Chapter- 6 Employment

Who is a worker?
All those persons who are engaged in various economic activities, in whatever capacity - high or low, and
hence contribute to gross national product are workers.
Even if some of them temporarily abstain from work due to illness, injury or other physical disability, bad
weather, festivals, social or religious functions, they are also workers.
Workers also include all those who help the main workers in these activities.
We generally think of only those who are paid by an employer for their work as workers. This is not so.
Those who are self-employed are also workers.

B. What is Employment?
The nature of employment in India varies. Some get employment throughout the year; some others get
employed for only a few months in a year.
Many workers do not get fair wages for their work.
While estimating the number of workers, all those who are engaged in economic activities are in
employment.

C. Participation of people in employment:-

During 2011-12, India had about a 473 million strong workforce.
Since majority of our people reside in rural areas, the proportion of workforce residing in rural areas is
higher. The rural workers constitute about three-fourth of this 473 million.
Men form the majority of workforce in India. About 70 % of the workers are men and the rest are women.
Women workers account for one-third of the rural workforce whereas in urban areas, they are just one-fifth of
the workforce.

D. Workforce participation rate:-

It is defined as the percentage of population that is actively contributing to the production of goods and
services of a country.
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑛𝑜.𝑜𝑓 𝑤𝑜𝑟𝑘𝑒𝑟𝑠
It is calculated as:- x100
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
It is an indicator which is used for analyzing the employment situation in the country.
If the ratio is higher, it means that the engagement of people is greater.
If the ratio of country is medium, or low, it means that a very high proportion of its population is not involved
directly in economic activities.

In rural areas more people participate in employment as compared to urban areas, because in rural areas they
have limited resources to earn income and moreover people do not go to school or college as their economic
condition does not allow them. So they have to join one or other work to support their families.

Urban people have variety of employment opportunities. They look for that job which is suitable for them as
per their skills.
More women participate in work in rural areas as compared to urban areas, because women working in farm
in rural areas are considered as a part of the workforce.
Whereas on the other hand men are able to earn high income in urban areas, so families discourage female
members for taking up jobs.

Unemployment
 Unemployment refers to a situation where people are willing to work at existing wage rate but they are not
getting work.

Worker and its types:-

All those people who are engaged in economic activities according to their capacity are known as workers.

Types:-

i. Self-employed workers:-
These are those workers who use their own resources such as land, labour, capital etc.
They are engaged in their own business and profession.
They are not employed by others whereas they provide job to themselves.

ii. Hired workers:-

These are those workers who are employed by others and are paid wages or salaries in return.
This is also known as wage employment.
They receive salaries for rendering their services.

iii. Casual workers:-

These are not hired on permanent/ regular basis by employers.
These do not get social security benefits such as Pension, Gratuity etc.
These are daily wagers. For eg:- Construction workers.

iv. Regular workers:-

These are hired on permanent/regular basis by their employers.
These get social security benefits such as Pension, Gratuity fund etc.
They can form their own trade unions.

F. Distribution of workforce:-

1. Distribution of work in different sectors:-

i. Primary sector:-
Primary sector includes sector which involves natural resources such as agriculture, forestry, mining etc.
As per 2015-16, near about 46% workforce is employed in primary sector.
A large workforce depends on primary activities to make a living. But the productivity and wage rate is less
which shows backwardness of primary sector.

ii. Secondary sector:-

Secondary sector includes manufacturing, construction etc.
Only 21.8% of workforce is employed in secondary sector which shows the industrial sector is unable to
generate employment opportunities.

iii. Tertiary sector:-

 It includes service sector that is trade, transport, storage etc.
It provides 32% of employment opportunities which is more than industrial sector.
It is a major source of employment for people in urban areas as against employment in rural areas.

Distribution of employment by gender:-

i. Male workforce:-
Male workforce engaged in primary sector is only 45%, in secondary sector -19% and tertiary sector-25%.
Male workforce can migrate from one area to another area, therefore in tertiary sector employment is greater
as compared to secondary sector.

ii. Female workforce:-

Female workforce engaged in primary sector is 57%, whereas in secondary sector -15% and tertiary sector
19%.
More of the female workforce is engaged in primary sector because women are unwilling to migrate for
outside jobs.
They prefer to work at their place in order to generate extra income for their family.

G. Growth and changing structure of Employment:-

1. There are two main developmental indicators to expand an economy:-

Growth of employment
Growth of gross domestic product:- India‘s planned development have been aimed at expansion of the
economy through increase in GDP and employment.
During the period 1950-2010, GDP of India grew positively and was higher than the employment growth.
There is a widening gap between the growth of GDP and employment during 1951-2012.
This means that, India is experiencing more GDP
through technology than the employment . It is a situation of jobless growth.
Therefore, jobless growth is a situation when the economy is able to produce more goods and services
without increase in level of employment.

2. Informalisation of Indian workforce:-

It is the situation where percentage of workforce in the formal sector tends to decline and that in the informal
sector tends to rise.
It is classified into Formal sector and Informal sector.

i. Formal sector:-
All the public or private sector establishments which employ 10 or more workers are called formal sector.
These workers are entitled to social security benefits such as provident fund, gratuity etc.
These workers form trade unions and have strong bargaining power, as their rights are protected by various
labour laws.

ii. Informal sector:-

All the private sector organisations which hire less than 10 employees together comprise informal sector.
These workers are not entitled to social security benefits such as provident fund, gratuity etc.
These workers cannot form trade unions and have weak bargaining power as their rights are protected by
various labour laws.
This sector includes millions of farmers, agricultural labour, owners of small enterprises etc.
H. Rural and Urban Unemployment:-
1. Rural unemployment:-Degree of unemployment is more in rural areas as compared to urban areas. More
of the workforce is engaged in primary sector. This sector leads to two types of unemployment:-

i. Disguised unemployment:-
It is a type of hidden unemployment which arises in agriculture sector.
It is a situation when more than actually required numbers of workers are engaged in work. If some of them
are withdrawn from the job, the total output will remain unaffected.
When all those who apparently seem working in agriculture are not able to contribute individually to total
output, would be counted in disguised unemployment.
Lack of job opportunities outside agriculture compel the people to work on their family farm which causes
unemployment.

ii. Seasonal unemployment:-

This is another common form of unemployment which prevails in rural areas. It occurs because agriculture is
seasonal in nature. The farmers are unemployed in off season.
It depends upon the method of cultivation, if farmer cultivates only one crop in a year then he remain
unemployed for 6-7 months.
This unemployment occurs in many other seasonal activities too, such as brick making, sugarcane crushing,
ice cream making etc.

2. Urban unemployment:-
i. Industrial unemployment:-
It includes those persons who want to work in industries, mining, transport but they do not get the work.
It refers to the unemployment which occurs because of modern industrial development which is based on
adopting capital intensive technology.
There is rapid increase in population in India and the industrial sector has not expanded so much so as to
create job opportunities.
There has been tendency of migration of people from rural areas to urban areas which further add to the
problem of industrial unemployment.

ii. Educated unemployment:-

It is that unemployment wherein people have education or a degree but they are not able to get the job.
There has been tremendous expansion of educational facilities at school, college and university level. This
has led to an increase in the number of educated people in the country.
But this education is degree oriented not job-oriented. Hence an educated person fails to get employment.
There is no correlation between the number of educated people and amount of job opportunities. Job
opportunities have not increased as much as the number of educated persons.

3. Other types of unemployment:-

i. Open unemployment:-
It refers to the unemployment in which people are able and willing to work, but fail to get work.
They have necessary skills and are ready to work at existing rate, but they do not get a job.
Such workforce remains unemployed throughout and totally depends upon others.

ii. Structural unemployment:-

It arises due to mismatch between demand of specified type of workers and unemployed persons.
It exists 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
technologies are no longer required and considered unemployed.
 This may also be due to change in demand because of which new changes in the methods of production are
required and the persons who cannot match the requirement are thrown out.

iii. Underemployment:-
It is a situation when worker does not work for full time or even if he is working for full time, he is paid less
than what he should get.
Underemployment may be visible in nature. In this situation, persons get employed for less than normal work
hours. For eg:- if a person works for 5 hours a day which is less than normal working hours that is 8 hours,
then he is underemployed.
Underemployment may also be invisible in nature. In this situation, persons are employed in full time work
but they are paid less.
iv. Frictional unemployment:-
It is temporary phenomenon. It 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. In this process they
are not working for some time, and hence will be called frictionally unemployed.
This may also happen due to installation of new equipment etc.

v. Cyclical unemployment:-

This problem occurs due to cyclical fluctuations in trade cycle that is boom, recession , depression and
recovery.
During the phases of recession and depression that is when the level of income falls it causes further fall in
demand of goods and services. The nation would then find cyclical unemployment.
I. Causes of unemployment:-
i. Slow economic growth:-
Slow growth rate of economy is an important factor that has led to unemployment.
Slow growth rate is unable to generate enough of job opportunities to absorb the available labour force.
The actual growth rate of economy is always less than the required growth rate and as a result it arises
unemployment.

ii. Rapid growth of population:-

A high rate of population growth in India is responsible for the unemployment in the country.
A high growth rate of population keeps adding more persons every year to the existing labour force who are
seeking employment.
Increase in population is at faster rate than the increase in number of job opportunities.

iii. Agriculture-A seasonal occupation:-

There is heavy pressure of population on agriculture which offers seasonal employment.
Because of which farmers remain idle for 3-4 months in a year.
Irrigation facilities are very poor due to which farmers are not able to undertake multicropping system.

iv. Joint family system:-

In India, there is still joint family system which prevails both in rural and urban areas.
In large families, many family members depend on the joint income of the family.
It gives rise to disguised unemployment.

v. Decay of cottage and small industries:-

 Decay of handicraft industry during British time caused unemployment.
Large scale industries have taken place of small scale industries but they failed to give employment
opportunities.

vi. Low savings and investment:-

There is lack of investment in the country. Lack of investment implies low production of goods and services
as a result of which there are less employment opportunities.
Lack of investment Less Income Less savings results in lack of job opportunities and effects
unemployment.

vii. Limited mobility of labour:-

There is low level of mobility of labour in India.
There are many reasons such as lack of awareness about job markets, family circumstances, language
problem which hinders mobility of workers for new jobs.

J. Economic and social Consequences:-

1.Economic consequences:-
• Non-utilization of man power:-As people are unemployed, manpower resources are not fully utilized
which result in wastage of resources.
• Loss of output:- As human resources are not utilized to the full, there will be loss of output and income
to the extent of unemployment.
• Low capital formation:- It is because of low level of income that people are not able to save and invest
sufficiently causing decline in capital formation.
• Low productivity:- Because of disguised unemployment or cyclical unemployment the productivity is
less.
2. Social consequences:-
• Low quality of life:- Unemployment means a state of low quality of life as the person is not earning
and is not able to maintain dignified standard of living.
• Greater inequality:- Unemployment corresponds to inequality as some are working and earning and
some are not. It widens the gap between haves and have nots.
• Social unrest:- Unemployment adversely affects the peace in the society. Being in the state of
suffering, unemployed person may resort to theft, dacoit, deception etc.
K. Suggestion to solve the problem of Unemployment:-
i. Increase in production:-
If employment has to be increased it is necessary to increase the output in different sectors that is industrial,
agriculture etc.
Greater the production, greater is the demand for labour.
ii. High rate of capital formation:-
Rate of capital formation has been increased by increasing level of investment and savings.
When investment rate increases then production capacity also increases creating more employment
opportunities.
iii. Help to self - employed persons:-
There should be encouragement to self-employed workers in rural areas and urban areas to set up their
work areas.
In rural areas, government should provide short term, middle term or long term loans to farmers to buy
seeds, equipment, manure etc.
In urban areas, there should be financial assistance given to set up their own enterprises.
iv. Educational reforms:-
 As the existing education system is more degree oriented, efforts should be made to make it job-oriented.
The system should include vocational and technical education at all levels of education.
There should be more institutions providing information about special programmes of training or enhancing
skills for educated unemployed.
v. Technique of production:-
In order to increase the employment in the country, it is essential to change the technology.
The technique of production should be employment friendly that is more importance must be given to Labour
intensive technique.
vi. Direct generation of employment opportunities by the government:-
The government employs people in various departments for administrative purposes.
It also runs industries, hotels and transport companies and hence, provides employment opportunities
directly to workers.