Employment: Growth, Informalisation and Other Issues – Class 11 Economics Chapter 6 Notes & NCERT PDF

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

People work in farms, factories, banks, shops and offices, and many work at home — from weaving and handicrafts to IT programming. During the Covid-19 pandemic (2020–21), millions delivered goods and services through work-from-home. People work to earn a living, but work also gives a sense of self-worth and helps us relate meaningfully to others. Every working person contributes to national income and to the country's development. Studying working people helps us understand the quality and nature of employment, plan human resources, measure each sector's contribution to national income, and address social issues like exploitation of marginalised sections and child labour.

Key Concepts

6.2 Workers and Employment

During 2022-23, India had a workforce of about 545 million; about two-thirds are rural. About 77 per cent of workers are men. Women are one-fourth of the rural workforce but only one-fifth of the urban workforce. Many women cook, fetch water and fuelwood and work on farms without payment, so they are not counted as workers — economists argue they should be.

6.3 Participation of People in Employment

Worker-Population Ratio (WPR) = (Total number of workers ÷ Total population) × 100.

It shows what proportion of the population actively contributes to producing goods and services. A higher ratio means greater engagement in economic activity.

From Table 6.1 (2023-24):

Why is rural participation higher? Rural people have limited resources and often cannot stay out of work; many do not attend or complete school and join the workforce early. Urban people can study longer and look for jobs that suit their skills.

Why do fewer women work, especially in cities? Where men earn high incomes, families often discourage women from taking jobs; and much household work by women is not recognised as productive work, which leads to underestimation of women workers.

6.4 Self-employed and Hired Workers

The status of a worker tells us about the quality of employment — their attachment to the job and authority in the enterprise. Using the construction industry example:

Self-employment is the major source of livelihood for both men and women (over 50 per cent). Casual wage work is the second major source for women. In regular salaried jobs, men form 21 per cent and women 16 per cent. Self-employment is higher in rural areas (people own and cultivate land), while urban areas have more regular salaried jobs because urban enterprises need workers regularly.

6.5 Employment in Firms, Factories and Offices

As an economy develops, labour flows from agriculture to industry and services, and workers migrate from rural to urban areas. The eight industrial divisions are grouped into three sectors:

Table 6.2 (2023-24):

6.6 Growth and Changing Structure of Employment

During 1951–2023, GDP grew positively and faster than employment. Employment growth mostly stayed at or below 2 per cent; it exceeded 2 per cent only in 1999–2005 and 2022–23. From the late 1990s, a widening gap appeared between GDP growth and employment growth — India produced more goods and services without generating matching employment. This is called jobless growth.

Table 6.3 (1972-73 → 2023-24):

6.7 Informalisation of the Indian Workforce

In 2019–20, India had about 535 million workers, of whom about 59 million were in the formal sector — only about 11 per cent (59/535 × 100); about 89 per cent are informal. In 2011–12, about 20 per cent of formal and 30 per cent of informal workers were women.

Box 6.1: In 2012, out of about 30 million formal sector workers, about 18 million were in the public sector — the government is the major formal sector employer. Women were only about one-sixth of formal workers.

Box 6.2 — Informalisation in Ahmedabad: the city's wealth rested on 60+ textile mills employing 1,50,000 workers with secure jobs, social security and a strong union. When mills began closing in the early 1980s, over about 10 years more than 80,000 permanent and 50,000 non-permanent workers lost jobs and were pushed into the informal sector — leading to poverty, alcoholism, suicides and children being withdrawn from school.

Informal workers have no regular income, no protection or regulation, can be dismissed without compensation, use outdated technology and often live in slums. With the efforts of the ILO, the government has begun modernising informal enterprises and extending social security.

6.8 Unemployment

The National Statistical Office (earlier NSSO) defines unemployment as a situation in which people who, owing to lack of work, are not working but seek work (through employment exchanges, intermediaries, friends or relatives, or applications) or express willingness to work. Economists define an unemployed person as one unable to get employment of even one hour in half a day.

Data sources: Census of India reports; NSO reports on Employment and Unemployment and Annual Reports of the Periodic Labour Force Survey; and the Directorate General of Employment and Training (registration with employment exchanges).

Types of unemployment:

In India, people rarely remain completely unemployed for long — poverty forces them to accept unpleasant or even dangerous jobs.

6.9 Government and Employment Generation

6.10 Conclusion

New jobs are mostly in the service sector. High technology and outsourcing let small enterprises and specialists work alongside multinationals; for many, home is becoming the workplace. But employment has become more informal with limited social security, and rapid GDP growth has not been matched by employment growth.

Key Facts & Figures

Exam Focus

Key Terms

Common Mistakes