HSSLIVE Plus One Economics Chapter 7: Employment-Growth, Informalisation and Related Issues Notes

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India’s employment landscape is characterized by a significant informal sector that employs over 90% of the workforce without adequate social security or legal protections. Despite economic growth, employment generation has not kept pace with labor force expansion, creating a situation of “jobless growth.” The employment structure shows a slow transition from agriculture to non-agricultural sectors, with services emerging as a major employer while manufacturing employment remains relatively stagnant. Key challenges include addressing the skills mismatch, reducing underemployment, improving working conditions in the informal sector, and creating quality employment opportunities for the growing youth population.

Chapter 7: Employment-Growth, Informalisation and Related Issues

Employment is a crucial aspect of economic development as it provides income, dignity, and social inclusion to individuals. India faces unique challenges in employment generation due to its large population, demographic structure, and the nature of economic growth.

Concept and Types of Employment:

  • Workers engaged in activities that contribute to GDP
  • Classification based on:
    • Sector (primary, secondary, tertiary)
    • Status (self-employed, regular wage/salaried, casual labor)
    • Nature (formal vs. informal)
    • Duration (permanent, temporary, seasonal)
    • Skills (skilled, semi-skilled, unskilled)

Employment Trends in India:

  1. Sectoral Distribution:
    • Declining share of agriculture (from over 70% at independence to about 42% currently)
    • Modest increase in manufacturing employment
    • Significant growth in service sector employment
    • Limited structural transformation compared to other developing economies
  2. Employment Status:
    • High proportion of self-employment (around 52%)
    • Casual workers (about 24%)
    • Regular wage/salaried workers (about 24%)
    • Vulnerability associated with self-employment and casual labor
  3. Formal vs. Informal Sector:
    • Over 90% of workforce in informal sector
    • Characterized by low wages, poor working conditions, limited social security
    • Informalization even within the formal sector through contract labor
  4. Rural vs. Urban Employment:
    • Rural: Predominantly agricultural with growing non-farm activities
    • Urban: Diverse employment opportunities but inadequate for migrant influx
    • Rural-urban migration driven by employment opportunities

Key Employment Challenges:

  1. Unemployment:
    • Open unemployment (particularly among educated youth)
    • Disguised unemployment (especially in agriculture)
    • Seasonal unemployment in rural areas
    • Structural unemployment due to skill mismatches
  2. Underemployment:
    • Working fewer hours than desired
    • Working below skill level
    • Low productivity employment
    • Inadequate earnings despite full-time work
  3. Quality of Employment:
    • Low wages and income
    • Poor working conditions
    • Limited job security
    • Absence of social protection
    • Lack of career advancement opportunities
  4. Informalization:
    • Growth of informal sector despite economic development
    • Casualization of workforce
    • Contract labor replacing permanent jobs
    • Limited coverage of labor laws and regulations
  5. Gender Disparities:
    • Low female labor force participation (around 25%)
    • Occupational segregation and wage gaps
    • Double burden of paid and unpaid work for women
    • Harassment and discrimination at workplace

Growth and Employment Linkages:

  • Jobless growth phenomenon in recent decades
  • Capital-intensive nature of growth in manufacturing
  • Service sector growth benefiting primarily skilled workers
  • Limited absorption of labor from agriculture to more productive sectors
  • Impact of technology and automation on employment generation

Government Initiatives for Employment Generation:

  1. Direct Employment Programs:
    • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
    • Prime Minister’s Employment Generation Programme (PMEGP)
    • Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM)
    • National Urban Livelihoods Mission (NULM)
  2. Skill Development Initiatives:
    • Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
    • National Apprenticeship Promotion Scheme
    • Industrial Training Institutes (ITIs)
    • Vocational education in schools and colleges
  3. Self-Employment Promotion:
    • Startup India
    • Stand-Up India
    • Mudra Yojana for micro-enterprises
    • Self-Help Group movement
  4. Labor Reforms:
    • Consolidation of labor laws into four codes
    • Extending social security to informal workers
    • Easing compliance burden for enterprises
    • Promoting formalization of workforce

Way Forward:

  • Promoting labor-intensive manufacturing through appropriate policies
  • Developing rural non-farm sector and agro-processing industries
  • Enhancing quality and relevance of education and skill development
  • Strengthening social protection for all workers
  • Addressing barriers to female labor force participation
  • Leveraging demographic dividend through appropriate human capital investments
  • Balancing labor protection with flexibility for enterprises
  • Promoting entrepreneurship and self-employment
  • Regional approach to employment generation based on local advantages

Employment generation remains one of the most significant challenges for Indian economy. The focus needs to shift from merely the quantity of jobs to quality of employment that provides adequate income, dignity, and social protection to workers.

Complete Chapter-wise Hsslive Plus One Economics Notes

Our HSSLive Plus One Economics Notes cover all chapters with key focus areas to help you organize your study effectively:

Economics: Indian Economic Development

Economics: Statistics for Economics

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