Employment Indian Economy Class 12 Notes

Employment is one of the most important aspects of any country. In this article, we will study employment notes of class 12 in the Indian Economy.

Unemployment

Unemployment refers to a situation when people are willing and able to work at the existing wage rate but are not getting any work.

Worker

A worker is an individual who is engaged in some economic activity to earn a living. A worker contributes to the process of GDP by rendering his productive services.
For example: Farmers, managers, labourers, doctors, bankers, professors, etc.

Types of Workers

There are mainly two types of workers which are as follows:

Self Employed Workers

These are those workers who are engaged in their own business or profession. For example: A farmer working on his own farm, an entrepreneur working in his own company.

Hired Workers

These are those workers who work for others, render their services to others, & as a reward get wages/salaries. They may also be paid in kind. For example: A teacher working in a school, a nurse working in a hospital, etc.

Hired Workers may be further categorised as:

1. Casual Workers: These are the daily wagers. Their employers do not hire them regularly. They are not given any social security benefits like provident fund, gratuity, or pension. Casual workers are usually unskilled. For example: A worker working at a construction site.
2. Regular Workers: These are those workers who are on the permanent payroll of their employers. They are entitled to all social security benefits like pension, gratuity & provident fund. A regular worker is usually a skilled worker. For example: An engineer working in a factory.

Labour Force

Labour force refers to the number of workers actually working or willing to work. It is not related to wage rage.

Labour Supply

Labour supply refers to the amount of labour that the workers are willing to offer corresponding to a particular wage rate. For example: a worker is able to work 10 hours a day but willing to work only 6 hours a day at a particular wage.

Work Force

Workforce refers to the number of people actually working and does not account for those who are willing to work but not working.

Work Force = Labour Force – Number of People not working but are willing to work

Note: Number of people unemployed = Labour Force – Work Force

Rural Unemployment

It is dominated by disguised & seasonal unemployment.

Disguised Unemployment

It occurs when the number of workers engaged in a job is much more than actually required to accomplish it. If some of them are withdrawn from that job, total production will not fall.

Disguised unemployment is rampant in Indian agriculture. The main causes are:

• On account of the joint family system farming families continue to work on family land. No matter if the actual number of workers far exceeds the required number.
• Per-person holding size continues to shrink with the expansion of family size.
• Lack of job opportunities outside agriculture compels the people to work on family farms. It further increases the possibility of disguised unemployment.

Seasonal Unemployment

Another kind of rural unemployment is seasonal unemployment. It occurs because agriculture is a seasonal occupation. During off season, the farmers are out of jobs. They have no work to do.

Urban Unemployment

Unemployment in the urban sector is placed into two categories:

Industrial Unemployment

It includes illiterate people who are willing to work in industries like mining, transport, trade & construction activities, etc. Educated

The principal causes of industrial unemployment are:

• Rapid Rise in Population: A rise in population leads to a rise in the supply of labour.
• Construction of Industries in Urban Areas: Due to the concentration of industries in the urban areas, rural people tend to migrate in the urban areas in search of jobs but the industrial expansion has not been so significant to provide employment to all the migrants.

Educated Unemployment

In India, the problem of unemployment among educated people is quite grave. This problem poses a serious threat to social peace & harmony.

The principal factors behind this problem are:

• The education system in India is largely degree-oriented rather than job-oriented. Hence, degree holder often fails to find jobs.
• Expansion of educational institution is not much as compared to the number of people demanding it.
• The increase in employment opportunities has significantly lagged behind the increase in the size of the educated labour force.

Human Capital Formation Class 12 Notes

Other Common Types of Unemployment

Open Employment

It occurs when a worker is willing to work and has the necessary ability to work yet he does not get any work. The person remains unemployed full-time and is totally dependent on the other members of the family.

This type of unemployment is usually found among agricultural labourers, educated persons & those who come from villages to urban areas in search of jobs but fail to get any work.

Structural Unemployment

It occurs due to structural changes in the economy. It is mainly of 2 types:

• Changes in Technology: As a result of it, old technocrats are no longer needed, they are rendered unemployed.
• Changes in the pattern of demand: Certain industries are closed down & workers are thrown out. In a country like India, a high degree of structural unemployment both in rural & urban areas.

Under Employment

It is a situation in which a worker does not get a full-time job. The person remains unemployed for some months in a year or some hours every day.

According to an international conference of labour statistics, the condition of underemployment found:

• When a person is engaged in part-time work are prepared to do more work than they are actually doing.
• When the income of the person increases after shifting to another occupation from their existing occupation.

Under Employment is of two kinds:

Visible Under Employment

In this case, people work less than the standard hours of work in a day. For example: In India, a person normally works for 8 hours. If the person finds a job only 4 hours a day, the person will be deemed as visible under employment.

Invisible Under Employment

In this case, people work full time but the income is not proportionate to their abilities. Thus, if an MBA degree holder has to work as a peon, the person will be called invisible under-employed.

Frictional Unemployment

It occurs due to imperfections in the mobility of labour across different occupations. One wishes to move from one job to another but in the process of change, the person may remain unemployed for some time. This is called frictional unemployment.

Cyclic Unemployment

Boom, recession, depression, and recovery occurs due to cyclic fluctuations in the economy.

• A boom relates to a high level of economic activity & accordingly a high degree of employment.
• A recession is a phase where there is a liquidity crunch in the economy because of which there is a slowdown in production & a cult in employment opportunities.
• Depression is a phase when aggregate demand decline triggering a cut in output & employment.
• Recovery is a phase when economic activities start picking up outputs start responding to an increase in AD. Hence, employment opportunities began to rise.

Causes of Unemployment

Rapid Growth of Population

The constantly rising population has been a grave problem in India. It is one of the principal factors contributing to unemployment. Despite the completion of 12 five year plans, the size of unemployment has continued to scale up.

Slow Economic Growth

Indian Economy is under-developed & its rate of growth is very slow. A slow growth rate fails to generate employment opportunities for the rising labour force. The size of labour force is much more than the available employment opportunities.

Agriculture – A Seasonal Occupation

Agriculture in India is under-developed in India. It is the primary occupation of our country & a large size of population depend upon it but its seasonal character does not provide stable jobs to the farmers. They remain idle for 3-4 months in a year.

Joint-Family System

It encourages disguised unemployment. It is more prevalent in rural areas & in joint families there is a high tendency to survive on a joint income without work. Hence, a high degree of disguised unemployment prevails.

Lack of Irrigation Facilities

Despite decades of planning, irrigation facilities continue to be scant. Covering only 41% of the agricultural area for want of irrigation monocropping becomes a compulsion. In the absence of multi-cropping employment opportunities remain limited.

Low Saving & Investment

There is scarcity of capital & eve the scarce capital has not been optimally used to eradicate unemployment. The bulk of the capital has been invested in large-scale industries where there is a high capital per unit of labour.

Economic & Social Consequences of Unemployment

Social Consequences

1. Low Quality of Life: Unemployment lowers the quality of life implying a state of perpetual suffering.
2. Greater Inequality: The higher the degree of unemployment, the greater the extent of inequality in the distribution.
3. Class Struggle: Unemployment divides the society into haves and have not accordingly. There is a class conflict that compounds the problem of social unrest.
4. Social Unrest: Terrorism may be motivated by several other factors but the contribution of self inspiration (on account of unemployment) is by no means less significant.

Economic Consequences

1. Loss of Output: There is a loss of output to the extent of man power resources is not utilised. Unemployed person makes no contribution to output even if they have the potential to do so.
2. Non-Utilisation of Manpower: To the extent people are unemployed manpower resources of the country are not utilised. It amounts to social wastage.
3. Low Productivity: Owning to disguised unemployment, there is a low level of productivity (output per worker). Low productivity implies a low growth rate.
4. Low Capital Formation: Living only as consumers & contributing nothing to production, unemployed people only adds to consumption neither do they earn nor do they save for investment accordingly rate of capital formation remains low.

Five-Year Plans Class 12 Notes Indian Economy

Suggestions to Remove Unemployment

Increase in Production

To increase employment, it is essential to increase production in agriculture & in industrial sectors. Foreign trade should be encouraged & production of industries, minerals & plantations should be exaggerated.

Greater the production, greater is the demand for labour.

Increase in Productivity

Demand for labour is directly related to productivity of labour. Higher productivity generates higher profits & therefore greater demand for labour. Accordingly, productivity (implying efficiency) of labour improve.

Help to Self-Employed Person

In India around 46% people are self employed & most of them are engaged in agriculture. Also, they are engaged in trade, cottage & small industries, restaurants, transports, etc.

Government should provide facilities to small farmers like irrigation facilities, better seeds, manures, credit, etc.

Poeple working in urban areas should be given facilities of credit, marketing facilities, raw material, technical trainings.

Educational Reforms

There is an urgent need for educational reforms in the country. Emphasis should be placed on vocational education.

Educated person must develop the spirit of serving in villages in the capacity of doctors, teachers, etc. Engineers should be given financial assistance to set up their own business.

Technique of Production

The technique of production should suit the needs & means of the country. It is essential that labour intensive technology is encouraged in place of capital-intensive. Quick-yielding industries should be given preference.

Importance to Employment Programmes in Plans

The plans which are likely to raise the level of employment should be given greater importance. The programes that can best serve this are irrigation projects, road constructions, forestry, rural electrification, soil conservation, & development of small industries.

Rate of Participation in India in Production Activity

It refers to the participation of people in production activity is measured as the ratio of workforce to total population or the country.

The rate of participation in India:

• The rate of participation for urban areas is about 43.5%.
• The rate of participation for rural areas is about 53%.
• In urban areas, the rate of participation is about 69% for men & 16.2% for women.
• In rural areas, the rate of participation is about 77.3% for men and 26.7% for women.
• Overall rate of participation in the country is about 50.3%.

Reasons for Participation

High Dependency Ratio

The overall rate of participation is not very high. Implying not many people are engaged in production activity. This results in a high dependency ratio in the country.

High Rate of Participation but Low Level of Productivity in Rural Areas

This is because, the bulk of jobs are in rural areas as more people are engaged in farming & allied activities but bulk of our GDP derive is not from rural economy. People are mainly engaged in farming activities contributing less to GDP.

It implies low productivity of workers in rural areas. Low productivity implies low earnings which is why there is widespread poverty in rural areas.

High Rate of Participation of Women in Rural Areas

Higher employment among women in rural areas is because of widespread rural poverty. Female workers are largely engaged in low paid & less productive jobs but adds to their family income.

Occupational Structure

The occupational structure includes:

• Primary Sector: Agriculture, forestry, fishing, mining, etc.
• Secondary Sector: Manufacturing, construction, electricity gas, water supply, etc.
• Tertiary Sector: Trade, transport, storage, banking, insurance, etc.

46% of our workforce is engaged in the primary sector, tertiary sector accounts for 32% where as secondary sector offers employment 22% of our work force.

Self-Employed & Hired Workers

Self-employment is higher in rural areas as compared to urban areas. In urban areas, people look for skilled jobs in offices & factories whereas in rural areas, family farms are the most attractive means of employment.

Among men around 51.6% are hired workers whereas among women around 60% are hired.

Jobless Growth

It is a situation when the level of output in the economy tends to rise owning to innovative technology without any perceptible rise in employment.

Jobless growth leads to chronic unemployment even when there is a rise in GDP. In poor countries like India, economic growth becomes meaningful only when it is associated with greater employment opportunities.

Unfortunately, the indian economy is experiencing more GDP through technology rather than employment of labour. Hence, it is a situation of jobless growth.

Casualisation & Informalisation of Work Force

Casualisation of work force refers to a situation when the percentage of casually hired workers in the total workforce tends to rise over time.

Our work force is suffering & increasing incidence of casualisation because:

• The bulk of self employed workers is found in rural areas.
• But, the employment on their farms is only for the namesake, in fact, they are disguised unemployment.
• For further employment opportunities, these workers migrate to urban areas but in that areas too they get employment only as casual workers.

This is the story of unskilled workers leading to the casualization of employment.

Informatization

Informalisation of workers is defined as a situation where the percentage of work force in the formal sector tends to decline & informal sector tends to rise.

Rate of Unemployment = No. of Persons Unemployed/Size of Labour Force*100

Participation Rate = Work Force/Total Population*100

Employment is broadly classified as:

Formal Sector

It refers to organized sector of the economy & includes all the government departments, public enterprises & private establishments which have 10 or more workers. Those working in the organized sector are called formal workers.

Informal Sector

It refers to unorganized sector of the economy & includes all such private enterprises which have less than 10 workers, besides farming & self employed ventures.

Those working in the unorganized sector are called the informal sector. From the point of view of employment status, there are the following differences between these two: