Employment: Growth, Informalisation and Other Issues

EMPLOYMENT: GROWTH, INFORMALISATION AND OTHER ISSUES

6.1 INTRODUCTION: UNDERSTANDING THE CONCEPT OF WORK

**Work** refers to any human activity that contributes to economic production, generating goods and services that add to the nation's wealth. Work encompasses diverse forms—from traditional agricultural labour to modern work-from-home arrangements in IT industries. The COVID-19 pandemic exemplified how technology enables work flexibility across geographic locations.

**Why people work:**

**Economic survival**: Earning a livelihood to meet basic needs and sustain families

**Social contribution**: Active participation in national income generation and economic development

**Psychological fulfillment**: Sense of self-worth, accomplishment, and meaningful social relationships

**Supporting dependents**: Meeting requirements of family members dependent on the worker

**Significance of studying employment:**

Provides insights into **quality and nature of employment** in the economy

Helps analyze **contribution of different industries** to national income and GDP

Enables **human resource planning** for economic development

Addresses **social issues**: exploitation of marginalized sections, child labour, gender discrimination in workforce participation

Reveals economic disparities between regions and social groups

Mahatma Gandhi emphasized that education and training must include various forms of work and crafts, opposing mindless mechanization that displaces workers without creating alternative employment opportunities.

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6.2 WORKERS AND EMPLOYMENT: DEFINITIONS AND CLASSIFICATIONS

**What is Employment?**

**Employment** refers to engagement in **economic activities**—any work that contributes to the nation's **Gross National Product (GNP)**. Economic activities include:

Agricultural production (food grains, raw materials)

Industrial manufacturing (transforming raw materials into finished goods)

Service provision (transportation, banking, retail, healthcare)

Any productive work generating monetary value

**Definition of a Worker**

A **worker** is any person engaged in economic activities that contribute to national income, regardless of:

Payment status (paid or unpaid)

Regularity of work (full-time, part-time, seasonal)

Employment nature (self-employed or hired)

Skill level (manual or professional)

**Inclusions in worker definition:**

People temporarily absent from work due to illness, injury, disability, festivals, or social functions are still classified as workers

Self-employed individuals (farmers, shopkeepers, professionals)

Wage labourers (casual and regular)

Helpers assisting main workers in productive activities

**Note**: Many unpaid household activities performed by women (cooking, fetching water/fuelwood, farm labour) are economically productive but not recognized as paid work, leading to **underestimation of women workers**.

**Employment Size in India (2022-23)**

**Total workforce**: Approximately 545 million workers

**Rural workforce**: About 471 million (two-thirds of total)

**Gender composition**: 77% men, 23% women

**Regional disparity**: Rural women workers = 25% of rural workforce; Urban women workers = 20% of urban workforce

**Nature of women's work**: Often unpaid domestic labour, agricultural help without cash wages—creating statistical invisibility despite significant economic contribution.

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6.3 PARTICIPATION OF PEOPLE IN EMPLOYMENT: WORKER-POPULATION RATIO

**Concept: Worker-Population Ratio**

**Worker-Population Ratio** = (Total Number of Workers / Total Population) × 100

This ratio indicates the **proportion of population actively engaged in productive economic activities**. A higher ratio suggests greater economic participation; lower ratio indicates substantial population not directly contributing to goods and services production.

**Interpretation and Data (2023-24)**

| Indicator | Rural | Urban | Total |

|-----------|-------|-------|-------|

| **Men** | 56.3% | 56.4% | 56.4% |

| **Women** | 34.8% | 20.7% | 30.7% |

| **Total** | 45.6% | 38.9% | 43.7% |

**Key observations**:

For every 100 persons in India, approximately **44 are workers** (41-43 range)

Rural participation (45.6%) exceeds urban participation (38.9%)

**Gender gap is severe**: Only 30.7% women participate vs. 56.4% men nationally

**Urban women severely underrepresented**: Only 20.7% of urban women participate in economic activities

**Reasons for Differential Participation Rates**

**Rural-Urban differences:**

**Rural areas**: Limited educational resources; people cannot remain unemployed due to economic pressure; fewer job opportunities drive higher participation

**Urban areas**: Better educational institutions; ability to pursue higher qualifications; selective job-seeking matching skills with positions; extended education delays workforce entry

**Gender disparities in female participation:**

**Social norms and family income**: Where male earning is high, families discourage female employment

**Unpaid household work**: Cooking, water/fuel fetching, childcare not recognized as economic activity, so not counted as employment

**Urban unemployment**: Urban women wait for appropriate jobs; rural women must work immediately

**Occupational segregation**: Limited job categories accessible to women (primarily informal, low-wage sectors)

**Note**: Current definition of "work" excludes non-monetary household contributions, leading to systematic underestimation of women's economic participation.

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6.4 SELF-EMPLOYED AND HIRED WORKERS: EMPLOYMENT STATUS AND QUALITY

**Concept: Employment Status**

**Employment status** reflects **worker's position within enterprises**, determining:

Nature of work attachment (permanent or temporary)

Authority and decision-making power

Income stability and security

Quality of employment conditions

**Three Categories of Workers**

**1. Self-Employed Workers (58% of India's workforce)**

**Definition**: Workers who own and operate enterprises to earn livelihood, possessing ownership and operational control.

**Characteristics**:

Bear business risk and investment responsibility

Set own working conditions and hours

Income fluctuates based on business performance

Include farmers, shopkeepers, artisans, professionals (doctors, lawyers, engineers)

Concentrated in rural areas due to agricultural dominance

**Example**: Cement shop owner operating independently; handloom weaver; street vendor

**2. Casual Wage Labourers (20% of India's workforce)**

**Definition**: Workers casually engaged in others' farms/enterprises for short-term periods without fixed employment contract, receiving wages for work completed.

**Characteristics**:

No job security or employment contract

Irregular work availability (seasonal, daily, weekly basis)

Wages paid per task/day without benefits

Vulnerable to income fluctuations and exploitation

Significant in agriculture and construction sectors

**Example**: Construction worker hired for specific project; agricultural labourer during harvest season; brick-making worker

**Most vulnerable category** due to:

Lack of job security and regular income

No access to benefits (healthcare, pension, insurance)

Susceptibility to wage exploitation

Difficult working conditions

**3. Regular Salaried Employees (22% of India's workforce)**

**Definition**: Workers engaged by employers/enterprises receiving regular, fixed wages/salary based on employment contract.

**Characteristics**:

Employment security with formal contracts

Regular, stable income independent of output

Access to benefits (provident fund, health insurance, leave)

Established hierarchical authority structure

Greater presence in urban areas and service sector

**Example**: Civil engineer in construction company; bank clerk; government office employee; factory supervisor

**Gender composition**: Men 21%, Women 16%

**Sectoral Distribution of Employment by Status**

**Chart 6.1 Distribution by Gender:**

**Male Workers (67% self-employed, 25% regular salaried, 8% casual)**:

Majority in self-employment due to agricultural concentration

Significant regular salaried employment in urban jobs

Minimal casual labour participation

**Female Workers (54% self-employed, 21% regular salaried, 25% casual)**:

Substantial self-employment in agriculture and small enterprises

Casual wage labour critical for rural women

Lower regular employment due to occupational segregation

**Chart 6.2 Distribution by Region:**

**Rural Workers (65% self-employed, 22% casual wage, 13% regular salaried)**:

Dominance of self-employment through land ownership and independent farming

Significant casual labour in off-season and non-farm activities

Minimal formal sector jobs

**Urban Workers (40% self-employed, 48% regular salaried, 12% casual)**:

Nearly half in regular employment (formal sector concentration)

Substantial self-employment (small businesses, retail, services)

Lower casual labour due to urban formal sector expansion

**Quality of Employment Analysis**

**Quality indicators beyond worker-population ratio:**

**Income level and stability**: Regular salaried > Self-employed > Casual wage

**Job security**: Regular salaried (highest) > Self-employed (medium) > Casual (none)

**Working conditions**: Regular salaried (protected) vs. casual (exploitative conditions)

**Access to benefits**: Regular salaried (comprehensive) vs. others (minimal/absent)

**Skill development**: Regular salaried (training provided) vs. others (limited)

**Gender wage gap**: Women earn significantly less in same status category

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6.5 EMPLOYMENT IN FIRMS, FACTORIES AND OFFICES: SECTORAL DISTRIBUTION

**Industrial Classification System**

All economic activities classified into **eight industrial divisions**, further consolidated into **three major sectors**:

**Primary Sector** (Agriculture and Extractive):

(i) Agriculture, Forestry, Fishing

(ii) Mining and Quarrying

**Function**: Extracting natural resources; foundation of agrarian economies

**Secondary Sector** (Manufacturing and Infrastructure):

(iii) Manufacturing

(iv) Electricity, Gas, Water Supply

(v) Construction

**Function**: Transforming raw materials into finished goods; building infrastructure

**Tertiary Sector** (Services):

(vi) Trade (Wholesale, Retail)

(vii) Transport and Storage

(viii) Services (Banking, Healthcare, Education, Tourism, IT)

**Function**: Providing services to consumption and production

**Workforce Distribution by Sector (2023-24)**

| Sector | Rural | Urban | Men | Women | Total |

|--------|-------|-------|-----|-------|-------|

| **Primary** | 59.8% | 6.7% | 36.3% | 64.4% | 46.1% |

| **Secondary** | 21.4% | 32.4% | 28.8% | 15.6% | 24.1% |

| **Tertiary** | 18.8% | 60.9% | 34.9% | 20.0% | 29.8% |

**Sectoral Employment Patterns**

**Primary Sector (46.1% of total workforce)**:

**Dominant in rural areas** (59.8% of rural workers) due to agriculture-based economy

Minimal in urban areas (6.7%) where land unavailable for farming

**Women concentration extremely high**: 64.4% of female workforce, indicating concentration in low-wage agricultural labour

**Men distribution**: 36.3% work in agriculture

**Declining trend**: Traditional development strategy aiming to reduce agricultural dependence

**Secondary Sector (24.1% of total workforce)**:

**Urban concentration**: 32.4% of urban workers in manufacturing, construction

**Rural presence**: 21.4% of rural workers in small-scale manufacturing, construction

**Gender gap**: Men 28.8% vs. Women 15.6%—women underrepresented due to occupational segregation and physical job requirements

**Growing opportunity**: Emerging manufacturing sectors (textiles, garments, electronics)

**Tertiary Sector (29.8% of total workforce)**:

**Urban dominance**: 60.9% of urban workers employed in services

**Rural presence**: 18.8% in trade, transport, services

**Gender disparity**: Men 34.9% vs. Women 20.0%

**Fastest growing**: IT, banking, healthcare, tourism sectors driving urban employment expansion

**Future focus**: Service sector modernization creating skilled job opportunities

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6.6 GROWTH AND CHANGING STRUCTURE OF EMPLOYMENT

**GDP vs. Employment Growth Trends (1950-2010)**

**Historical Pattern:**

**Period 1950-2010**: GDP grew consistently at higher rates than employment growth

**Employment growth rate**: Typically not exceeding 2% annually

**Fluctuations**: GDP growth variable; employment growth remained relatively stable

**Planning objective**: Expansion of economy through increased national output and employment creation

**Recent Trends and "Jobless Growth" Phenomenon (Late 1990s onwards)**

**Concerning development:**

**Employment growth declined** to early planning period levels (below 2%)

**Widening GDP-Employment Gap**: Significant divergence between economic growth and job creation

**Jobless Growth**: Economy producing more goods and services **without proportional employment generation**

**Implications**:

Economic growth not translating to adequate employment opportunities

Structural unemployment and underemployment persisting

Rising income inequality despite GDP expansion

Inadequate absorption of rural workers into non-agricultural sectors

**Sectoral Shift in Employment (1972-73 to 2023-24)**

| Sector | 1972-73 | 2023-24 | Change |

|--------|---------|---------|--------|

| **Primary** | 74% | 46% | -28 percentage points |

| **Secondary** | 11% | 24% | +13 percentage points |

| **Tertiary** | 15% | 30% | +15 percentage points |

**Positive structural transformation:**

**Declining agricultural dependence**: 74% to 46%—significant reduction in farm-based workforce

**Secondary sector expansion**: 11% to 24%—manufacturing and construction providing alternative employment

**Service sector growth**: 15% to 30%—rapid expansion driven by urbanization, IT revolution, globalization

**Development trajectory**: India transitioning from agrarian to industrial-service economy

**Evidence of planned development success:**

Decades of planning strategies successfully reduced agricultural workforce concentration

Emergence of manufacturing opportunities in rural and urban areas

Service sector expansion creating new employment categories and skill requirements

**Remaining challenges:**

**Transition quality**: Rural workers moving to informal sector jobs rather than stable formal employment

**Skills gap**: Workers without education/training unable to access secondary/tertiary sector jobs

**Regional disparities**: Uneven industrial development creating regional unemployment

**Informalisation**: Workers shifting to informal economy despite sectoral growth

**Understanding "Jobless Growth"**

**Definition**: Situation where economy produces increasing GDP without generating proportional employment, leading to:

Rising output with stagnant job creation

More goods/services produced with fewer workers

Technological displacement without new job creation

Growing unemployment/underemployment despite economic expansion

**Causes in Indian context:**

**Technological advancement**: Automation reducing labour requirement in manufacturing

**Capital-intensive development**: Industries investing in machines rather than labour

**Service sector bias**: IT and financial services (skill-intensive) create fewer jobs than labor-intensive sectors

**Informal sector growth**: Workers absorbed into low-wage, unprotected informal economy

**Policy implications:**

Need for **labour-intensive manufacturing** strategies

Focus on **skill development** for technological jobs

Support for **self-employment** and **small enterprises**

Strengthening **rural employment** through agriculture modernization and non-farm activities

Targeted **employment generation schemes** for vulnerable populations

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6.7 KEY CONCEPTUAL DISTINCTIONS AND EXAMINATION FOCUS

**Essential Definitions for Exam**

1. **Worker**: Person engaged in economic activity contributing to GNP

2. **Economic Activity**: Work producing goods/services adding to national income

3. **Worker-Population Ratio**: (Workers/Population) × 100—measure of participation

4. **Self-Employed**: Owner-operator of enterprise

5. **Casual Wage Labourer**: Temporary worker without job security

6. **Regular Salaried Employee**: Permanent worker with fixed wages and benefits

7. **Primary Sector**: Agriculture and extractive industries

8. **Secondary Sector**: Manufacturing and construction

9. **Tertiary Sector**: Services sector

10. **Jobless Growth**: GDP growth without employment generation

**Critical Analysis Points**

**Gender and employment**: Women systematically excluded through unpaid labour non-recognition and occupational segregation

**Rural-urban divide**: Different employment structures reflecting resource availability and educational access

**Sectoral transformation**: Successful shift from agriculture toward services, but inadequate formal job creation

**Employment quality**: Status matters as much as employment count for understanding actual development

**Informal sector dominance**: 58% self-employed mostly in informal economy without protections

**Policy Implications for Students**

Government must focus on **quality employment** not just job numbers

**Rural development** and agricultural modernization essential for sustainable employment

**Skills training** critical for transitioning to secondary/tertiary sectors

**Women's formal sector participation** requires policy intervention addressing social norms and occupational segregation

**Minimum wage and labour laws** vital for protecting casual workers

**Technology adoption** must balance productivity with employment creation