CBSE Class 12 Economics -

Employment: Growth, Informalisation and Other Issues


What is Unemployment:

A situation where people who are willing to work and able to   work at the existing wage rate but do not get work is called unemployment.

Worker: Individual engaged in any production activity contributing to the GDP with his services.      

     

SELF – EMPLOYED AND HIRED WORKERS

Self – Employed: People engaged in own business or profession are called self – employed.

Hired Workers: People who get paid/ wages/ salary by rendering their services to others are called hired workers.

CASUAL AND REGULAR WORKERS

Casual Workers: People who are not hired on the regular basis by their employers and not provided with benefits of permanent job are called casual workers.

Regular Workers:  Workers who are provided the social security benefits including pension, gratuity and provident fund and are on the permanent payroll of their employers are called regular workers.

LABOUR SUPPLY, LABOUR FORCE AND WORKFORCE

Labour Supply:

- Amount of labour worker is ready to supply or offer in agreement with a particular wage rate is called Labour Supply. 

  • It is measured in terms of man- hours of work and neccesrily in relation to wage rate.       

Labour Force:

  • - Number of workers working or willing to work irrespective of the wage rate.

Workforce:

  • Workforce = Labour force - Number of persons not working but are willing to work.
  • Number of Persons Unemployed = Labour Force - Workforce

Size of Workforce in India and reason behind it being Rural - based

- India’s 70 per cent of workforce comprises of male workers and is only found in rural areas which means female workforce (out of total) is very  low.

- More people are engaged in farming yet contribute less to the GDP  meaning that there is low productivity of workers in rural areas resulting in low earnings therefore poverty.

  • Percentage of female workers is very low because female education in India is still not encouraged in many parts of the country and in urban areas the decision to work is taken by the families and not the women herself.  This means that half of the country’s available resources are not utilised.

Rate of Participation in India -

Means the people’s participation in production activity which is measured as:

Workforce: Total Population of the country.

OBSERVATIONS:

  1. High dependency Ratio - Rate of participation is not high meaning that a lot of people aren’t engaged in production activity implying high dependency ratio.
  2. High Rate of Participation yet Low productivity - In rural area larger chunk of people are engaged in production activity but contribute very less to the GDP of the country which implies greater poverty and low income in rural areas.
  3. High Rate of Participation for Women in Rural areas - As a result of poverty women population in rural areas tend to participate more in production activity in rural areas, lack of education and sustainable jobs providing low wage rates are other reasons.


OCCUPATIONAL STRUCTURE/WORKFORCE DISTRIBUTION

OBSERVATIONS:

  1. To meet their basic needs bulk of workforce depends on primary sector even now reflecting upon the backwardness of the Indian economy.
  2. Lack of employment opportunities in the secondary and tertiary sector results in dependency of people in primary sector.
  3. Secondary and Tertiary sectors comprise of the urban population whereas Primary sector largely comprises of rural population.
  4. Due to globalisation India’s trade and commerce is increasing and people in urban areas are becoming conscious about the quality of life which is explained by their expenditure on health, education and tourism.
  5. Large percentage of female population is engaged in primary sector owing to the fact that mobility of women in rural areas is very low as they prefer jobs near their homes.

JOBLESS GROWTH

- When GDP is experienced more through technology than the employment of labour then an economy witnesses jobless growth.

  • India experiences jobless growth because the growth is achieved through efficient technology rather greater use of labour.

  CASUALISATION AND INFORMALISATION OF WORKFORCE

Casualisation means a situation where casually hired workers in total workforce tends to rise. This happened in India due to:

  1. Disguised unemployment in rural areas and
  2. Migration to urban areas where they only work as daily - wagers or casual workers.

Informalisation is a situation where workforce declines in formal and rises in informal sector and it can be categorised into:

  1. Formal sector employment
  2. Informal sector employment

FORMAL SECTOR

INFORMAL SECTOR

Also called organised sector

Also called unorganised sector

Govt. department, public & private enterprises that hire 10 or more workers

Enterprises that hire less than 10 workers.

Workers here are called formal workers

Workers here are called informal workers

Have social security like gratuity, pension etc,

No such social security.

Can form trade unions

No trade unions can be formed.

Market economy & in formalisation are correlated to each other.

RURAL AND URBAN UNEMPLOYMENT

Rural Unemployment dominated by:

  1. Disguised Unemployment - which is caused by joint family system where actual number of workers required on farm land exceeds the required number.
  2. Seasonal Unemployment - That occurs because agriculture is a seasonal occupation and the seasonal unemployment depends on factors like conditions and methods of cultivation in different areas/states.

Urban Unemployment  is divided into two categories:

  1. Industrial Unemployment - Inclusive of illiterate people willing to work in  industries etc and Rapid Rise in Population and Concentration of Industry in urban areas are the reason behind industrial unemployment. Industrial unemployment is a spillover of rural unemployment. Further the use of western technology that is labour saving is another big reason behind it.
  1. Educated Unemployment - It happens due to expansion in educational institutions where the education system is not job - oriented ans is simply degree - oriented.The size of educated labour force is increasing leaving behind the employment opportunities.

COMMON TYPES OF UNEMPLOYMENT IN RURAL & URBAN AREAS

  1. Open Unemployment - a worker willing and able does not get work. This type of unemployment found in agricultural labourers among others.
  2. Structural Unemployment - Happens due to structural change in methods of production like changes in technology and changes in pattern of demand as well.
  3. Underemployment - where the worker is unable to find a full time job. It happens when people engaged for part - time tend to be prepared for doing  more work than they are doing and when the income increases with shift to other occupation. It is divided into: Visible & Invisible unemployment.
  4. Frictional Unemployment - Happens due to the mobility of workers from one occupation to another where in the process of finding a new occupation he/she remains unemployed for sometime.
  5. Cyclical Unemployment - Boom, recession, depression , recovery these phases of fluctuation cause cyclical unemployment.

CAUSES OF UNEMPLOYMENT IN INDIA

  1. Slow Economic Growth
  2. Rapid Growth of Population
  3. Seasonal Occupation - Agriculture
  4. Lack of Irrigation facilities
  5. Joint Family System
  6. Low Savings and Investment
  7. Limited Mobility of Labour

ECONOMIC & SOCIAL CONSEQUENCES OF UNEMPLOYMENT

ECONOMIC CONSEQUENCES:

1. Non - utilisation of Manpower resulting in Loss of output - The unemployed do not contribute to the output even after having the potential to do so.

2. Low Capital Formation implying Low Productivity - Unemployed people contribute to the consumption and not the production so the rate of capital formation stays low. Disguised unemployment results in low level of productivity further meaning low growth rate.

SOCIAL CONSEQUENCES:

  1. Low Quality of Life
  2. Greater Inequality - in terms of income & wealth distribution resulting in social injustice.
  3. Social Unrest - can be seen through self - desperation.
  4. Class Struggle - the societal divide (between have and have - nots)due to unemployment.

SOLVING THE PROBLEM OF UNEMPLOYMENT THROUGH:

  1. Increase in Production in agricultural and industrial sectors
  2. Increase in Productivity
  3. High Rate of  Capital Formation where investment must be focused towards areas of production in which the employment potential is high. Decrease in capital - output ratio is essential.
  4. Help to Self- employed by providing credit facilities ,  marketing, raw materials, technical training etc.
  5. Educational Reforms by laying prime focus on vocational education and on financial assistance to set up own enterprises.
  6. Technique of Production by encouraging labour - intensive technology in place of capital - intensive one.
  7. Cooperative Industries
  8. Importance to Employment Programmes in Plans which should focus non irrigation projects, road construction, flood - control, soil conservation etc.

SKILL INDIA, MAKE IN INDIA, START - UPS

- Campaigns initiated by government to generate opportunities