Key Notes: Employment: Growth, Informalisation and other issues

Table of Contents
1. Introduction
2. Types of Workers
3. Economic Activities
4. Employment across Sectors
5. Jobless Growth, Casualization and Informalisation
6. Unemployment
7. Causes of Unemployment
8. Government and Employment Generation
9. Illustrative Examples
10. Conclusion
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Introduction

Worker refers to any individual who participates in productive activities to earn a livelihood. Productive activities include the creation of goods and services and their distribution and consumption. As an economy develops, there is often labour migration-a movement of workers from agriculture (rural areas) to industry and services (urban areas and towns).

Types of Workers

• Self-employed: Individuals who own and operate their own enterprises or work on their own account. Examples include a small shop owner, an artisan, a farmer managing their own farm, or a professional running a private practice. Self-employment comprises over 50% of the workforce.
• Hired workers: Individuals who work for wages or salaries for an employer. Hired workers can be further distinguished by the regularity and security of their employment.
• Casual workers: Hired for short periods or employed on a day-to-day basis. Payment is typically daily or hourly. Casual workers usually lack job security, employment benefits and social protection. Examples include daily-wage construction labourers and temporary agricultural workers during harvest.
• Regular workers (salaried): Employed on a continuing basis by firms, factories, offices or government organisations and receive a fixed salary or regular wages. They may have formal employment contracts and access to social security or benefits.

Economic Activities

Production Activity

• Production consists of actions that transform inputs into goods and services which generate income for the producer. Examples are cultivating crops, manufacturing goods in a factory, and providing professional services.

Distribution Activity

• Distribution covers activities that ensure goods and services reach consumers and that infrastructure is built and maintained for economic activity. This includes transportation, trade, storage, and public utilities such as electricity and water supply.

Employment across Sectors

Employment is commonly classified by the sector of economic activity. Labour moves between these sectors as economies develop.

• Primary sector: Activities that use natural resources directly, for example agriculture, forestry, fishing and mining.
• Secondary sector: Activities that process raw materials and produce finished goods, for example manufacturing, construction and utilities.
• Tertiary sector: Services such as trade, transport, communication, finance and other professional, personal and public services.

Jobless Growth, Casualization and Informalisation

• Jobless growth occurs when an economy's output (GDP) grows but employment does not rise at a similar rate. In other words, economic growth outpaces job creation and many people remain unemployed or underemployed.
• Casualization of employment means a rising share of workers are employed on temporary or daily contracts rather than in permanent jobs. Casual jobs often lack job security and social protection.
• Informalisation of employment refers to the growth of employment in the informal sector where work is not regulated by formal employment contracts, social security or labour laws. Informal jobs are commonly found in small unregistered enterprises, household enterprises, street trading and many casual jobs.

Unemployment

• Unemployment exists when people who are willing and able to work cannot find suitable employment.
• Unemployment rate is the proportion of the labour force that is without work but available and seeking employment. The labour force includes all those either working or actively seeking work.

Types of Unemployment

• Rural unemployment: Seasonal and disguised.
• Urban unemployment: Industrial, educated, and technological.

• Seasonal unemployment: Occurs when work is available only in certain seasons. Agricultural labourers, certain tourism workers and some construction workers may be seasonal.
• Disguised unemployment: Exists when more people are employed in a job than are actually needed; removing some workers does not reduce output. This is common in some rural family farms where surplus family labour is present.
• Industrial or structural unemployment: Occurs when workers' skills do not match the requirements of available jobs, for example, due to technological change or shifts in industry structure.
• Educated unemployment: When educated or formally trained persons are unable to find jobs that correspond to their qualifications or when the economy does not generate enough suitable professional jobs.
• Technological unemployment: A form of structural unemployment where technology replaces human labour, reducing demand for certain types of workers.

Causes of Unemployment

• Slow economic growth: If the economy grows slowly, new jobs are not created at a rate sufficient to absorb new entrants into the labour force.
• Rapid population growth: When the working-age population rises quickly, the economy must create a large number of jobs simply to maintain the employment rate.
• Inadequate employment planning: Lack of coordinated policies and planning to promote labour-intensive sectors, small enterprises and skill development can lead to insufficient job creation.
• Over-reliance on imported technology: Excessive dependence on foreign machinery and technology without developing domestic skills and enterprises can lead to fewer locally generated jobs.

Government and Employment Generation

• The central and state governments play a crucial role in generating employment through policy measures, public investment, skill development programmes and direct employment schemes.
• National Rural Employment Guarantee Act, 2005: A central legislation that guarantees rural households a specified number of days of wage employment in a financial year, providing a social safety net and creating rural assets. It is commonly referred to as MGNREGA and guarantees up to 100 days of employment to a household that demands work in a year.
• Other government measures include promotion of small and medium enterprises (SMEs), incentives for labour-intensive industries, public works programmes and schemes for skill building and entrepreneurship that aim to increase job opportunities in both rural and urban areas.

Illustrative Examples

• A small farmer who cultivates and sells crops from his own land is an example of a self-employed worker.
• A daily-wage construction worker who works on a building site when work is available is an example of a casual worker.
• An information technology professional employed by a company on a permanent contract is an example of a regular (salaried) worker.
• When a factory installs automatic machines and reduces the number of assembly workers, the workers who lose jobs illustrate technological unemployment.
• When many members of a rural household work on the same small plot but removing some does not reduce output, this is disguised unemployment.

Conclusion

• Shift in the workforce towards the service sector.
• Growth in the service sector and technology enable small-scale enterprises.
• Outsourcing and remote work practices.
• Informalization of the workforce.
• GDP growth doesn't match job opportunities.
• Government initiatives to create rural employment opportunities.