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Employment: Growth, Informalisation and Other Issues

A worker is anyone doing a job that adds to national output, even if self-employed. The share of people who work is the worker-population ratio. In India about half the workers are self-employed; the rest are regular salaried or casual wage workers. Most jobs are in the informal sector, with no job security or social security. Problems include unemployment (open, disguised, seasonal), jobless growth and casualisation. Government tries to fix them through direct job schemes like MGNREGA and indirect help through growth, skills and credit.

đŸŽŦ Step-by-step story

  1. A crowd of 10 people stands on the ground. Four step forward and light up green: they are workers. Worker-population ratio = workers Ãˇ population × 100 = 40%.
  2. The green workers split into three groups: self-employed (own shop or farm), regular salaried (fixed monthly pay), casual wage (daily pay, no fixed job).
  3. Workers walk onto three platforms: farming, industry, services. Over the years more move from farming to industry and services, but farming is still the biggest.
  4. A small tower has a roof: formal sector (fixed pay, provident fund, leave). A big open yard has no roof: informal sector. About nine in ten workers stand in the yard.
  5. Red warning signs appear: open unemployment, disguised unemployment (too many on one farm), seasonal unemployment, jobless growth. Then blue policy blocks rise: MGNREGA, skill training, self-employment loans.
  6. Free play: set how many hired workers a firm has and whether it is registered. Watch it turn formal or informal. Try it: when does it get a roof?

Tip: drag the 3D scene to turn it. Use two fingers to zoom.

🤔 Common doubts, cleared

Is a housewife a worker?

Her home work is not counted in GDP, so surveys usually do not count it, though it is valuable. That is one reason women's ratio looks low.

Is a shop owner employed?

Yes, self-employed; the biggest group.

Why does farming still have most workers?

Other sectors did not create jobs fast enough; see the platforms.

Can a worker in a big company be informal?

Yes, if hired on contract with no benefits.

How can someone working be unemployed?

Disguised unemployment: extra hands on a farm add nothing.

What exactly makes a firm formal?

Public sector, or private with 10+ hired workers under labour laws. Test it in free play.

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) × 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 − workforce.

Self-employed and hired workers

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.

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

Key formulas and definitions

Worked examples

1. A village has 2,000 people, of whom 760 are workers. Find the worker-population ratio.

760 Ãˇ 2,000 × 100 = 38%.

2. Labour force = 500, workforce = 460. Find the number unemployed and the unemployment rate.

Unemployed = 500 − 460 = 40. Rate = 40 Ãˇ 500 × 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 − 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 − 104 − 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

Practice quiz

1. Worker-population ratio is:
2. The largest group of workers in India is:
3. A private firm is in the formal sector if it has at least:
4. More people on a farm than needed shows:
5. MGNREGA guarantees how many days of work per rural household a year?

Practice: answer these yourself

Type or choose your answer, then press Check. Use a hint if you are stuck; the full solution appears after you answer.

Frequently asked questions

What is the difference between formal and informal sector?

Formal: public sector and firms with 10+ hired workers, with security and benefits. Informal: small units and casual work without security.

What is disguised unemployment?

When more people work on a job than needed, so the extra people add nothing to output.

What is worker-population ratio?

Workers as a percentage of total population.

Where this is taught

CBSE (India)Class 12Current Challenges facing Indian Economy

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