Long Questions with Answers - Employment: Growth, Informalisation, and other issues

Q.1 What are the causes of informalisation of workforce in India?
Ans. The following are the causes of informalisation of workforce in India:
(i) Close Down of the Enterprises: Many enterprises were incurring losses during the 1980s and 1990s and hence were closed down. This forced a large number of workers to move into the informal sector. For example, in the early 1980s textile mills all over the country began to close down. In Mumbai the mills closed rapidly, whereas in Ahmedabad the close-down process spread over ten years due to strong trade unions. Approximately 80,000 permanent workers and over 50,000 non-permanent workers lost their jobs and were driven to the informal sector. Such closures reduce formal-sector jobs and increase casual and self-employed work without social protection.
(ii) Loss-Making Public Sector: When public sector enterprises incur sustained losses, the government may disinvest, restructure, or close them down. Workers affected by such measures often do not find comparable jobs in the organised sector and therefore enter informal employment where terms and protections are weaker.
(iii) Increasing Population: Employment generation in the formal sector has failed to keep pace with the rapid growth of population and the working-age labour force. As a result, many people are compelled to accept casual, low-paid jobs in the informal sector to earn a livelihood.
(iv) Unemployment: The number of unemployed persons in India has remained high at various times. Because formal-sector and government jobs are limited, many of the unemployed take up informal or precarious work, increasing the size of the informal workforce.
Overall, these factors-industrial closures, retrenchment in public enterprises, rising labour supply and inadequate formal job creation-have combined to expand informal employment, characterised by irregular work, low pay and limited or no social security.

Q.2. How are the activities in the economy classified on the basis of employment conditions?
Ans. The activities in the economy on the basis of employment conditions are classified as organised sector and unorganised sector.
(i) Organised Sector: It covers those enterprises or places of work where the terms of employment are regular and people have assured work. Its features are:

• Formal processes and procedures
• Proper rules and regulations
• Job security
• Fixed number of job hours; paid overtime for extra work
• Paid leave and payment during holidays
• Provident fund, gratuity and pension benefits on retirement
• Safe working environment

Examples of the organised sector include government departments, large public and private enterprises and formally registered industries which follow labour laws and provide employee benefits.

(ii) Unorganised Sector : Unorganised sector comprises small and scattered units, which are largely outside the direct control of the government. Its features are: 

• No formal rules and regulations for employment
• Irregular and low-paid jobs
• No provision for overtime, paid leaves or social security
• No job security
• Workers often face social and economic discrimination

Examples of the unorganised sector include small shops, casual agricultural labour, street vendors, home-based workers and many small-scale or family-run enterprises. The unorganised sector employs a large share of India's workforce but offers limited protection and benefits.

Q.3. What are the causes of unemployment in India?
Ans. The following are major causes of unemployment in India:
(i) Increase in Population: There has been a large increase in population in India since 1951. Consequently the number of people seeking work has grown rapidly. The pressure of a growing labour force, when job creation is insufficient, increases unemployment.
(ii) Failure of Planning: Planning and policy measures have not always generated enough productive employment opportunities for the growing number of job-seekers. As a result, planned targets for job creation have often fallen short.
(iii) Neglect of Agriculture: Agriculture did not receive proportionate investment and modernisation in some periods of planning. Since agriculture is a major employer in rural India, its slow development meant fewer productive jobs in rural areas.
(iv) Neglect of Small-Scale and Cottage Industries: Small-scale and cottage industries are labour intensive and can generate large employment. However, insufficient support and emphasis on these sectors limited their growth and their ability to absorb surplus labour. Plans tended to focus more on capital-intensive, large-scale industries.
(v) Slow Industrial Growth: Slow growth in the industrial sector reduces the number of new jobs created in urban areas and adds to urban unemployment and underemployment.
(vi) Defective Education System: The education system has placed more emphasis on general academic education than on vocational and job-oriented training. As a result, many educated youth are not equipped with skills demanded by employers, leading to unemployment among white-collar job seekers.
These causes operate together-structural issues in the economy, mismatches between skills and jobs, and inadequate growth in labour-absorbing sectors-leading to persistent unemployment and underemployment.

Q.4. Explain the various self-employment and wage generation programmes initiated by the government to solve the problem of unemployment.
Ans. The various self-employment and wage generation programmes initiated by the government to tackle unemployment include the following:
(i) Food for Work Programme (FWP): Launched in the 1970s for the upliftment of the poor, FWP provided foodgrains in exchange for wage work. This scheme combined short-term relief with asset creation by engaging poor households in public works.
(ii) Prime Minister's Rozgar Yojana (PMRY): Implemented with the support of the Khadi and Village Industries Commission, PMRY aimed to create self-employment opportunities in rural areas and small towns. Eligible educated unemployed persons from low-income families could obtain bank loans and financial assistance to set up small enterprises, thereby encouraging entrepreneurship and self-employment.
(iii) Swarna Jayanti Shahari Rozgar Yojana (SJSRY): This programme focused on urban poverty and aimed to create both self-employment and wage-employment opportunities in urban areas. Individuals and groups received financial assistance and support for skills training to set up small urban enterprises.
(iv) Swarnajayanti Gram Swarozgar Yojana (SGSY): Launched in April 1999, it is a major self-employment programme. Its objective is to promote micro-enterprises and lift assisted poor families (swarozgaris) above the poverty line. This is done by organising them into Self-Help Groups, providing training and capacity building, and offering a blend of bank credit and government subsidy for income-generating assets.
(v) Sampoorna Grameen Rozgar Yojana (SGRY): Launched in September 2001, SGRY integrated the schemes of Jawahar Gram Samridhi Yojana and the Employment Assurance Scheme. It sought to provide additional wage employment along with food security and to create durable community, social and economic assets. The scheme envisaged generation of up to 100 man-days of employment per household in a year.
(vi) National Food for Work Programme (NFWP): Launched on 14 November 2004 in 150 of the most backward districts, NFWP was a 100 per cent centrally sponsored scheme under which foodgrains were provided to states free of cost. Its objective was to intensify the generation of supplementary wage employment and to target the poorest districts.
Collectively, these programmes combine immediate relief (wage employment and food security) with longer-term measures (credit, skills and micro-enterprise promotion) to reduce unemployment and provide income opportunities for vulnerable groups.