Employment: Growth, Informalisation & other Issues Class 12 Economics

Introduction

People engage in various types of work, including farming, factory jobs, and home-based work like handicrafts and IT programming. Work provides income, self-worth, and societal contribution. Mahatma Gandhi emphasized education and training in various crafts. Studying working people offers insights into employment quality and helps address social issues like exploitation and child labour.

Worker & Employment

A person who participates in a productive activity to earn a livelihood can be referred to as a worker.

Types of Workers

• Self-Employed: Individuals who own and operate their own businesses to earn a living are known as self-employed workers. An example of a self-employed worker would be a farmer who manages their own farm. This category comprises over 50% of the workforce.
• Hired Workers: Hired workers are individuals who receive wages or salaries in exchange for their services and are employed by others. There are two types of hired workers:
  • Casual Workers: Casual workers are not employed on a regular or permanent basis by their employers and are typically paid on an hourly or daily basis without receiving social security benefits.
  • Regular Workers (Salaried): Regular workers, also known as salaried employees, are employed by an organization on a regular basis and receive a fixed salary payment.

Economic Activity

Economic activities are actions undertaken by individuals to generate income for their livelihood. The main forms of economic activities include production, distribution, and consumption.

• Production Activity: Production activity refers to any actions taken to create goods and services that generate income.
• Consumption Activity: Consumption activity is the use of products and services by a household, and is included in the calculation of Gross Domestic Product (GDP). Macroeconomists often use consumption as a proxy for the overall economy.
• Distribution Activity: Distribution activity involves the construction, operation, and routine maintenance (excluding major overhauls) of substation plants, overhead mains, underground cabling and jointing, pole inspection and street lighting, customer emergency services, and tree trimming and removal within minimum approach distances to energized conductors. This type of work is typically performed as part of distribution activities.

Labour Force: The labour force comprises individuals who are either employed or actively seeking employment within a particular economy. 

Labour Supply: Labor supply refers to the number of individuals available and willing to work at a given wage rate within a specific market or economy.

Work Force

• The workforce consists of individuals currently employed and actively contributing to productive activities, typically aged between 15 to 60 years.

Work Force Participation Ratio (WPR)

• It is calculated as the proportion of the workforce to the total population, aiding in assessing the percentage of the population involved in production and services.

WPR = (Total number of workers)/(No. of work population in India) x 100

• Urban participation rates stand at approximately 35%, while rural participation is around 41%.
• Men in urban areas participate at a rate of 54.3%, while women participate at 13.8%.
• In rural regions, men participate at a rate of 54.7%, and women at 26.1%.
• The overall participation rate for the country is approximately 39.2%.

Employment In Firms, Factories and Offices

The process of labour shifting from agriculture and other related sectors to industry and services during a country's economic development is referred to as labour migration. As part of this process, workers often move from rural to urban areas.
All production activities can be broadly classified into three industrial divisions:

• The primary sector includes activities such as agriculture, forestry, logging, fishing, mining, and quarrying.
• The secondary sector involves activities related to manufacturing, construction, and the provision of electricity, gas, and water.
• The tertiary sector comprises trade, transportation, storage, and service-related activities.

Jobless Growth

It is defined as a situation where the rate of economic growth exceeds the rate of job creation, leading to a rise in unemployment.

• Casualization of employment is a term used to describe an increase in the proportion of temporary workers over time. Due to a lack of opportunities in the organized sector, individuals often resort to working as casual labourers. Additionally, the flexible working conditions and a lack of strict labour law enforcement encourage businesses to hire more casual workers.
• Informalization of employment refers to a situation where individuals tend to find employment more in the informal sector of the economy rather than the formal sector. Informalization can include transitioning from permanent employment to casual and fixed-term contracts, outsourcing, and employment through labour brokers. Many individuals who previously worked in formal jobs may re-enter the workforce as atypical employees.

Unemployment

It happens when an individual is prepared and willing to work at the prevailing wage rate but is unable to secure employment.
The unemployment rate is computed as the proportion of the labour force that is jobless, rather than as a percentage of the total population. The formula to calculate the unemployment rate is:

Types of Unemployment

Rural Employment: Rural employment refers to the provision of jobs and opportunities for work within rural areas.

There are two types of rural unemployment: seasonal employment and disguised employment. 

• Seasonal employment occurs when a large number of people are unable to find work during a specific season, such as in agriculture, ice cream factories, woollen mills, and other industries. 
• Disguised employment, on the other hand, occurs when the marginal physical productivity of labour is zero or negative.

Urban unemployment: Urban employment refers to the availability of jobs and opportunities for work within urban areas.

It can be classified into three types: industrial unemployment, educated unemployment, and technological unemployment. 

• Industrial unemployment includes illiterate people who want to work in industries, mining, transportation, trading, and construction. 
• Educated unemployment occurs when many educated individuals are either unemployed or underemployed because their qualifications do not match the available jobs. 
• Technological unemployment occurs when new machinery and labor-saving technologies replace workers.

Causes of Unemployment

• The slow pace of economic growth in India fails to generate sufficient job opportunities for the growing population, resulting in an excess supply of labour.
• The rapid growth of the population in India has been a significant contributor to unemployment, with the number of jobless individuals increasing rather than decreasing over the years.
• Inadequate employment planning is another reason for the unemployment problem in India, as the country's five-year plans did not prioritize job creation.
• The over-reliance on foreign technology due to the high cost of indigenous technology has led to technical unemployment in the country.

Government and Employment Generation

• The National Rural Employment Guarantee Act, 2005, aims to offer 100 days of guaranteed paid employment to rural households willing to undertake unskilled manual labour.
• This initiative is part of various efforts to assist unemployed individuals in securing work opportunities in rural regions.
• Since independence, both federal and state governments have been actively involved in job creation and providing employment opportunities.

Their efforts can be divided into two categories:

• Direct Employment: In this scenario, the government recruits personnel for administrative roles across various departments and also manages factories, hotels, and transportation enterprises, thereby offering direct employment opportunities to individuals.
• Indirect Employment: When government enterprises increase their production of goods and services, private businesses that rely on raw materials from these government entities will also increase their output, leading to an expansion in the number of jobs within the economy.

Conclusion

• In India, there has been a shift in the composition of the workforce, with new job opportunities mostly emerging in the service sector.
• The service sector's growth and the rise of high technology have enabled efficient small-scale enterprises and specialist workers to compete alongside multinational corporations.
• Outsourcing work has become a widespread practice, whereby larger companies close specialist departments and outsource numerous smaller tasks to small enterprises or individual specialists, sometimes even in other countries.
• The conventional idea of a modern factory or office has changed, and many individuals now work from home.
• Despite the changes, the workforce has become more informal, and social security measures for workers are limited.
• In the past twenty years, India's gross domestic product has grown rapidly, but job opportunities have not increased at the same pace.
• Consequently, the government has taken initiatives to generate employment opportunities, particularly in rural areas.