages:The amount of goods and services that labourer can get with his nominal wages is called real wages. However. mere money payment does not reflect the real earnings of the labourer. FILL IN) .( PL.

These incidental benefits generally known as ‘Fringe Benefits’ or ‘Perks’ if available must be added while comparing and calculating real wages 3. foreign tours etc. FILL IN) . 2. FILL IN). healthy atmosphere free from pollution. Working Conditions:While considering real wages. availability of facilities like drinking water and rest house etc. 7. whether there exists great hazards. Incidental advantages and benefits:While calculating real wages. This must be taken into account while LABOUR ECONOMICS(Page 5) Name : (PL. extra benefits or advantages a worker may be getting must be taken into consideration. 1. wages in terms of goods and services) depend on purchasing power of money. These extra benefits may take the form of free or subsidized transport facility. whether it involves frequent traveling etc. Nature of jobs:While considering real wages of a worker nature of job must be taken into account whether the job is injurious to health.Following are the factors or items that are generally taken into account while calculating ‘Real Wages’ of a worker as compared to his nominal wages. Enrolment No. some jobs carry higher social status and prestige than some other.( PL. must be taken into account while calculating real wages. undertaking tuitions etc. Some jobs (like professors and teachers) enjoy the opportunities of making extra income by writing books. Social prestige and status:For example. Possibilities of promotion and success:Possibility of quick promotions. Purchasing power of money:Real wages (i. working conditions must be considered. Possibility of extra earnings:Possibilities of extra earnings must be taken into account while calculating and comparing real wages of workers. 4. By working conditions are meant number of working hours per day. which means on the prevailing price level at particular place where a worker is working and living. 6.e. 5.

( PL. LABOUR ECONOMICS(Page 6) Name : (PL. while certain jobs do not involves such expenses. Training expenses:Training expenses involved in the case of different jobs must be taken into account while calculating real wages and especially while real wages of two jobs. 8. Enrolment No. 9. FILL IN) . Trade and office expenses:Some jobs like doctor’s and pleader’s involves trading expenses like maintaining an office and a clerk etc.calculating real wages of workers and comparing real wages of two workers doing two jobs in different occupations. FILL IN). This must be taken into account while determining and comparing real wages.

Profitability of the Organization:In those industries. it is seldom seen that uniform level of wages is established even in long run. Wage difference is also found between male and female workers. Enrolment No. Wage difference between different industries and occupations because of many underlying factor:1. which have high profitability in comparison to those industries where profitability is lesser.Q4. Wage differences may be horizontal and vertical. Horizontal wage difference is found among workers who have the same amount of skill training and efficiency. Nature of Work:Wages also differ based on nature of work. FILL IN) . 5. What do you understand by the term ‘Wage differentials’? How do you account for wage differences in different industries and occupations and in the same industry? Why do wages differ between male and female labour? Wage Differentials:- Ans: - In the real world however. which have a higher status. Trade Unions:Where powerful trade unions exist in some industries wages in those industries will be higher than in others where such trade unions do not exist. FILL IN). 3. 2.( PL. wages will be higher. Difference in skill and efficiency:Where different skill and efficiency norms are involved in different industries wage must be different. Foreign companies and multinational corporations normally pay higher wages merely because of status norm. LABOUR ECONOMICS(Page 7) Name : (PL. On the contrary. Risky employments normally involve higher wages or compensations in comparison to less risky jobs. 4. Status of the Organization:Wages are normally higher in organization. Vertical wage differences on the other hand denote the differences (in wages) in different grade of an occupation. 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.

there is an over crowding of female workers. The reasons for this disparity are1. the productivity of female labourers is believed to be low. Enrolment No. The mobility of female worker is also low because of family ties and domestic responsibilities. 3. 5. In certain occupations. Ignorance:When workers suffer from ignorance. Female workers would not like to change jobs even if a change of job has better prospectus for them. domestic servants. jobs such as teaching. LABOUR ECONOMICS(Page 8) Name : (PL. Differences in wages based on differences in sex are not justified. nursing etc.6. Owing to lower physical strength and other factors. The international labour organization had laid down in its constitution that men and women should receive equal remuneration for equal work. Wage differs between male and female labour:Female labourer is paid much less than male workers.( PL. 4. The trade union movement is not very strong and has not taken deep roots in case of female labour. It is believed that the necessity for the earnings by man is greater than that of a woman. FILL IN) . Generally. females are not sole breadwinner of the family. Many countries have tried to eliminate them based on principle of “Equal pay for equal work”. 2. FILL IN). For instance. they suffer from lower wages.

accountants and white colored workers. It does not include the payment made in the form of salaries to individuals working as clerks. Different concepts of wages: Minimum Wage  Living Wage  Fair Wage The problem of wage is the most controversial subject in industrial relations. Enrolment No.( PL. Ans: - Wages The price paid for the services of labourers in production is called wages. a minimum wage is one. Benham defines a wage as:“A sum of money paid under contract by an employer to a worker for services rendered. LABOUR ECONOMICS(Page 9) Name : (PL. The labourers are generally paid a certain sum of money per day or week or month. FILL IN) . Give an idea about different concepts of ‘Wages’.” Benham definition covers only the payment made for the use of manual labour. which may be sufficient to enable q worker to live in reasonable comfort having regard to all obligations to which an average worker would ordinally be subject. The 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.  Minimum Wage The concept of “Minimum Wage” stands for different standard of different countries. Thus. The 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. FILL IN).Q5.

Marshell Says.  Living Wage According to the committee in fair wages. govt. thus prevent sweating in industry. 4.( PL. To raise the wages in the industries where they are low. protection against ill health requirement of essential social needs and a measure of insurance against the more important misfortunes including old age. 3.The objective of minimum wage 1. Marshell and Pigou have defined fair wages. which provided for the payment of fair wages of labour. of India appointed a Fair wages committee in 1948.” Lower limit of fair wages must be the minimum wage for workers and upper limit will be the industry capacity to pay. FILL IN). To promote peace in industry by guaranteeing a wage rate this will enable them to meet their minimum requirements. and the committee report was published in 1949. 2. FILL IN) . Raise the standards of living and efficiency of workers. the living wages should enable to male earner to provide for himself and his family the bare essential of food. “The 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. Enrolment No.  Fair Wage To bring improvement in the relations between labour and management the industrial truce resolution was passed in 1947. However. between these two limits following factors have to be considered  The productivity of labour LABOUR ECONOMICS(Page 10) Name : (PL. the committee on Fair wages observed. After considering various observations made by Indian authorities. To prevent explanation of workers and secure a wage equal to work load. clothing and shelter but a measure of frugal comfort including duration for the children. “In any given industry wages are fair relatively to wage in industry in general.

FILL IN) . Enrolment No. The prevailing rate of wages in the same or neighboring locality  The place of the industry in the economy  The level of national dividend and its distribution LABOUR ECONOMICS(Page 11) Name : (PL. FILL IN).( PL.

” LABOUR ECONOMICS(Page 12) Name : (PL. Enrolment No. Yet 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.The concepts of minimum. FILL IN).( PL. FILL IN) . fair and living wages should not be treated as water tight compartments. “As the level of wages actually prevailing a country would depend largely on the level of economic development.

labour market is normally local markets in the sense of the demand for the supply of labour being confined to a particular locality. There 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.( PL. industries occupations and d regions are determined. LABOUR ECONOMICS(Page 13) Name : (PL. A labour market is essentially an imperfect market: . It is the only device for sorting out worker with varying skills and interest among the multitude of different jobs in the economy.Lack of mobility is an important characteristic of a labour market owing to various reasons.Q6. The labour market is also an area or place where relative wage levels for different plants. Lack of mobility: . 3. Unlike a commodity market. Thus. FILL IN). What are the main characteristics of labour market? Explain the major imperfections in labour market. Define Labour market. relationship between a buyer and seller in a labour market (expecting a casual labour market) is not temporary and is expected to continue for some limit. Labour Market:- Ans: - Labour market may be defined as “A process by which supplies of particular type of labour and demands for that type of labour balr seek to obtain a balance”. Labour market is essentially local in character: The 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. Enrolment No. Characteristics of Labour Market:Main characteristics of labour market are as follows:1. 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. 2. FILL IN) . The labour market is the place for operation of this process.Labour market is an imperfect market where one does not find a normal wage rate to which the market rate naturally tends. 4.

In fact. 6. However. as Hicks pointed out.There is no perfect mobility of labour from one industry top another or from one locality to another. Monopoly:. Wage differentials:In a perfectly competitive market for a commodity. However. in the actual market the wage differentials are often due to imperfections in the labour market. These peculiarities also make labour market imperfect 1. c) Barriers to the entry of labour: There 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.( PL. Therefore. In other words. 2. the other markets are normally cleared.Monopoly in labour market is extremely rare excepting when the skill of a particular type of extremely rare or when a very powerful trade union exercise a complete control over the supply of labour in a given industry or in a given area. In other words. in labour market wages are not freely flexible. George Stigler defined the mar4ket of a commodity as all those places where the price of that commodity tends to be uniform after allowance for transport cost. a) No perfect knowledge: Worker and employers do not have perfect knowledge about the conditions in the labour market. the wage differences prevail. LABOUR ECONOMICS(Page 14) Name : (PL. the effect of incre3ase in demand for labour on wage rate is felt only after a long passage of time. which distinguish it from the market of other commodity. Therefore. b) Lack of perfect mobility of labour: . FILL IN) . Most of the labour markets in the world do not justice to the workers in the matter of the division of the proceeds of industry as between the employers and workers.5. No equilibrium between demand for and supply of labour: In the markets of other commodities prices keeps on changing till demand is equal to supply. FILL IN). Imperfections in the labour market:There are certain peculiarities of labour market. all units of the commodity are homogeneous and price tends to be uniform. the labour markets are usually the buyers market. Enrolment No.

( PL. LABOUR ECONOMICS(Page 15) Name : (PL. Therefore. there cannot be an economic explanation of wage rates based purely on demand and supply conditions. mainly the market forces of demand and supply determine the price. FILL IN) . e) Institutional forces in determining wages: In the market of the other commodities. FILL IN).d) Employer’s monopsony: The 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. Enrolment No.

If more capital is available. It means a firm is a buyer in the labour market. Unlike demand for consumer goods. private firms want to invest more. they need more labour and so demand for labour increases because of increase in supply of capital. Substitution between labour and machinery:Labour and capital can also be substituted for each other. Sometimes firms have motives of maximum growth rate. FILL IN). capital. FILL IN) . In such cases. If work done by labour can also be performed by machinery i. It creates larger demand for labour. To achieve this goal they keep investment and producing more. 5. The management follows many different motives. 4.( PL. 3. it means producers have choices between labour and machinery. Availability of Capital:Largely capital and labour are complementary factors of production. Demand For Labour:- Ans: - In labour market. Demand for commodities produced by labour:When demand for commodities increases. which want to employ labour to carry out their production. LABOUR ECONOMICS(Page 16) Name : (PL. When they increase investment and set up new production units. firms wants to sell more. Demand for labour by firms depends on the following factors:1. demand for labour is made by individual firms. for which they have to increase production. If labour productivity is low. Labour productivity:Just as demand for a commodity by a consumer depends on its utility. Discuss the factors influencing demand for and supply of labour. Enrolment No. private firms are joint stock companies. they need labour as a factor of production. 2. demand for labour is a derived demand. it becomes costlier to employ labour and so it is not profitable to increase demand for labour.e. demand for labour as a factor of production depends on the productivity. They are run by professional managers.Q7. Motives of the firms:In modern economy.

3. the retirement age is 55 years. Social Attitude:In certain occupations.( PL. 6. 5. Supply of Labour:Supply of labour refers to the number of labour units offering themselves for work. Unreasonable long working hours means fatigue and inefficient work. LABOUR ECONOMICS(Page 17) Name : (PL. 2. sex and caste are taken into consideration. In some cases. Factors. which influence the supply of labour in a country or to the economy as a whole:1. Wage rate:Price of labour is nothing but wage rate per unit of labour. FILL IN). Rate of working population to total population:Though supply of labour depends primarily on the size of population of the country. Australia have less supply of labour. Normally there is inverse relation between wage rate and demand for labour. Enrolment No.6. it is 58 to 60 years of age. This restricts the mobility and availability of labour. The inverse relation between wage rate and demand for labour until marginal product is equal to wage rate. In some other places. Size of population:Potential labour force in a country depends upon the size of the population and its growth. Sex Rate:The ratio of males to females in the working age group is determining factor in the supply of labour. FILL IN) . Working Hours:Workers can give continuous and sustained work only if the working hours are reasonable. We must also remember that not all people are available for work. 4. Age of Retirement:Workers retire at a certain age. Thinly populated countries like Canada. Supply of labour is normally measured as the number of person-hours (or person-days) which workers are willing to offer at the market wage.

( PL. However. Potential Desire to Work:The actual labour supply depends not only on how many workers are there in the working age group.7. 9. Wage Level:Labour supply is related to the wage level in a country. Enrolment No. 8. FILL IN) . FILL IN). Training Period:If labour is educated and trained then the period of education and training will be an important factor in influencing supply of labour. High wage level contracts the supply of labour and lower wage level forces the worker to work more due to economic compulsions. it also depends on their enthusiasm towards work. LABOUR ECONOMICS(Page 18) Name : (PL.

Mobility of labour is advantageous from the point of view of the industrial structure. New Climate 2. which hinder or inhibit the mobility of labour. Problem of accommodation LABOUR ECONOMICS(Page 19) Name : (PL. However. Cost of Transport and Conveyance Facilities 3.( PL. labour is least mobile. Unemployment is kept at bay by the mobility of labour. Enrolment No. Importance of mobility of labour:Mobility is of great advantage to the worker himself. The factors. What is mobility of Labour? Discuss the factors hindering mobility of labour. In industrial field too from traditional industries to modern and now automation. Hence it is rightly remarked that among all sorts of luggage. in case of labour. He has practically a fixed place in the society and does not liked to be rooted out from the known surroundings. It is advantageous to them to move from the place of less demand to place where their services are mere demanded or opportunities available. we reached to industrial stage. Example: -From agriculture. A labour move from place where it is not demanded is there. Mobility of Labour:- Ans: - ‘The ability and willingness of a worker to move from one place to another place or from one occupation to another occupation to get a job is called mobility of labour’. It is a life less they and is transported to the place where required which much ease and less difficulty. Land is geographically immobile and in an exception. He is not merely actuated by economic or monetary consideration. it is different.Q8. Capital may be money or machine. FILL IN). Industrial structure has undergone lot of changes. Factors hindering mobility of labour:Among all factors of production. FILL IN) . can be listed as follow:1. man is the most difficult to be transported.

education and training 10.4. social disturbance 11.Family attachment 14.New customs and rituals conventions 15. Enrolment No. FILL IN).Political. FILL IN) . 8.( PL. Diet and food habits Age and time of transfer and psychological conditions. 5.Cost of living 12.Problem of adjusting with new culture and surroundings. LABOUR ECONOMICS(Page 20) Name : (PL. atmosphere etc. Adjustment with new environment and surroundings and locations 9. 6. 7.Racial differences 13.Wages/pay scale 16. Language barriers Admission of children to schools or colleges.

In hot climate. It determines the size of real productive labour force in a country. Wages: If a labourer get a low wage. If a labourer works for long hours. Climate: . Suggest the measures to improve efficiency of labour. 3. Factors affecting the efficiency of labour are as follows:1. Ans: Meaning Of Efficiency Of Labour Normally though efficiency of labour means the ability or4 fitness of a worker to produce goods and services in proper quantity and of the right quality which is a given period. labour productivity will also be low. Hours to Work: . Hot climate is not conductive to very hard work. one factor worker producing more number of a commodity with in a given time than the other worker is considered more efficient. What do you understand by the term ‘Efficiency of Labour’? Explain the factors affecting labour efficiency.Q11. He cannot give the best. Thus.( PL. if wages are low. he can’t maintain his efficiency.In temperate and cold climate. FILL IN). work becomes monotonous and the labourers worse only half heartily. people can work hard. Racial Stock: Man acquires some physical qualities from the racial stock to which he belongs. LABOUR ECONOMICS(Page 21) Name : (PL. Enrolment No.The efficiency of labour is affected by the working hours. Efficiency of labour is thus an important determinant of the study of labour in a productive sense. 4. labourers cannot work as hand as labourer in cool climate can. 2. A country labour supply will be substantially augmented if it possesses a relatively small labour force possessing a high degree of efficiency. The Sikhs and Jats are very strong and are capable of hard work. The ability can be measured in terms of number of units of a commodity produced by a worker with in a given period. FILL IN) .

5. Bringing improvement in plan lay out material handling and better internal management in a factory has positive effect on labour efficiency. Education and Training: Education and Training impact technical knowledge. FILL IN) . Labour efficiency can be raised by mutual argument between management and workers regarding distribution of benefits of raising labour productivity. Comprehensive planning and introducing input is creating quality consciousness in production and in cost control. it is possible to motivate labour. 7. Trained labourer can use modern machinery efficiency. Thus. Welfare Activities: Social security measures like medical facilities and maternity benefits help laborer to maintain their health and efficiency. However. 5. labour efficiency can be improved with respect of following points:1. By linking about labour efficiency and by wages and incentive bonus. 3. LABOUR ECONOMICS(Page 22) Name : (PL. FILL IN). sense of responsibility and improve the efficiency of labour. 4. Enrolment No. if factory building is clean and well ventilated and if the atmosphere is pleasant. that efficiency can be raised. training improvement in machines and betterment in working living conditions. 6. Improving industrial relations can raise labour efficiency. This can be done particularly through proper education. Measures to improve efficiency of labour:Efficiency of labour can be improved by eradicating the cause of low efficiency.( PL. Working Conditions: If the factory building is dirty and not well-ventilated workers cannot hard work. 2. workers like to work hard.

Naturally. The 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. the worker is subjected to periodic unemployment due to cyclical fluctuation in business. Social security measures in India:In an industrial economy. 7. labour efficiency can be raised. maternity invalidity accident and industrial disease unemployment.6. the state has the obligation to help the worker and provide them security. FILL IN) . By 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. By introducing modern methods of organization. LABOUR ECONOMICS(Page 23) Name : (PL. Sickness 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. The social security system aims to help individual in such times of dependency. Q12. 8. FILL IN).( PL. Govt. 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. Enrolment No. Ans: Social Security Social security as at present understood is one of the dynamic concepts of the modern age. In western countries. Explain the concept of social security. The main risk of insecurity. old age. Briefly review the Social security Measures adopted by the government in India. There is nothing more serious to worker to his/her family than unemployment. sickness industrial accidents and old age. death of bread winner and other such emergency. which has deeply influenced the social and economic policy of many countries in the world. Providing training to workers and taking measures to improve labour welfare.

mechanically propelled vehicles construction workers and certain other hazardous occupations. 1948. 1948. After independence-The employee’s state insurance act. the Govt. maternity and employment injury. The employee’s state insurance act was passed in 1948 with the objective of providing compulsory and contributory health insurance of workers. All these measures are collectively known as social security schemes.( PL. mines plantation. Administration LABOUR ECONOMICS(Page 24) Name : (PL. the amount of compensation depends upon the nature of the injury and the salary of worker concerned. FILL IN) . pension to the dependent on death.started various measures to protect workers in time of sickness and unemployment and provide relief in case of accident and old age. Various security measures adopted in India is divided into two categories: Before Independence  After Independence Before Independence:Workmen’s Compensation act:In 1923. The act provides for medical care and treatment cash benefits during sickness. FILL IN). of India passed the Workmen’s Compensation Act in order to provide for compensation to the workers in case of industrial accidents and injury. Under this act. The Act is however not applicable to the persons who are covered by Employee State insurance Act. Enrolment No. The act now covers workers employed in factories.

which was earlier fixed at 4%. (10) Factors affecting demand for labour Ans 13(4):Type of Unemployment Unemployment of some kind has always been a running problem of modern societies whether developed or underdeveloped. 9. 7. the parliament. 2.5% to 1. 6. Write short note on:(4) Types of Unemployment and Unemployment in India. FILL IN) . The state Govt. Enrolment No.75% and that of employee rose from 1.75% of the wage. Voluntary Unemployment LABOUR ECONOMICS(Page 25) Name : (PL.The act of 1948 set up the autonomous Employee’s state corporation. Finance and Contribution The act of 1948 provided for the setting up of a fund known as the Employee’s State Insurance Fund. 4. 5. 8. employees and employer’s organization and the medical profession.5%. employee contribution the central and state Govt. Q13. Voluntary Unemployment Frictional Unemployment Casual Unemployment Seasonal Unemployment Structural Unemployment Technological Unemployment Cyclical Unemployment Chronic Unemployment Disguised Unemployment Brief descriptions of various type of unemployment are as follows:1.( PL. has been raised to 4. 3. also provides grants for the working of the scheme. FILL IN). share the expenditure on the provision of medical care to the extent of 12. which has the responsibility of administering the body of 40 people representing the union and the state Governs. The rate of contribution by the employer. The various types of unemployment may be classified are as follows:1. Besides the employer.

in which production activities are seasonal in nature. Casual Unemployment In industries such as building construction catering or agriculture where workers are employed on a day-to-day basis. FILL IN). there are chances of casual unemployment occurring due to short-term contract. 2. it is called “Chronic Unemployment”. there are some people who are unwilling to work at the prevailing wage rate and there are some who do not want to work. LABOUR ECONOMICS(Page 26) Name : (PL.In every society. Technological Unemployment A kind of structural unemployment may take place in an economy because of technological improvement. Since cyclical phase cannot be Permanente. Frictional Unemployment Frictional unemployment is a temporary phenomenon. structural unemployment may take place. Such unemployment may be described as technological unemployment. Cyclical Unemployment Capitalist biased. cyclical unemployment remains only as a short-term phenomenon. 6. Structural unemployment is caused due to a decline in demand for the production in a particular industry. Structural Unemployment Due to structural changes in economy. the catering trade in holiday resorts. some agro-based industries activities such as sugar mills and rice mills etc. 8. FILL IN) . Such type of unemployment in any society is known as Voluntary Unemployment. especially during recession and depression phase cause cyclical unemployment in these countries. 4.( PL. 7. Trade cycles. 5. Lack of developed resources and their utilization. Enrolment No. Chronic Unemployment When unemployment tends to be a long-term feature of a country. 3. When some workers are temporarily out of work while changing job it called Frictional Unemployment. advanced countries are subject to trade cycles. It may take place in various ways. Seasonal Unemployment There are some industries and occupations such as agriculture.

( PL. Disguised Unemployment Unemployment may be classified into (i) Open and (ii) Disguised The term-disguised unemployment commonly refers to a situation of employment with surplus manpower. demand for labour is made by individual firms. demand for labour is a derived demand. It is found that people now want the income as income of one person in family is not enough & hence unemployment increases.5% but employment opportunities owe not increase accordingly.When demand for commodities increases. which want to employ labour to carry out their production. Ans 13 (10):Factors affecting demand for labour:- In labour market. unemployment of labour is mostly cyclical or frictional in nature.It is estimated that when population increases by 2.9. population has increased at the average rate of 2. In such case.3% per year. Increase in labour force participation rate: It shows that percent of working population is actually ready to work at existing wage rate. Unlike demand for consumer goods. Determinants or factors affecting demand for labour:1. Cyclical unemployment can be cured by increasing aggregate demand for goods. Causes of unemployment in India:1. the demand for labour goes on increasing. the population belonging to the working age group increase by more than 4. firms wants to sell more for which they have to increase production. they need labour as a factor of production. Demand for commodities produced by labour: . Enrolment No.In India during the planning period. Change in age structure of population: .5% per year. 3. FILL IN). Disguised unemployment in the strict sense implies underemployment of labour. It means a firm is a buyer in the labour market. Population growth: . Thus in growing countries. FILL IN) . 2. Unemployment problems in India:In developed countries. LABOUR ECONOMICS(Page 27) Name : (PL.

firms reduce demand for labour. Normally there is inverse relation between wage rate and demand for labour.( PL. 5. LABOUR ECONOMICS(Page 28) Name : (PL. private firms want to invest more. Enrolment No. They have many different motives. they need more labour. To achieve this goal they keep investing and producing more. When they increase investment and set up new production. Professional managers run them. If more capital is available.2. Motives of the firm: In modern economy. FILL IN) . If wage rate increase cost of employing labour also increases. Substitution between labour and machinery: Labour and capital can also be substituted for each other. 4. demand for labour well reduces. FILL IN). Availability of Capital: largely capital and labour are complementary factors of production. 3. private firms are joint stock companies. If work done by labour can also be performed by machinery. Hence. It creates larger demand for labour. Sometimes firms have motives of maximum growth rate. Wage Rate: Price of labour is nothing but wage rate per unit of labour.

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