Class 12-science NCERT Solutions Economics Chapter 7 - Employment: Growth, Informalisation and Other Issues

A worker is an individual who is doing productive work to earn a livelihood. He/she is contributing to the flow of goods and services in an economy. The sum of the total value of goods and services produced during a particular year is called the gross domestic product. So, an individual who receives income in the form of wages or salaries for rendering his/her services in production is known as a worker. For example, a teacher earns a salary and a labourer engaged in the construction of a building earns wages for rendering services.

Worker-population ratio is the ratio between the total number of workers in a country and its population. It is used as an indicator for analysing the employment condition in a country and understanding the proportion of people actively involved in the production of goods and services in a country. 

A beggar, a thief, a smuggler and a gambler are not workers because they are not actively engaged in productive activity and not contributing to the flow of goods and services in an economy. Workers include only those who legally contribute to the national income.

The owner of a saloon and a tuition master are self-employed workers who own and operate an enterprise to earn their livelihood. On the other hand, a cobbler, cashier in Mother Diary, transport operator and construction worker are hired workers engaged by an enterprise and paid wages or salaries as a reward for their services. Hence, the owner of a saloon and a tuition master are the odd ones in the given list of workers.

The newly emerging jobs are found mostly in the service sector.

The service sector provides its expert services to people such as education, banking, insurance, transport, tourism and consultation. The development of primary and secondary sectors has resulted in the rise of several services which are required for the smooth functioning of these sectors.

An establishment with four hired workers is known as an informal sector establishment.

The informal sector includes all those private enterprises which hire less than 10 informal workers but excluding self-employment and agricultural farming activities. These informal workers are not entitled to social security benefits. So, an establishment with only four hired workers is known as an informal sector establishment.

Raj can be considered a worker because he is engaged in a farming activity when he is not in school.  He is contributing to the flow of goods and services in an economy. So, workers include all who are fit to work, available to work and willing to work.

In India, about 70% of the workforce is found in rural areas and only 30% is in urban areas. The percentage of female workforce in rural areas is nearly 26%, while it is only 14% in urban areas. So, the participation of rural women in the total workforce is more than the participation of urban women. Reasons for more rural women working than urban women:

1. Skill perspective: In rural areas, the agricultural farming and non-farming activities do not require highly skilled labourers. Hence, most rural women are able to take part in these activities. On the other hand, in urban areas, most activities require highly skilled labourers to handle technically advanced machinery. Hence, the participation of urban women is quite low. 
2. Level of poverty: The percentage of people living below the poverty line in rural areas is comparatively higher than the urban areas. Hence, rural women work as landless agricultural labourers, cultivators with very small land holdings and landless labourers engaged in various non-farming activities to satisfy their basic needs. On the other hand, the percentage of people living below the poverty line in urban areas is comparatively lesser than the rural areas. Income of urban male workers is higher than rural male workers. Hence, urban males do not expect females to work.
3. Nature of activity: Rural women working in the farm are considered part of the total workforce if they are paid wages in cash or in kind. Urban women perform many activities in the household which are not recognised as productive work.
4. Level of dependence: Work for rural women is based on the requirement of survival, while the work for urban women is based on the decision of the family. 

Meena can be considered a worker because she is working in her husband's cloth shop and contributes to the flow of goods and services in an economy. Her husband owns and operates the cloth shop and she is supporting him in generating income.  

A rickshaw puller works under a rickshaw owner, a mason and mechanic shop worker are hired workers engaged by an enterprise and paid wages or salaries as a reward for their services. On the other hand, the shoeshine boy is a self-employed worker who owns and operates an enterprise to earn his livelihood. Hence, the shoeshine boy is the odd one from the given list of workers.

Above facts refer to the following observations:

1. High workforce but low productivity in rural areas

The total distribution of workforce in India for 1972-73 was 234 million. Of these, 195 million of the workforce was found in rural areas and 39 million of the workforce was found in urban areas.

This indicates that a huge percentage of the workforce is engaged in rural areas (83%). Because the primary activities of production are confined largely to rural areas, they contribute less to the economy. This implies low productivity of workers in rural areas than urban areas. This low productivity results in low earnings and widespread poverty in rural areas.

2. Low workforce of females in rural areas and still lower in urban areas

The total distribution of workforce in rural areas was 64% for males and 36% for females. For urban areas, it was 82% for males and 18% for females. This implies that the male workforce is higher in both rural and urban areas. This is because access to education for females in India is less, and therefore, they have low employment opportunities. Mostly, the work for urban females is based on the decision of the family head rather than an individual's decision. In rural areas, poverty forces females to neglect education and seek employment. Hence, the rural female workforce was comparatively higher than the urban female workforce. Also, these female workers engaged in less productive work and low wage jobs. 

Regular salaried employees are workers engaged by someone or an enterprise and paid his/her wages regularly. These regular salaried employees are higher in urban areas compared to rural areas because

1. Educational facilities: On account of education facilities in urban areas, there are many educated and well-trained people. These people are hired and paid regular salary for their services by an enterprise. In rural areas, poverty forced people to avoid education and seek employment in less productive jobs.
2. Acquisition of skill: Educated people in urban areas seek skilled work in offices and factories. On the other hand, in rural areas, family agricultural farming is the main source of employment and non-farming employment opportunity is less. They do not prefer to acquire skill and training for non-farming activities.
3. Less job opportunities: The service sector and the secondary sector are the main sources of employment in urban areas. The presence of economic infrastructure and availability of modern facilities such as banking, transport and communication attract foreign companies to invest in India. This is mainly because of globalisation of the economy. Hence, many people are hired by large companies such as multinational companies in urban areas. On the other hand, backward rural areas provide odd jobs as casual workers on the farms and fields of others. 

Less women are found in regular salaried employment because

1. Educational facilities: In India, the government has expressed the importance of education for all. However, India still has one of the lowest female literacy rates in Asia. Majority of the women do not have educational qualifications and skills which are required for regular salaried employment.
2. Family decision: Many families do not allow females to work outside, particularly if it is for long hours, i.e. in regular salaried employment. Household work and responsibility of children and other family members do not allow women to spend time in regular employment.
3. Wage discrimination: Gender-based discrimination in India does not support women to engage in regular salaried employment, and hence, they prefer to stay at home or get involved in self-employment opportunities.
4. Security issues: Women are not interested in regular employment because of increasing crime against women. In private sector firms and multinational companies, women are bound to work late hours which may not be suitable. 

In an economy, all economic activities are clubbed into three sectors—the primary (e.g. agriculture), secondary (e.g. manufacturing) and tertiary (e.g. service). 

With reference to the data, the following observations on the distribution of the workforce can be highlighted:

• The distribution of the workforce shows a substantial shift from agricultural to non-agricultural work which can be seen in the data. 
• In 1973–74, the primary sector was the main source of employment, providing employment to nearly 74% of workers, but this has declined to about 45% in 2017–18. 
• The shares of secondary and service sectors have increased from 11% to 24% and 15% to 31%, respectively.
• This distribution of the workforce (from 1972 to 2018) indicates that self-employment continues to be the major employment provider, followed by casual wage laborers and regular salaried employees. 
• However, a notable change is the percentage of casual wage work is declining and people are moving towards either self-employment or regular salaried jobs.

It is not true that there has hardly been any change in the distribution of the workforce across various industries since the 1970s. 

The distribution of workforce in 1972-73 shows that 74% of the workforce took part in the primary sector and it has reduced to 45% in 2017-18. In the last few decades, developments in the primary and secondary sectors have resulted in the rise of several services that are required for the smooth functioning of the banking, insurance, and transport sectors. This provides the scope for increasing the workforce in India. Over the years, the distribution of the workforce shows that people shifted from categories such as self-employment and regular salaried workers to the casual worker's category. This is true from the following facts:

1. The participation of the casual wage workers was 23% of the total workforce in 1972-73, and it increased to 30.0% in 2011-2012. However in 2017-18 it has reduced to 25%.
2. The participation of the self-employed was 62% of the total workforce in 1972-73, and it has declined to 52% in 2011-2012 and continues to remain the same in 2017-18.
3. The participation of the regular salaried workers was 15% of the total workforce in 1972-73, and it has slightly increased to 18.0% in 2011-2012. However in 2017-18 there has been an increase to 25% respectively.

The distribution of the workforce in different status indicates that since the 1970s, people have moved from self-employment and regular salaried jobs to casual wage work. 

In 1950-51, the percentage share of the primary, secondary and tertiary sectors in gross domestic product (GDP) was 52%, 14% and 34%, respectively. In 2013-14, the share of the primary sector has declined to 18%, the share of tertiary sector has improved to 57% and the share of the secondary sector has also increased to 25%. Here, it is clear from the facts that services produced in the tertiary sector contribute the most to the gross domestic product.

In 1999-00, the share of the three sectors was 61.7%, 15.8% and 22.5%, respectively. In 2009-10, it was 51.8%, 26.3%, 21.9%, respectively.

Here, the primary sector continues to be the largest employer even in 2010. A remarkable fact about India is while there has been a change in the share of the three sectors in GDP, a similar shift has not taken place in employment. It is because enough jobs were not created in the secondary and tertiary sectors. As a result, more than 50% of the workers in the country work in the primary sector, mainly in agriculture, contributing only 1/4^th of the GDP. While the secondary and tertiary sectors contribute 3/4^th of the total produce. It implies that more people work in the primary sector than the required number of people. This situation in the primary sector is called underemployment. Here, underemployment is hidden in contrast to someone who does not have a job and is clearly visible as unemployed. Hence, it is also called disguised unemployment.

Generally, the rate of investment and choice of technology determine the growth rate of employment. During these years, there was a wide gap between the growth of GDP and employment. This results in a jobless growth phenomenon in our economy. After the reforms, industrialisation has failed to absorb the workforce, but it was able to produce goods and services without generating employment. Thus, employment grew at a rate of not more than 2% in India.

The formal sector is a sector where terms and conditions of employment are regular and according to the rules and regulations passed by the government. It includes government departments, public enterprises and private establishments. They hire 10 or more workers with certain terms and conditions of employment based on the various acts passed by the government such as the Minimum Wages Act and Payment of Gratuity Act. The main features of this sector are employees enjoy the security of employment, get paid overtime in case of excess hours and get paid leaves, provident fund and medical benefits.

The informal sector does not follow rules and regulations regarding the terms and conditions of employment. They hire 10 or less than 10 workers, besides farming and self-employment establishments. Main features are the wages of workers are low, and no paid leaves, overtime, gratuity, provident fund and medical benefits are given to employees. There is no job security during the lean period, and facilities such as clean drinking water, proper sanitation and healthy work conditions are not provided to employees. This makes workers highly vulnerable. Hence, it is necessary to generate employment in the formal sector rather than in the informal sector.

Victor can get work only for two hours in a day, and he remains unemployed for the remaining hours. According to National Sample Survey Statistics, an individual is called underemployed if he is working only for 28 hours a week. So, Victor is an unemployed person, i.e. a situation in which a worker does not get a full time job. 

Victor can perform jobs such as delivering milk/newspapers in the morning hours and delivering flowers in the evening hours or as working as a waiter in restaurants. He could also take up jobs in teaching, gardening, sewing, painting, designing, writing, sculpting and so forth, depending on his skills, aspirations and ambitions as well as the time at his disposal. 

Suggestions to generate employment opportunities in villages:

1. Increase in production: Productive activities should be increased in industrial and agricultural sectors to generate more employment opportunities. The government has to formulate policies to encourage the development of small and cottage industries. Policies are required to decentralise the industrial activity to increase employment opportunities.
2. Change in industrial technique: The main objective of the production technique is to suit the purpose and means of the nation. So, it is important to encourage labour intensive technology instead of capital intensive technology.
3. Change in policy to remove seasonal unemployment: Mostly seasonal unemployment prevails in agriculture and agro-based industries. Hence, agriculture should adopt multiple cropping and encourage plantations, horticulture, animal husbandry and dairy to employ people throughout the year.
4. Increase in productivity: Increasing the demand for farm and non-farm products and services encourage rapid growth of employment opportunities in other sectors. Farm schools have to impart advanced skills in the production and therefore increases efficiency of labour.
5. Educational reforms: The educational system should be modified to encourage high enrolment in schools. The government should admit only interested students in colleges to pursue their education with specific objective. This enables them to serve as teachers, engineers and doctors in villages. 
6. Industries in the cooperative sector: Industries in the cooperative sector need to encourage generating more employment opportunities. For example, a textile mill in Kerala generated employment to 600 people. Under this cooperative sector, each individual contributed Rs 500 and the remaining capital was invested by the government to establish a textile mill.
7. Increase in the rate of capital formation: The rate of capital formation should be accelerated. The government should take initiative to opt for activities which have high employment potential. So, the capital output ratio should remain low.  
8. Control in the growth of population: The growth of population should be controlled by adopting appropriate measures such as family planning programmes.  

A casual wage labourer is the daily wage earner who does not receive any regular income, protection, regulation or job security from the government. They lack social benefits which permanent workers receive for their service. Hence, it makes the casual worker more vulnerable. These labourers are engaged in construction work which account for 34% of India's workforce. These labourers work in other farms and receive remuneration for their work.

From the following points, we can understand that the worker is working in the informal sector:

 i. A worker is working in any such private enterprise which hires 10 or less than 10 workers such as agricultural farmers, labourers and owners of any small undertaking. 

 ii. The government's rules and regulations regarding the conditions of employment are not followed.

 iii. Often jobs are low paid and irregular. Workers have to work for longer hours with no provision of overtime.

 iv. They are neither given paid leaves or any medical benefits.

 v. There is no job security and the employer can ask an employee to leave in case of the lean season.

 vi. Workers cannot form trade unions and are not protected by labour laws.