Class 11 Economics Notes Chapter 7 (Employment: growth; informalisation and other issues) – Indian Econimoc Development Book

Alright class, let's delve into a very crucial chapter for understanding the Indian economy – Chapter 7: 'Employment: Growth, Informalisation and Other Issues'. This chapter is vital not just for your exams but also for understanding the socio-economic fabric of our country. Pay close attention as we break down the key concepts.

Chapter 7: Employment: Growth, Informalisation and Other Issues - Detailed Notes

1. Introduction: Why Study Employment?

• Employment is a key indicator of economic health and social well-being.
• Studying employment helps us understand:
  • The contribution of different sectors and industries to national income.
  • The quality and nature of employment available.
  • The extent of poverty and inequality.
  • The effectiveness of government policies.
• People work for 'earning a living', contributing to Gross National Product (GNP), and gaining a sense of self-worth and social connection.

2. Basic Concepts:

• Worker: An individual engaged in any economic activity, contributing to the GNP. This includes:
  • Those who work for others (employees).
  • Self-employed individuals.
  • Those temporarily absent from work (due to illness, injury, festivals, etc.).
  • Those assisting in family enterprises (even if unpaid).
• Economic Activity: Activities undertaken for monetary gain or that result in the production of goods and services.
• Labour Force: All persons who are working (have a job) and though not working, are seeking and available for work. Essentially, Employed + Unemployed (seeking work).
• Workforce: The number of persons actually working. It does not include those who are unemployed but seeking work.
• Labour Supply: Refers to the amount of labour (in terms of person-hours or person-days) that workers are willing to offer at a particular wage rate. It's different from the Labour Force, which is the number of people available.
• Rate of Participation: (Total Workforce / Total Population) × 100. It indicates the proportion of the population actively participating in economic activities. Participation rates are generally lower for urban areas compared to rural areas, and significantly lower for women compared to men.
• Unemployment: A situation where a person is able and willing to work at the prevailing wage rate but does not find work.

3. Types of Employment/Workers:

Based on the nature of employment, workers are categorized as:

• Self-Employed: Workers who own and operate an enterprise to earn their livelihood (e.g., shopkeepers, farmers, small business owners). Constitute the largest share in India (around 52% as per data around the textbook's context).
• Casual Wage Labourers: Workers engaged by others and paid remuneration on a daily or periodic basis; they do not have regular work or social security benefits (e.g., construction workers, agricultural labourers). Account for a significant portion, especially in rural areas.
• Regular Salaried Employees: Workers engaged by someone or an enterprise and paid wages/salary on a regular basis; usually have social security benefits (e.g., teachers, clerks, factory workers with regular contracts). This group is smaller compared to the other two but generally has better job security and benefits.

4. Distribution of Employment by Sector:

Economic activities are broadly grouped into:

• Primary Sector: Agriculture, mining, quarrying, forestry, fishing. Relies heavily on natural resources.
• Secondary Sector: Manufacturing (registered and unregistered), construction, electricity, gas, and water supply. Involves transformation of raw materials.
• Tertiary (Service) Sector: Trade, transport, storage, banking, insurance, communication, community, social and personal services.

Trends in Sectoral Distribution:

• Historically, India had a majority of its workforce in the Primary Sector.
• Over time, there has been a slow shift from the Primary sector towards Secondary and Tertiary sectors, but the pace has been less dramatic compared to many developed nations.
• While the share of agriculture in GDP has declined significantly, its share in employment remains high, indicating low productivity and disguised unemployment.
• The Tertiary Sector has seen the most significant growth in terms of GDP contribution and is increasingly absorbing labour, though often in low-paying, informal jobs.
• The Secondary Sector's employment growth has been relatively sluggish.

5. Growth and Changing Structure of Employment:

• Employment Growth vs. GDP Growth: India has often experienced periods where GDP grew significantly faster than employment opportunities. This phenomenon is termed 'Jobless Growth'. It implies that economic growth isn't translating into sufficient job creation.
• Casualisation of Workforce: An increasing trend where the proportion of casually hired workers in the total workforce rises. This indicates growing insecurity and lack of benefits for workers.
• Informalisation of Workforce: A shift towards employment in the informal or unorganised sector.

6. Informalisation of the Indian Workforce:

• Formal (Organised) Sector: Includes all public sector establishments and private sector establishments employing 10 or more hired workers. Workers have regular employment, job security, and social security benefits (like PF, gratuity).
• Informal (Unorganised) Sector: Includes private enterprises employing fewer than 10 workers, farmers, agricultural labourers, self-employed individuals not operating registered enterprises, etc.
  • Characteristics: Lack of written contracts, absence of social security benefits (pension, health insurance, paid leave), vulnerability to dismissal, often poor working conditions, low wages.
  • Extent: A vast majority (over 90%) of India's workforce is in the informal sector.
  • Reasons for Growth: Slow growth of employment in the formal sector, rigid labour laws (argued by some), ease of entry/exit for firms, subcontracting by formal sector firms.
  • Consequences: Low productivity, low tax base for the government, vulnerability of workers, perpetuation of poverty and inequality.
  • Gender Dimension: Women constitute a significant proportion of the informal sector workforce, often in the most vulnerable and low-paying jobs.

7. Unemployment:

• Sources of Data: National Sample Survey Organisation (NSSO, now NSO), Census of India, Directorate General of Employment and Training (DGET) data from Employment Exchanges.
• Types (Contextual understanding, though not explicitly detailed categories in this chapter):
  • Disguised Unemployment: More people are employed in an activity than required (common in agriculture). Marginal productivity is near zero.
  • Seasonal Unemployment: Employment exists only during certain seasons (e.g., agriculture, tourism).
  • Open Unemployment: People able and willing to work but cannot find any work.
• Extent: Unemployment rates vary across regions, gender, and education levels. Urban unemployment is often different in nature from rural unemployment. Unemployment among educated youth is a significant concern.

8. Government Role and Employment Generation:

• The government plays a crucial role through direct employment (in public sector enterprises, administration) and indirect employment generation (via economic policies, infrastructure development, and specific employment generation schemes like MGNREGA - Mahatma Gandhi National Rural Employment Guarantee Act, though details might be outside this specific chapter's core).
• Policies aim to boost labour-intensive sectors, skill development, and support small enterprises.

9. Key Challenges and Issues:

• Jobless Growth: Economic expansion without adequate job creation.
• High Proportion of Informal Employment: Lack of security and benefits for the majority of the workforce.
• Low Quality of Employment: Many jobs are low-paying, insecure, and offer poor working conditions.
• Underemployment: People working fewer hours than they want or working in jobs below their skill level.
• Sectoral Imbalance: Heavy dependence on agriculture for employment despite its declining share in GDP.
• Gender Disparity: Lower participation rates, wage gaps, and concentration of women in less desirable jobs.
• Regional Disparities: Differences in employment opportunities across states.

Multiple Choice Questions (MCQs)

1. A person engaged in an economic activity contributing to the GNP is known as a:
   (a) Labourer
   (b) Worker
   (c) Employee
   (d) Entrepreneur

2. The Labour Force is defined as:
   (a) Total Population minus Children and Elderly
   (b) Number of people actually working
   (c) Employed persons + Unemployed persons seeking work
   (d) Total number of people willing to work at any wage

3. Which category of workers constitutes the largest share of the Indian workforce?
   (a) Regular Salaried Employees
   (b) Casual Wage Labourers
   (c) Self-Employed
   (d) Government Employees

4. The phenomenon where GDP grows significantly faster than employment opportunities is termed:
   (a) Disguised Unemployment
   (b) Jobless Growth
   (c) Structural Unemployment
   (d) Frictional Unemployment

5. The shift of the workforce from agriculture to manufacturing and services is indicative of:
   (a) Economic Stagnation
   (b) Economic Development
   (c) Increasing Poverty
   (d) Declining GDP

6. The Formal Sector typically includes:
   (a) All agricultural labourers
   (b) Self-employed street vendors
   (c) Public sector establishments and private establishments with 10+ workers
   (d) Private enterprises with fewer than 10 workers

7. Which of the following is a characteristic feature of the Informal Sector?
   (a) Regular monthly salary
   (b) Access to social security benefits like provident fund
   (c) Lack of written job contracts
   (d) Strong trade union presence

8. 'Casualisation of workforce' refers to:
   (a) Increase in the number of self-employed workers
   (b) Increase in the proportion of casually hired workers
   (c) Decrease in the overall workforce participation rate
   (d) Shift of workers from rural to urban areas

9. The Worker Population Ratio or Rate of Participation is calculated as:
   (a) (Labour Force / Total Population) × 100
   (b) (Total Workforce / Labour Force) × 100
   (c) (Total Workforce / Total Population) × 100
   (d) (Unemployed / Labour Force) × 100

10. Which sector in India employs the largest proportion of the workforce, despite its declining share in GDP?
    (a) Secondary Sector
    (b) Tertiary Sector
    (c) Primary Sector
    (d) Formal Sector

Answer Key for MCQs:

1. (b) Worker
2. (c) Employed persons + Unemployed persons seeking work
3. (c) Self-Employed
4. (b) Jobless Growth
5. (b) Economic Development
6. (c) Public sector establishments and private establishments with 10+ workers
7. (c) Lack of written job contracts
8. (b) Increase in the proportion of casually hired workers
9. (c) (Total Workforce / Total Population) × 100
10. (c) Primary Sector

Remember to correlate these notes with the specific data and examples provided in your NCERT textbook. Understanding the trends and definitions accurately is key for your exams. Keep revising!