Employment: Growth, Informalisation and Other Issues — notes

A worker is a person engaged in any economic activity, that is, any activity that contributes to the production of goods and services. Payment is not the test: unpaid helpers in a family farm or shop are workers, and so are regular employees temporarily absent through illness. Full-time students, home-makers doing only household work, and pensioners doing no economic activity are not workers.

• Workforce: all persons actually working.
• Unemployed: persons not working but seeking or available for work.
• Labour force = workforce + unemployed. People who neither work nor seek work are outside it.

Worker-population ratio = (number of workers ÷ total population) × 100. It indicates what proportion of the population is actively contributing to production; it is used to compare regions and groups.

Broad patterns in India (qualitative; the latest survey reports give figures):

• Higher for men than for women: much of the work women do at home is not counted as economic activity, and social norms limit women's paid work.
• Higher in rural than in urban areas: poor farm households need everyone's labour; in towns more young people study longer.
• Higher for rural women than for urban women: rural women work on family farms and enterprises.

By status:

• Self-employed: own and operate an enterprise; the largest category in India.
• Regular salaried employees: hired on a regular basis and paid wages or salaries, often with benefits.
• Casual wage labourers: hired for short spells, with no assurance of continued work or social security.

Rural vs urban: self-employment and casual work dominate villages; regular salaried jobs are more common in towns. Women are more often self-employed or casual.

By sector: the share of the primary sector in employment has declined but is still the largest; the tertiary share has risen most and the secondary share somewhat. Output has moved towards services faster than workers, leaving many in low-productivity farming.

Jobless growth: GDP has grown faster than employment, because much growth came from technology and productivity rather than from more hiring.

Casualisation: over several decades the share of casual wage labour rose relative to regular salaried work, so more workers depend on uncertain daily earnings.

Formal sector: all public-sector establishments and private establishments employing 10 or more hired workers. Informal sector: all other enterprises and workers — farmers, agricultural labourers, own-account workers, small enterprises and casual labour.

Informalisation: a rising share of the workforce works informally, including contract workers inside formal firms. Causes: slow growth of formal jobs, cost-cutting through contract hiring, slower public-sector hiring.

Protecting informal workers: registration and social security (health, accident cover, pensions), enforcement of minimum wages and safety, and credit, skills and market access for small enterprises.

A person is unemployed when he or she has no work but is seeking or available for it. Unemployed = labour force − workforce.

• Open unemployment: willing and able to work at the prevailing wage, but no work at all; common among educated youth in towns.
• Disguised unemployment: more persons engaged in an activity than required; withdrawing some would not reduce output. Common on small family farms.
• Seasonal unemployment: work available only in certain months, as in farming between harvest and sowing.

Data sources: the Census of India, the labour force surveys of the National Statistical Office (NSO), and employment exchanges. Disguised and seasonal unemployment are hard to measure because the persons concerned appear to be working.

Problems: slow growth of formal jobs; underemployment in farming; mismatch between the skills of job seekers and the needs of employers; low participation of women.

How the government generates employment:

1. Directly — hiring in its departments, services and public enterprises.
2. Indirectly — its output and investment raise demand for goods and services of private firms, which then hire.
3. Programmes — wage employment on public works; self-employment through loans, subsidies and training; skill development for jobs in demand.

MGNREGA 2005: a legal guarantee of up to 100 days of unskilled manual wage work a year to every rural household that asks; an unemployment allowance if work is not given in time; wages paid into accounts; works such as water conservation and rural roads.

Appraisal (balanced): these measures have given income and security to many poor households and created assets, but implementation gaps (such as payment delays) and the slow growth of formal jobs limit their impact; better skills and labour-intensive growth are widely seen as the long-term answer.