CBSE Class 11 Economics Chapter 7 Notes: Employment Growth, Informalisation, and Other Issues

Key Definitions for Employment & Workforce

Workforce

Refers to all persons who are actually engaged in economic activities, i.e., all employed persons. It is a subset of the labour force.

Labour Force

Includes all persons who are working (employed) and those who are able and willing to work but are not employed (unemployed). Labour Force = Workforce + Unemployed.

Worker-Population Ratio

The proportion of the population that is actively participating in production activities. It indicates the employment status in a country. Calculated as (Total Workers / Total Population) × 100.

Unemployment

A situation where people who are able and willing to work at the prevailing wage rate cannot find work.

Informalisation of Workforce

A trend where a growing proportion of the workforce is engaged in the informal sector, characterized by lack of social security, job uncertainty, and low wages.

Casualisation of Workforce

The process where the proportion of casual wage labourers in the total workforce increases. Casual labourers typically lack job security, social benefits, and fixed income.

Nature of Employment in India: Diverse Patterns

Understanding the nature of employment in India requires categorising workers into three broad types: self-employed, regular salaried employees, and casual wage labourers. The distribution among these categories reflects the economic structure and social security available to the workforce.

Self-employed individuals constitute the largest segment of the Indian workforce, comprising roughly 52% of all workers. These are people who own and operate their own enterprises, often working alone or with a few family members. Examples include farmers, shopkeepers, artisans, and professionals like doctors or lawyers in private practice. Their income is derived from the profits of their enterprise. While offering autonomy, this category often lacks formal social security benefits and faces market risks.

Regular salaried employees are those who work for others and receive a regular wage or salary in return. This group typically enjoys job security, social security benefits like provident fund (PF), gratuity, pension, and paid leaves. They account for about 18% of the workforce. Employment in the formal sector predominantly falls into this category, offering better working conditions and legal protections. However, their numbers are relatively small in India compared to self-employed and casual workers.

Casual wage labourers are individuals who are intermittently hired for specific tasks or periods, receiving daily or periodic wages. They account for approximately 30% of the workforce. This group is characterised by lack of job security, no social security benefits, and often faces exploitative working conditions. They are particularly vulnerable to economic downturns and are a significant part of the informal sector. The increasing proportion of casual labourers in the workforce is a key indicator of casualisation, highlighting a concerning trend towards precarious employment.

Formal (Organised) vs. Informal (Unorganised) Sector

Key Points: Employment Growth and Challenges

• Workforce Participation Rate Trends: Female WPR is significantly lower than male WPR, especially in rural areas, though it has seen some fluctuations.
• Sectoral Distribution of Workforce: Historically, agriculture has been the largest employer. There has been a shift towards manufacturing and services, but agriculture still employs a substantial portion.
• Informalisation Drivers: Economic liberalisation, lack of formal job creation, easy entry, and lower compliance costs contribute to informalisation.
• Consequences of Informalisation: Leads to poor working conditions, low wages, lack of social security, increased vulnerability for workers, and hinders overall human resource development.
• Types of Unemployment: Disguised Unemployment: More people are employed than actually required, their marginal productivity is zero or negligible. Seasonal Unemployment: Occurs during certain seasons of the year (e.g., agriculture). Open Unemployment: People are able and willing to work but cannot find jobs. Structural Unemployment: Mismatch between available skills and required skills in the market. * Frictional Unemployment: Temporary unemployment when people are changing jobs.
• Government Initiatives: Schemes like MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), Pradhan Mantri Kaushal Vikas Yojana (PMKVY), and Start-up India aim to generate employment and enhance skills.
• Jobless Growth: Refers to a situation where GDP grows at a high rate, but employment generation does not keep pace, leading to rising unemployment. India has experienced phases of jobless growth.
• Gig Economy & Platform Workers: Emerging forms of work, often informal, characterised by flexible, temporary, or task-based jobs facilitated by digital platforms, posing new challenges for social security.

Exam Tip: Analysing Employment Data

When answering questions related to employment, informalisation, or unemployment, always try to correlate concepts with recent trends or data if mentioned in the question. For example, if asked about informalisation, explain its causes and consequences clearly, and mention which segments of the workforce (e.g., casual labourers, rural workers, women) are most affected. Use keywords like 'worker-population ratio', 'labour force participation rate', 'social security benefits', 'jobless growth', and 'casualisation' precisely. For questions on government policies, briefly mention the objectives of relevant schemes like MGNREGA.

Practice Questions with Solutions

• Q: What is the main difference between 'workforce' and 'labour force'? A: Labour force includes both employed (workforce) and unemployed persons who are willing to work, while workforce only includes those who are actually employed.
• Q: Give two characteristics of the informal sector that make it vulnerable for workers. A: Lack of social security benefits and absence of job security/fixed contracts.
• Q: Define 'jobless growth' and explain why it's a concern. A: Jobless growth occurs when GDP grows significantly but employment generation lags. It's a concern because it exacerbates unemployment despite economic progress, leading to social inequality and underutilization of human capital.
• Q: How does casualisation of the workforce impact workers? A: Casualisation leads to loss of job security, denial of social security benefits, low and irregular wages, and poor working conditions for workers.

Frequently Asked Questions