Workers and workforce participation
A worker is anyone who does an economic activity that adds to the country's output (GDP), for pay or on their own farm or shop. Unpaid help on the family farm also counts.
Worker-population ratio
Worker-population ratio = (number of workers Ãˇ total population) à 100. It shows what share of people are working. It is higher in villages than in towns (poor rural families need everyone to work, and many urban youth are still studying). It is lower for women than men, partly because a lot of women's home work is not counted as economic activity.
Labour force and workforce
Labour force = people working + people looking for work. Workforce = only those actually working. Unemployed = labour force â workforce.
Self-employed and hired workers
- Self-employed: own and run their farm, shop or business (the biggest group in India, about half of workers).
- Hired workers: work for someone else and get a wage.
- Regular salaried: fixed pay every month, often with benefits.
- Casual wage: hired day by day, no guarantee of work tomorrow (e.g. construction).
Villages have more self-employed and casual workers; towns have more regular salaried workers.
Workers across sectors
The primary sector (farming, fishing, mining) still employs the largest share, though its share has fallen. Industry (secondary) and services (tertiary) have gained workers, but not as fast as their share of output rose.
Formal and informal sectors
Formal (organised) sector: all public sector jobs and private firms with 10 or more hired workers. Workers get fixed pay, provident fund, paid leave, and can form trade unions. Labour laws protect them.
Informal (unorganised) sector: farms, small shops and firms with fewer than 10 workers, street vendors, home workers, casual labour. No job security, no social security, often low pay. Around nine in ten Indian workers are informal.
Informalisation
Since the 1990s even formal firms hire many workers on contract or casual terms. This rise of informal jobs is called informalisation (or casualisation when casual work rises).
Government has set up welfare boards and social security schemes (like e-Shram registration and pension schemes for unorganised workers) to help them.
Problems: unemployment and jobless growth
Unemployment: people willing and able to work at the current wage cannot find work.
- Open unemployment: clearly without work (common among educated urban youth).
- Disguised unemployment: more people on a job than needed; if some leave, output does not fall (e.g. 6 family members on a farm that needs 3).
- Seasonal unemployment: no work in some months (farm off-season).
Jobless growth: GDP grows but jobs grow slowly, because growth comes from machines and skilled services. Other issues: casualisation, low wages, few jobs for women, and a mismatch between skills and jobs.
Government policies for employment
- Direct job creation: government hires people for its own offices and projects. MGNREGA (2005) guarantees 100 days of paid work a year to every rural household that asks for it, building ponds, roads and other assets.
- Indirect creation: when public firms produce more, private suppliers also hire more.
- Self-employment and poverty programmes: loans and training for small businesses (e.g. PMEGP, Mudra loans), rural livelihood missions for SHGs.
- Skill development: Skill India, apprenticeship schemes, so youth fit available jobs.
- Infrastructure: roads, power, housing create jobs and help firms grow.
Key formulas and definitions
- Worker-population ratio = (workers Ãˇ total population) à 100
- Labour force = employed + unemployed (seeking work)
- Unemployed = labour force â workforce
- Unemployment rate = (unemployed Ãˇ labour force) à 100
- Formal sector: public sector + private firms with 10 or more hired workers
Worked examples
1. A village has 2,000 people, of whom 760 are workers. Find the worker-population ratio.
760 Ãˇ 2,000 à 100 = 38%.
2. Labour force = 500, workforce = 460. Find the number unemployed and the unemployment rate.
Unemployed = 500 â 460 = 40. Rate = 40 Ãˇ 500 à 100 = 8%.
3. A farm needs 3 workers; 6 family members work on it. Output stays the same if 3 leave. How many are disguisedly unemployed?
6 â 3 = 3 workers. Their extra labour adds nothing to output.
4. Out of 200 workers: 104 self-employed, 46 regular salaried, rest casual. Find the percentage of each.
Casual = 200 â 104 â 46 = 50. Self 52%, regular 23%, casual 25%.
5. A shop has 7 hired workers and a factory has 25. Which is formal?
The factory (10 or more hired workers). The shop is informal.
6. GDP grows 7% a year but jobs grow 1%. What is this called and why can it happen?
Jobless growth. Output rises with more machines and skilled services, not with many new jobs.
Common mistakes
- Counting only paid jobs as work. Self-employed and unpaid family farm help also count.
- Thinking labour force and workforce are the same. Labour force also includes job seekers.
- Believing a big firm's every worker is formal. Contract and casual workers in big firms are often informal.
- Confusing disguised with seasonal unemployment. Disguised = too many on one job; seasonal = no work in some months.