UPSC Economics Employment and Infrastructure NCERT Extracts - Employment - Growth, Information and other Issues

Introduction

• What I object to, is the 'craze' for machinery, not machinery as such. The craze is for what they call labour-saving machinery. Men go on 'saving labour' till thousands are without work and thrown on the open streets to die of starvation... Mahatma Gandhi
• Studying about working people gives us insights into the quality and nature of employment in our country and helps in understanding and planning our human resources.
• It helps us to analyse the contribution made by different industries and sectors towards national income.
• It also helps us to address many social issues such as exploitation of marginalized sections of the society, child labour etc.

Workers and Employment

• We know that the total money value of all such goods and services produced in a country in a year is called its gross domestic product for that year.
• When we also consider what we pay for our imports and get from our exports we find that there is a net earning for the country which may be positive or negative (if imports exceeded exports in value terms) or zero (if exports and imports were of the same value).
• When we add this earning (plus or minus) from foreign transactions, what we get is called the country's gross national product for that year.
• Those activities which contribute to the gross national product are called economic activities. All those who are engaged in economic activities, in whatever capacity - high or low, are workers.
• Even if some of them temporarily abstain from work due to illness, injury or other physical disability, bad weather, festivals, social or religious functions, they are also workers.
• Workers also include all those who help the main workers in these activities. We generally think of only those who are paid by an employer for their work as workers. This is not so. Those who are self-employed are also workers.
• The nature of employment in India is multifaceted. Some get employment throughout the year; some others get employed for only a few months in a year. Many workers do not get fair wages for their work.
• While estimating the number of workers, all those who are engaged in economic activities are included as employed. During 2011-12, India had about a 473 million strong workforce.
• Since majority of our people reside in rural areas, the proportion of workforce residing there is higher. The rural workers constitute about threefourth of this 473 million.
• Men form the majority of workforce in India. About 70 per cent of the workers are men and the rest are women (men and women include child labourers in respective sexes).
• Women workers account for one-third of the rural workforce whereas in urban areas, they are just one-fifth of the workforce.
• Women carry out works like cooking, fetching water and fuelwood and participate in farm labour. They are not paid wages in cash or in the form of grains; at times they are not paid at all.
• For this reason, these women are not categorised as workers. Economists have argued that these women should also be called workers.

Participation of People in Employment

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• Worker-population ratio is an indicator which is used for analysing the employment situation in the country. This ratio is useful in knowing the proportion of population that is actively contributing to the production of goods and services of a country.
• If the ratio is higher, it means that the engagement of people is greater; if the ratio for a country is medium, or low, it means that a very high proportion of its population is not involved directly in economic activities.
• Population is defined as the total number of people who reside in a particular locality at a particular point of time. If we want to know the worker-population ratio for India, divide the total number of workers in India by the population in India and multiply it by 100, we will get the worker-population ratio for India.
• People in rural areas have limited resources to earn a higher income and participate more in the employment market. Many do not go to schools, colleges and other training institutions.
• Even if some go, they discontinue in the middle to join the workforce; whereas, in urban areas, a considerable section is able to study in various educational institutions.
• Urban people have a variety of employment opportunities. They look for the appropriate job to suit their qualifications and skills. In rural areas, people cannot stay at home as their economic condition may not allow them to do so.
• Compared to females, more males are found to be working. The difference in participation rates is very large in urban areas : for every 100 urban females, only about 15 are engaged in some economic activities.
• In rural areas, for every 100 rural women about 25 participate in the employment market.
• Why are women, in general, and urban women, in particular, not working?
• It is common to find that where men are able to earn high incomes, families discourage female members from taking up jobs.
• Going back to what has already been mentioned above, many activities for the household engaged in by women are not recognised as productive work.
• This narrow definition of work leads to non-recognition of women's work and, therefore, to the underestimation of the number of women workers in the country.
• Think of the women actively engaged in many activities within the house and at family farms who are not paid for such work.
• As they certainly contribute to the maintenance of the household and farms, do we think that their number should be added to the number of women workers?

Self-employed and Hired Workers

• By knowing the status with which a worker is placed in an enterprise, it may be possible to know one dimension - quality of employment in a country.
• It also enables us to know the attachment a worker has with his or her job and the authority she or he has over the enterprise and over other co-workers.
• Workers who own and operate an enterprise to earn their livelihood are known as self employed. Thus the cement shop owner is self-employed.
• About 52 per cent workforce in India belongs to this category. The construction workers are known as casual wage labourers; they account for 30 per cent of India's workforce.
• Such labourers are casually engaged in others' farms and, in return, get a remuneration for the work done. Workers like the civil engineer working in the construction company account for 18 per cent of India's workforce.
• When a worker is engaged by someone or an enterprise and paid his or her wages on a regular basis, they are known as regular salaried employees.
• Self-employment is a major source of livelihood for both men and women as this category accounts for more than 50 per cent of the workforce.
• Casual wage work is the second major source for both men and women, a little more so for the latter (31 per cent).
• When it comes to regular salaried employment, men are found to be so engaged in greater proportion. They form 20 per cent whereas women form only 13 per cent. One of the reasons could be skill requirement.
• Since regular salaried jobs require skills and a higher level of literacy, women might not have been engaged to a great extent.
• The self-employed and casual wage labourers are found more in rural areas than in urban areas. In the latter, both self-employment and regular wage salaried jobs are greater.
• In the former, since majority of those depending on farming own plots of land and cultivate independently, the share of self-employed is greater.
• The nature of work in urban areas is different. Obviously everyone cannot run factories, shops and offices of various types. Moreover enterprises in urban areas require workers on a regular basis.

Employment in Firms, Factories and Offices

• In the course of economic development of a country, labour flows from agriculture and other related activities to industry and services. In this process, workers migrate from rural to urban areas.
• Eventually, at a much later stage, the industrial sector begins to lose its share of total employment as the service sector enters a period of rapid expansion.
• This shift can be understood by looking at the distribution of workers by industry.
• Generally, we divide all economic activities into eight different industrial divisions. They are :
• Agriculture,
• Mining and Quarrying,
• Manufacturing,
• Electricity, Gas and Water Supply,
• Construction,
• Trade,
• Transport and Storage, and
• For simplicity, all the working persons engaged in these divisions can be clubbed into three major sectors viz.,
• primary sector which includes agriculture.
• secondary sector which includes mining and quarrying, manufacturing, electricity, gas and water supply and construction.
• service sector which includes divisions trade, transport and storage and services.
• Primary sector is the main source of employment for majority of workers in India. Secondary sector provides employment to only about 24 per cent of workforce. About 27 per cent of workers are in the service sector.
• About 67 per cent of the workforce in rural India depends on agriculture, forestry and fishing. About 16 per cent of rural workers are working in manufacturing industries, construction and other industrial activities.
• Service sector provides employment to only about 17 per cent of rural workers. Agriculture is not a major source of employment in urban areas where people are mainly engaged in the service sector.
• About 60 per cent of urban workers are in the service sector. The secondary sector gives employment to about 30 per cent of urban workforce.
• Though both men and women workers are concentrated in the primary sector, women workers concentration is very high there.
• About 63 per cent of the female workforce is employed in the primary sector whereas less than half of males work in that sector. Men get opportunities in both secondary and service sectors.

Growth and Changing Structure of Employment

• During the period 1950-2010, Gross Domestic Product (GDP) of India grew positively and was higher than the employment growth.
• However, there was always fluctuation in the growth of GDP. During this period, employment grew at the rate of not more than 2 per cent.
• During 1990s employment growth started declining and reached the level of growth that India had in the early stages of planning. During these years, we also find a widening gap between the growth of GDP and employment.
• This means that in the Indian economy, without generating employment, we have been able to produce more goods and services. Scholars refer to this phenomenon as jobless growth.
• So far we have seen how employment has grown in comparison to GDP. Now it is necessary to know how the growth pattern of employment and GDP affected different sections of workforce. From this we will also be able to understand what types of employment are generated in our country.
• We know that India is an agrarian nation; a major section of population lives in rural areas and is dependent on agriculture as their main livelihood. Developmental strategies in many countries, including India, have aimed at reducing the proportion of people depending on agriculture.
• Distribution of workforce by industrial sectors shows substantial shift from farm work to non-farm work. In 1972-73, about 74 per cent of workforce was engaged in primary sector and in 2011-12, this proportion has declined to about 50 per cent.
• Secondary and service sectors are showing promising future for the Indian workforce. We may notice that the shares of these sectors have increased from 11 to 24 per cent and 15 to 27 per cent, respectively.
• The distribution of workforce in different status indicates that over the last four decades .(1972-2012), people have moved from self-employment and regular salaried employment to casual wage work.
• Yet self-employment continues to be the major employment provider. Scholars call the process of moving from self-employment and regular salaried employment to casual wage work as casualisation of workforce. This makes the workers highly vulnerable.

Formal Sector Employment

• The information relating to employment in the formal sector is collected by the Union Ministry of Labour through employment exchanges located in different parts of the country.
• Do we know who is the major employer in the formal sector in India? In 2012, out of about 30 million formal sector workers, about 18 million workers were employed by the public sector.
• Here also men form the majority, as women constitute only about one-sixth of the formal sector workforce.
• Economists point out that the reform process initiated in the early 1990s resulted in a decline in the number of workers employed in the formal sector.

Informalisation of Indian Workforce

• In the previous section we have found that the proportion of casual labourers has been increasing.
• One of the objectives of development planning in India, since India's independence, has been to provide decent livelihood to its people.
• It has been envisaged that the industrialisation strategy would bring surplus workers from agriculture to industry with better standard of living as in developed countries.
• Economists argue that, over the years, the quality of employment has been deteriorating. Even after working for more than 10-20 years, why do some workers not get maternity benefit, provident fund, gratuity and pension?
• Why does a person working in the private sector get a lower salary as compared to another person doing the same work but in the public sector?
• We may find that a small section of Indian workforce is getting regular income. The government, through its labour laws, enable them to protect their rights in various ways.
• This section of the workforce forms trade unions, bargains with employers for better wages and other social security measures.
• To know this we classify workforce into two categories : workers in formal and informal sectors, which are also referred to as organised and unorganised sectors.
• All the public sector establishments and those private sector establishments which employ 10 hired workers or more are called formal sector establishments and those who work in such establishments are formal sector workers.
• All other enterprises and workers working in those enterprises form the informal sector.
• Thus, informal sector includes millions of farmers, agricultural labourers, owners of small enterprises and people working in those enterprises as also the self-employed who do not have any hired workers.
• It also includes all non-farm casual wage labourers who work for more than one employer such as construction workers and headload workers.
• Those who are working in the formal sector enjoy social security benefits. They earn more than those in the informal sector. Developmental planning envisaged that as the economy grows, more and more workers would become formal sector workers and the proportion of workers engaged in the informal sector would dwindle.
• We learnt that there are about 473 million workers in the country. There are about 30 million workers in the formal sector. Can we estimate the percentage of people employed in the formal sectors in the country?
• About only 6 per cent (30/473 x 100)! Thus, the rest 94 per cent are in the informal sector.
• Out of 30 million formal sector workers, only 6 million, that is, only about 21 per cent (30/6><100) are women. In the informal sector, male workers account for 69 per cent of the workforce.
• Since the late 1970s, many developing countries, including India, started paying attention to enterprises and workers in the informal sector as employment in the formal sector is not growing.
• Workers and enterprises in the informal sector do not get regular income; they do not have any protection or regulation from the government. Workers are dismissed without any compensation.
• Technology used in the informal sector enterprises is outdated; they also do not maintain any accounts. Workers of this sector live in slums and are squatters.
• Of late, owing to the efforts of the International Labour Organisation (ILO), the Indian government has initiated the modernisation of informal sector enterprises and provision of social security measures to informal sector workers.

Unemployment

• NSSO defines unemployment as a situation in which all those who, owing to lack of work, are not working but either seek work through employment exchanges, intermediaries, friends or relatives or by making applications to prospective employers or express their willingness or availability for work under the prevailing condition of work and remunerations.
• There are a variety of ways by which an unemployed person is identified. Economists define unemployed person as one who is not able to get employment of even one hour in half a day.
• There are three sources of data on unemployment : Reports of Census of India, National Sample Survey Organisation's Reports of Employment and Unemployment Situation and Directorate General of Employment and Training Data of Registration with Employment Exchanges.
• Though they provide different estimates of unemployment, they do provide us with the attributes of the unemployed and the variety of unemployment prevailing in our country.
• The situation described in the first paragraph of this section is called open unemployment.
• Economists call unemployment prevailing in Indian farms as disguised unemployment. What is disguised unemployment? Suppose a farmer has four acres of land and he actually needs only two workers and himself to carry out various operations on his farm in a year, but if he employs five workers and his family members such as his wife and children, this situation is known as disguised unemployment.
• One study conducted in the late 1950s showed about one third of agriculture workers in India as disguisedly unemployed.
• Work in agriculture is seasonal; there are no employment opportunities in the village for all months in the year. When there is no work to do on farms, people go to urban areas and look for jobs. This kind of unemployment is known as seasonal unemployment. This is also a common form of unemployment prevailing in India.
• Though Scholars says that in India, people cannot remain completely unemployed for very long because their desperate economic condition would not allow them to be so. We will rather find them being forced to accept jobs that nobody else would do, unpleasant or even dangerous jobs in unclean, unhealthy surroundings.
• The central and state governments take many initiatives and generate employment to facilitate'a decent living for low income families through various measures.

Government and Employment Generation

• We may recall about the National Rural Employment Guarantee Act, 2005. It promises 100 days of guaranteed wage employment to all rural households who volunteer to do unskilled manual work.
• This scheme is one of the many measures governments implement to generate employment for those who are in need of jobs in rural areas.
• Since independence, the Union and state governments have played an important role in generating employment or creating opportunities for employment generation.
• Their efforts can be broadly categorised into two - direct and indirect. In the first category, as we have seen in the preceding section, government employs people in various departments for administrative purposes.
• It also runs industries, hotels and transport companies and hence provides employment directly to workers.
• When output of goods and services from government enterprises increases, then private enterprises which receive raw materials from government enterprises will also raise their output and hence increase the number of employment opportunities in the economy.
• For example, when a government owned steel company increases its output, it will result in direct increase in employment in that government company.
• Simultaneously, private companies, which purchase steel from it, will also increase their output and thus employment. This is the indirect generation of employment opportunities by the government initiatives in the economy.
• Employment generation programmes. Aim at providing not only employment but also services in areas such as primary health, primary education, rural drinking water, nutrition, assistance for people to buy income and employment generating assets, development of community assets by generating wage employment, construction of houses and sanitation, assistance for constructing houses, laying of rural roads, development of wastelands/degraded lands.

Conclusion

• There has been a change in the structure of workforce in India. Newly emerging jobs are found mostly in the service sector. The traditional notion of the modem factory or office, as a result, has been altering in such a manner that for many the home is becoming the workplace.
• In the last two decades, there has been rapid growth in the gross domestic product, but without simultaneous increase in employment opportunities.