CHAPTER 7

EMPLOYMENT
EMPLOYMENT
It is an activity which enables a person to earn. When undertaken this activity, a person renders his
services and get paid(wages/salaries) in returns.
If all those who are willing and able to work, are working at the existing wage rate, the situation is
called full employment.
If some of these do not work, the situation is called unemployment.
Studying about working people gives us insights into
 the quality and nature of employment in a country and helps in understanding and planning our
human resources.
 It helps us to analyse the contribution made by different industries and sectors towards
national income.
 It also helps us to address many social issues such as exploitation of marginalised sections of
the society, child labour, etc.
Why do people work?
 People work for ‘earning’ a living.
 Being employed in work gives us a sense of self-worth and enables us to relate ourselves
meaningfully with others.
 we work to meet the requirements of those who are dependent on us.
ECONOMIC ACTIVITY
 These are the activities which contribute to GDP of the country.
Example: a farmer grow wheat for sale, a doctor treats patients etc.
 Economic activities can be classified into
a) Primary sector: Agriculture, forestry, mining, fishing (Basic production )
b) Secondary sector : Industries, construction, craft work(production of goods)
c) Tertiary sector: Trade, bank, transport, culture, education , health (services)
WORKERS
 All those people (human resources) who are engaged in economic activities, in any capacity –
high or low, are workers.
 In other words a ’worker’, or an individual engaged in production activity, contributes to GDP
by rendering his services.
Types of workers
 There are two types of workers:
a) hired workers:
i) Regular workers
ii) Casual wage workers
b) Self employed
a) Hired workers: These are the workers who are employed by others and are paid wages or
salaries in return of their services. These are of two types
i)Regular workers: These are hired on permanent/regular basis by their employers. They gets
social security benefits like pensions etc. Eg. Government officials, teachers employed in a

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 school etc. They get wages or salaries on regular basis. Regular workers are usually skilled
workers like an engineer working in a factory.
ii)Casual wage workers: These are not hired on a permanent/regular basis by employers.
They do not gets social security benefits. Eg. construction workers. It is often found that
casual workers are unskilled workers, like a worker working at the construction site.
b) Self employed workers
 These are the workers who use their own resources (land, labour, capital, enterprise) to earn
their living. In other words, they are engaged in their own business or their own profession.
They provide jobs to themselves to their own. More than 50% of workforce in India belongs to
this category. For Example, shop keepers, businessmen, a doctor running his own clinic etc.
LABOUR FORCE AND WORK FORCE
Labour force:- number of workers actually working or willing to work. It include all those who
are working and those not working but are seeking work and are available for work. In other
words, it includes employed and unemployed workers.
Work force:- It includes all those who are employed at a particular point of time. In other
words, these refer to those persons who are working. It does not include unemployed persons even
though they are willing and available for work.
Unemployed persons = Labour Force (-) Workforce .
Work force of India
 During 2017-18, India had about a 471 million strong workforce.
 Since majority of our people reside in rural areas, the proportion of workforce residing there is
higher.
 rural workers constitute about two thirds of this 471 million.
 Men form the majority of workforce in India.
 About 77 per cent of the workers are men and the rest are women
WORKER POPULATION RATIO
 It is the ratio of the total number of workers to the population.
total numbers of workers
Worker population ratio = X 100
total population
 It is an indicator used for analysing the employment situation in the country.
 If the ratio is higher, it means that engagement of people is greater, if the ratio is low, it means
that a very high portion of its population is not involved directly in economic activities.
Participation of people in employment (Table 7.1)
a) Participation of workforce residing in rural area is higher as compared to urban areas
It is because:
i) People in rural area have limited resources to earn a higher income and participate more in
the employment market.
ii) In rural areas, people cannot stay at home as their economic conditions may not allow them
to do so. (Because they have lower productivity, lower level of income, larger size of the family and
greater poverty in the rural India).
iii) Many people do not go to school, if they go they drop in the middle and join in the
workforce.

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b) Men posses greater share in total workforce than women. This is because
i) It is common to find that where men are able to earn high income, families discourage female
member from taking jobs
ii) female education in India is still a far cry, implying low opportunities for jobs.
ii) Family customs and high income of male members doesn’t allow women to work.
iii) Many activities for the household engaged in by women are not recognised as productive
work.
c) In rural areas female participation is more compared to urban areas. This is because
i) in rural India, poverty compels women to avoid education and seek employment.
ii) without education, people in rural areas find only less productive jobs and get low wages.
Low wage rate is the principle reason why women look for sustainable jobs at an early age.
DISTRIBUTION OF WORFORCE BY GENDER (chart 7.1)
a) Self employment is a major source of livelihood for both men and women. It is because:
 Literacy rate is low, implying low acquisition of skill for wage jobs.
 Owing to diverse social environment across different regions, mobility of workforce is low.
 Women in rural India find ample opportunity of self-employment , engaged themselves in
traditional jobs like spinning, weaving, bleaching etc.
b) In Regular salaried work both women and men are found to be so engaged in greater
proportion. Men form 23 per cent whereas women form 21 per cent. The gap between men and
women is very less.
c) Casual wage work is the second major source for both men and women, a little more so for the
latter (24-27 per cent).

Distribution of work force in rural and urban area (chart 7.2)

 Self employed and casual workers are higher in rural areas while in urban areas Regular
salaried employees and self employed are more.
 In Urban areas, people look for skilled jobs in offices and factories while in rural areas, family
farms are the most attractive means of employment.
 In rural areas, non-farm job opportunities are limited. Accordingly people generally do not
show preference to acquire skill and training for non-farm occupation. They prefer to stay on
family farms and field as self employed.
 In urban areas, hired employment is more as there is larger number of job opportunities are in
factories and offices.
 In urban areas 38% of workers are self-employed and 47% of workers are regular salaried
employees whereas in rural areas 58% are self –employed and 29% are causual wage
labourors.

Distribution of workforce among different sectors: (Table 7.2)

We divide all economic activities into eight different industrial divisions. They are (i) Agriculture (ii)
Mining and Quarrying (iii) Manufacturing (iv) Electricity, Gas and Water Supply (v)Construction (vi)
Trade (vii) Transport and Storage and (viii) Services. For simplicity, all the working persons engaged in
these divisions can be clubbed into three major sectors viz.,
(a) primary sector which includes (i) and (ii),

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 (b) secondary sector which includes (iii), (iv) and (v)
(c) service sector which includes divisions (vi), (vii) and (viii).
 Primary sector is the main source of employment for majority of workers in India (44.6%)
Secondary sector provides employment to only 24% of workforce. About 31% of workers are
in service sector.
 60 per cent of the workforce in rural India depends on agriculture, forestry and fishing.
Agriculture is not a major source of employment in urban areas.
 In rural area about 20 per cent of rural workers are working in manufacturing industries,
construction and other industrial activities. The secondary sector gives employment to about
one-third of urban workforce.
 In urban areas people are mainly engaged in the service sector. Service sector provides
employment to only about 20% of rural workers while 60% of urban workers are in this sector.
 Though both men and women workers are concentrated in the primary sector, women workers’
concentration is very high there. About 57 per cent of the female workforce is employed in the
primary sector whereas less than half of males work in that sector. Men get opportunities in
both secondary and service sectors.
Growth and changing structure of employment (chart 7.3)
 During the period 1950–2010, Gross Domestic Product (GDP) of India grew positively
and was higher than the employment growth.
 During this period, employment grew at the rate of not more than 2 per cent.
 During these years, we also find a widening gap between the growth of GDP and
employment.
Jobless Growth
In India, after 1990, the rate of growth of jobs is declining while growth rate of development is
increasing. This means that in Indian Economy without generating employment, able to
produce more goods and services. This phenomenon is known as jobless growth.
Trends in Employment Pattern (Sector-wise), 1972-2018 (Table 7.3)
 Distribution of workforce by industrial sectors shows substantial shift from farm work to
non-farm work.
 In 1972-73, about 74 per cent of workforce was engaged in primary sector and in 2011-12,
this proportion has declined to about 50 per cent.
 Secondary and service sectors have increased from 11 to 24 per cent and 15 to 27 per cent,
respectively.
 During 2011-18, there is stagnation in the industrial sector .
Trends in Employment Pattern (Status-wise), 1972-2018 (Table 7.3)
 During 1972-94, people have moved from self-employment and regular salaried
employment to casual wage work.
 During 2011-18, there is a moderate rise in the share of regular salaried employees and
self-employment and decline in the share of casual wage work .
Casualisation of workforce
The process of moving from self-employment and regular salaried employment to casual wage
work is known as casualisation of workforce. This makes the workers highly vulnerable.

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 Formal and informal sector employment
The structure of employment in India can be divided into Formal sector and Informal sector
Formal sector :-
 It is also known as organised sector consisting of all units which are registered by the
government and follows rules are regulations.
 This sector includes all public sector establishment, government departments and private
sector establishments hiring 10 or more workers.
 Formal sector employers have secured employment with social benefits (pension, paid holidays
etc.)
 These workers form trade unions and have strong bargaining power as their rights are
protected by various labour laws.
 They have better and regular earnings and higher standards of livings.
 According to the data (Chart 7.2), 30 million workers out of 473 million workers are working in
organised or formal sector. In other words, just 6% of the total workforce is in formal sector.
Only about 20% of the formal sector workers are women. (6 million out of 30 million)
Informal sector:
 This is also known as unorganised sector. All Private sector establishment which employ less
than 10 workers are called Informal sector establishment.
 This consist of those units which are not under the direct control of the government. These are
scattered units.
 This sector do not follow rules and regulations because it is out of the control of the
government.
 They will not get any of the social security benefit such as paid leaves, pension, medical leaves
etc. For them job is not secured. Their wages are irregular.
 These workers cannot form trade unions and have weak bargaining power and their rights are
not protected by labour laws.
 Technology used in the informal sector enterprises is outdated; they also do not maintain any
accounts. Workers of this sector live in slums and are squatters.
 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. It also includes all non- farm casual wage labourers who work for more than one
employer such as construction workers and head load workers.
 According to the data (Chart 7.2), 443 million workers are working in unorganised or informal
sector. In other words, just 94% of the total workforce is in informal sector. 30 per cent of
informal sector workers are women. (133 million out of 443 million)

Informalisation of workforce
It refers to a situation when the proportion of workforce in the informal sector to total
workforce increases.

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 In other words this is the situation where employment growth in formal sector declines
and that of informal sector (unorganised sector) increases.

Reasons for Informalisation of workforce.

 The decline of employment in formal sector is due to economic reforms in 1991
which encouraged privatization and disinvestment.
 Existing establishment in formal sector tend to shift to capital intensive technology
to be more competitive. Hence some persons are rendered unemployed.
 Job opportunities in formal sector are not growing.
UNEMPLOYMENT
 It is a situation where the able bodied persons willing to work and fail to find a job that earn
them living.
TYPES OF UNEMPLOYMENT
1. Involuntary unemployment:- It is a situation where workers are able and willing to do work at
the prevailing wage rate, but they do not get employment. It is an open unemployment.
2. voluntary unemployment:- It is a situation where job opportunities are available in the
economy but workers are not willing to do work because of lower wage rate, location, climate of
organisation etc.
3. Underemployment :- It is a situation when a worker does not work for full time or even if he is
working for full time, he is paid less than what should he get. In underemployment labour are not
doing up to their potential and here labour efforts are get divided. (disguised unemployment,
seasonal unemployment etc. are underemployment situation)
3. Seasonal unemployment:- This is one kind of rural unemployment in India. It occurs because
agriculture is a seasonal occupation. During off season, often the farm workers are out of job, they
have no work to do. The volume of seasonal unemployment depends upon the condition and
methods of cultivation in different states.
4. Disguised unemployment:- It is also known as hidden unemployment. It is the phenomenon of
where the number of workers engaged in a job is more than actually required to accomplish it. If
some of them are withdrawn from that job, the total production will not fall. This type of
unemployment is a common feature in agricultural section.
4. Structural unemployment:- It arises due to mismatch between demand of specific types of
workers and unemployed workers. It exist because of structural changes in the economy. This may
be due to:
 change in technology because of which persons who are trained to work with old
technology are no longer required and are rendered unemployed.
 change in the pattern of demand because of which new change in the method of production
are required and the persons who cannot match the requirements are terminated.
5. Frictional unemployment:- It is a temporary phenomenon. It is happens due to some temporary
changes taking place in the work place.
 It occurs when workers leave one job and need some time to wind up the previous job and
undertake some formalities to join new one. In this process they are not not working for some
time, hence will be called frictionally unemployed during thid time period.
 This way also happen due to imperfect knowledge about information on job availability or may
be during breakdown of plant or during installation of new mechines and equipments etc.

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 6. Cyclical unemployment:- This problem related to the trade cycle in the economy that is boom,
recession, depression and recovery. During the phases of recession and depression i.e., when the
level of income is falling further fall in the demand of goods and services, the nation would find
cyclical unemployment.
CAUSES OF UMEMPLOYMENT IN INDIA
1. Slow economic growth: Indian economy is underdeveloped and the rate of economic growth is
very low. This slow growth fails to provide enough employment opportunities to the rising
population.
2. Rapid growth of population:-Constant increase in population has been a great problem of India.
It is one of the main causes of unemployment.
3. Agriculture- a seasonal occupation:- Agriculture is the primary occupation of our country and a
large size of population depends on it. But its seasonal character does not provide work to the
farmer all the year round. Most of the farmers remain idle for 3-4 months in a year.
4. Lack of irrigation facilities:- Despite the completion of the 12th five-year plans, irrigation
facilities could be provided only to 34% of agriculture area. Consequently, the farmers remain
unemployed for quite some time during the year.
5. Declain of cottage and small scale industries :- The industrial development policy adopted by the
govt adversely affected the artisans working in small and cottage industries. The goods
previously produced by these industries are now being produced by large scale industries.
6. Low saving and investment:- There is shortage of capital in India and even the scarce capital has
not been wisely invested. Bulk of the capital has been invested in large scale industries where
there is high capital per unit of labour.
7. Mobility of labour:- Mobility of labour in India is very low. Owing to a variety of families as
well as social constrains people are reluctant to move too far off areas even when jobs are
available. Factors like diversity like language, religion and custom in different states are the
major hindrances to the mobility of labour.
GOVERNMENT AND EMPLOYMENT GENERATION
 In order to create employment various efforts have been made by government. These are
categorized as:-
1. Direct efforts: Government employees people in various departments for administrative
purpose runs industries, hotels, transport companies to provide employment directly to
workers. Eg: Indian Railway, IAS officers, etc.
2. Indirect efforts:- Production of basic raw materials and infrastructural development by
government enterprise leads to increase in production and creation of employment
opportunities in pvt enterprises. One large industry give birth to many dependent units which
generate more employment.
3. All the poverty alleviation programmes that the government implemented aimed at
alleviating poverty through employment generations. They are also known as employment
generation programmes. Eg; NREGA, SGSY, SGRY etc.

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