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Chapter 7 Employment: Growth, Informalization and other Issues class 12th Commerce


Employment is an activity from which a person earn means of livelihood. Each and every working person have their contribution to national income in various economic activities. As no one work only for their own self but also for those who are dependent on him….


This study of working people gives insight into quality and nature of employment in the country….


Worker and Employment

A worker is an individual who is involved in some economic activity, to earn a living.

A worker contribute to the process of Gross Domestic Product (GDP) by rendering his productive activities. Those activities which contribute to the Gross Domestic Product or gross national product are called economic activities.

When net earning are added to GDP we get GNP.

A worker is an individual who is involved in some economic activity, to earn a living.

Some get employment throughout the year; some others get employed for only a few months in a year.

Those who are paid by an employer for their work as workers


Labor force

All person who are working and though not working, are seeking and are available for work is known as labor force.

Labour force participation rate

The ratio of labour force to total population is called labour force participation rate.


Work force

The numbers of person who are actually employed at a particular point of time is known as work force…


Participation of People in Employment

Working population is calculated by dividing the total number of workers in India by the population.

The worker population ratio indicates the status of workers in the society and their working conditions.

This also enables to know the attachment, which a worker has with his job and the authority possessed by him over other coworkers.

1. Higher proportion of Rural People

2. Employment opportunities

3. Education level


Question. Who is a worker?

A worker is an individual who is involved in some economic activity, to earn a living.


Question. What is the difference between labor force and work force?

All person who are working and through not working are seeking and are available for work is known as labor force.


Labor force = person working + person seeking and or available for work.

The numbers of person who are actually employed at a particular point of time is known as work force…

Unemployed people = labor force -work force


Definition and Types of Employment

So employment is an activity which enables a person to earn means of living.

  • Types of employment-
  • So there are two types-
  • Self employed
  • Wage employed
  • Self employed


Self – employment

It refers to Workers who own and operate an enterprise to earn their livelihood are known as self-employed.


Self – employment is a major source of livelihood for both men and women.

In case of self-employment, a person makes uses of his own land, labor, capital and entrepreneurship, to make a living.

For example, shopkeepers, traders, businessmen, etc.


Wage employed

It refers to when workers sell his labor and earn wages in return then it is said to be known as wage employment. Under wage employment, worker is known as employee.

  • Regular worker
  • Casual worker
  • Regular worker


Regular worker

When a worker is engaged by someone or by an enterprise and is paid wages on a regular basis, then such worker is known as regular salaried employee.

Workers are hired on a permanent basis and also get social security benefits (like pension, provident fund, etc.)

For example, Professors, teachers, Civil engineer working in the construction company, etc.


Casual Workers

Workers who are casually engaged and, in return, get remuneration for the work done, are termed as casual workers.

Casual Workers are not hired on a permanent basis. It means, they do not have: (I) Regular Income; (ii) Protection or regulation from the government; (iii) Job Security; and (iv) Social benefits.


Distribution of employment

By gender





Self employed



Regular worker



Casual worker




  • Employment is the major source of livelihood for both Men 51% and Woman 56%.
  • Casual worker accounts for the second major source for both Men 29% and Women 31%.
  • In case of regular salary employed Mens are at 20% whereas women form only 13%.  The reason for this could be skill requirement, as regular salaried job requires skills in higher level of literacy.


By region

Distribution of employed workers by region and enables us to know the quality of employment and the attachment of workers to their jobs.


Self employment: It is the major source of livelihood in both urban areas 43% and in rural areas 56%, but in case of rural areas self-employed workers are greater than majority of rural peoples, are engaged in farming on their own plots of land.


Casual workers: In case of rural areas Casual workers accounts with 35% of work force. Casual worker in urban areas is 15%.


Regular salaried employees: It is the second major source with 42% of work force. Urban people have a variety of employment opportunities because of their educational attainment and skills. However, only 9% of rural people are engaged as regular salaried employees because of illiteracy and lack of skills.


By sectors.

In the course of labor force, agriculture and other related activities in industries and services. In this process workers migrate from rural to urban areas.

  • Primary sector is the main source of employment 48.9% for majority of workers in India.
  • Secondary sector provides employment to only 24.3% workers of workforce.
  • Services sector provides employment to 26.8%.
  • Distribution of Rural-Urban Employment in Different Sectors


Employment in Rural areas:

  • 64.1% of the workforce in rural areas or engaged in primary sector.
  • 20.4% of rural workers are working in secondary sector.
  • 15% of rural worker are engaged in Service sector or tertiary sector.


Employment in Urban Areas:

  • In case of urban area, Primary sector has just 6.7%. So activities like agriculture or mining are not the major source of employment in urban areas.
  • The secondary sector gives employment to about 35% of urban workforce.
  • People are mainly engaged in the service sector with 58.3% of urban workers.
  • Distribution of Male-Female Employment in Different Sectors


Growth and Changing Structure of Employment

GDP and employment growth are the indicators of economic development so according to that, 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 a stable rate of about 2%.

In the late 1990 employment growth started declining and reached at the level of growth that India had in the early stages of planning.

During these years the gap between the growth of GDP and employment was widening this trend is termed as jobless growth. Basically Jobless growth refers to a situation when the economy is able to produce more goods and services without a proportionate increase in employment opportunities.

- In 1972-73, 74.3% of workforce was engaged in primary sector which declined to 48.9% in 2011-12. Which shows substantial shift from farm to non-farm work.

- Secondary and service sectors are showing promising future for Indian workforce as share of these sectors have increased from 10.9% to 24.3% and from 14.8% to 26.8% respectively.


Casualization of Workforce

The distribution of workforce in different status indicates that over the last three decades, people have moved from self-employment and regular salaried employment to casual wage work.

The movement of workers from regular workers and regular salaried employees to casual wage workers is known as casualization of workers.

Yet self-employment continues to be the major employment provider.

So according to the trend,

Self-employed shares decline from 61% in 1972-73 to 52% in 2011-12.

Regular salaried employee’s share shows a marginal increase from 15% in 1972-73 to 18% in 2011-12.

Casual workers shares shows an increase from 23% in 1972-73 to 30% in 2011-12.


Informalization of Indian Workforce

All the public enterprises and private establishments which employ 10 or more hired workers, are called formal sector establishments.

Formal workers enjoy social security benefits and earn more than those in the informal sector.

The government protects them in various ways through its labor laws and they can form “Trade Unions” to protect their interests.


Informal or Unrecognised Sector

Informal sector includes all those private enterprises which hire less than 10 workers.

Workers who work in such enterprises are known as informal sector workers. For example, farmers, agricultural labourers, owners of small enterprises, etc.

In India, over 90 per cent employment is found in the unorganized sector, viz, small farms, household industries, shops and other self-employment units.

In the formal sector, male workers account for 69 per cent of the workforce.

Workers of this sector live in slums and are squatters (persons who unlawfully occupy an uninhabited building or unused land).



Informalization of workforce refers to a situation whereby the proportion of workforce in the informal sector to total workforce, increases.


Distribution of Workforce in Formal and Informal Sectors


As the economy grows, more and more workers should become formal sector workers and the proportion of workers engaged in the informal sector should decrease. However, the situation in India is very discouraging.


Number of workers (in Millions)




Formal sector




Informal sector





Formal Vs Informal: Out of total 396 million workers in the country;

28 million workers are in the formal sector and the remaining 368 million are employed in the informal sector.

It means, only 7 per cent people are employed in the formal sector and the rest 93 per cent are in the informal sector.


Male Vs Female

In the formal sector, out of 28 million workers, 23.2 million (83 per cent) are male workers and only 4.8 million (17 per cent) are women.

In the formal sector, out of 368 million workers, male workers account for 249.8 million (69 per cent) and remaining 118.2 million (31 per cent) are women.

Question What do you mean by casualization of workforce?

Question What do you mean by Informalization? Explain with the help of changing structure of employment?


Meaning and Sources of unemployment data

So. We can say that unemployment is a situation in which people are willing to work at the existing rate but do not get work.


Sources of unemployment data

Report of census in India: Population census collects information on the economic activity of the people.

NSSO collects data through sample surveys and gives annual estimate of employment and unemployment.

So, Directorate general of employment and training DGET is implementing employment market information (EMI) schemes over the last 30 years. EMI provides information about the structure of employment, occupational compositions and educational profile of employees.


Types of Unemployment

  • Disguised unemployment
  • Seasonal unemployment
  • Open unemployment
  • Disguised unemployment:


Disguised unemployment refers to a state in which more people are engaged in work than are really needed.

For example, if two workers are needed on a piece of land and five workers are engaged on the same job, then three workers are disguised unemployed.


Seasonal unemployment :

Unemployment that occurs at certain seasons of the year is known as seasonal unemployment.

In agriculture, work is seasonal and there are no employment opportunities in the village for all months in the year. So, when there is no work to do on farms, men go to urban areas and look for jobs. They come back to their home villages as soon as the rainy season begins.

The period of seasonal unemployment varies from state to state, depending upon the methods of farming, the condition of soil, the type and number of crops grown, etc.


Open unemployment :

Open Unemployment refers to that phenomenon in which persons are able and willing to work at the prevailing wage rate, but fail to get work. It is called open unemployment because such unemployment can be seen and counted in terms of the number of unemployed people.


Government Policies and Employment Generation

Direct employment

Indirect employment

Government employs people in various departments for administrative purposes. It also runs industries, hotels and transport companies and hence provides employment directly to workers.


Indirect employment

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 programs

Government has implemented many employment generation programme like National rural employment guarantee act-2005, Prime Minister Rozgar Yojana, Swarna Jayanti Shahri Rozgar Yojana.

Through which

  • Government aims to alleviate poverty through such employment generation programmes
  • All these programme aims at providing employment services in primary health, education, rural shelter etc.
  • These programme also into assist people in buying income and employment generating assets developing community assets in construction of houses and sanitation.

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