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Class 11 Economics Chapter 7 Employment Growth Informalisation and Related Issues Notes

Please carefully read the Employment Growth Informalisation and Related Issues Notes for Class 11 Economics provided below. Use them prior to your exams as this will help you to revise the entire chapter easily. We have also provided MCQ Questions for Class 11 Economics which will be asked in the upcoming exams.

Worker-

It refers to an individual who is engaged in some productive activity to earn a living. Type of workers Workers are broadly classified into 3 categories:-

1. Self employed

It refers to the workers who are engaged intheir own business or enterprises. In other words, the worker who own and operate an enterprise is known as self employed worker.

2. Hired workers

It refers to the workers who are hired by others and are paid in the form of wages or salary as a reward of their services.
Hired workers are of 2 types:-

I. Regular workers

When a worker is engaged by an individual or an enterprise and is paid wages on regular wages, then they are known as regular worker or regular salaried employees.
In India around 15% of total workforce is engaged as regular workers. Example- teachers, office employ, manager of an organization etc.

II. Casual workers (part time labour)

It refers to the workers who are not employed on regular basis.

They are casually engaged on a job and in return get entertained by the remuneration for the work done.
These employees do not get any job security and social benefits.

♦ Labour force

It refers to the sum total of the persons who are willing and able to work at an existing wage rate in an economy.
Labour force includes both employed and unemployed persons.

Labour force = Persons working + person available/seeking for work

♦ Work force

It refers to the part of labour force who are actually engaged in some productive activity.
In other words, work force refers to the number of persons who are actually employed at a particular point of time in an economy.

Work force participation ratio

It refers to the percentage of population constitutes work force in an economy.
Work Force/Total Population * 100 

♦ Labour supply

It refers to the amount of labour that workers are willing to work corresponding to a particular wage rate.
In other words, the labour supply is the total hours that workers wish to work at the given wage rate.
Example- Wage rate – 500 rupees per day – worker is ready to work for 8 hours

Wage rate – 1000 rupees per day – workers is ready to work for 10 hours.

♦ Jobless growth 

It refers to a situation where gross domestic product of an economy grows faster than the employment opportunities which results in unemployment.
In India, the economy is experiencing GDP growth more through technology than the employment of labour.

♦ Casualisation of employment

Casualisation refers a situation when the percentage of casually hired workers in the total work force tends to rise over time.
Even the skilled workers of urban areas are to struggle for regular jobs due to massive unemployment in the country. Unemployment reduces the bargaining power of workers whereas it increases the bargaining power of employers.

Informalisation of employment

Employment structure can be classified as

1. Formal sector employment

2. Informal sector employment

1. Formal sector

♦ It refers to the organized sector of the economy.

♦ It includes all public and private establishments which hire 10 or more workers.

♦ The workers of these sectors are entitled to social security benefits (such as pension).

♦ The workers of these sectors are not protected by labour laws.

♦ The workers of these sectors are called as formal sector workers.

2. Informal sector workers

♦ It refers to the unorganized sector of the economy.

♦ It includes all such private establishments who hires less than 10 workers.

♦ The workers of these sectors does not entitled to any social security benefits.

♦ The workers of these sectors are not protected by labour laws.

♦ It provides employment to more than 90% of workforce.

Informalization refers to a situation when people tends to find employment more than informal sector of the economy and lesss in formal sector of the economy. It generally happens as informal sector requires fewer amounts of qualifications and formalities to get the job.

Unemployment

It refers to a condition of unemployment in which all those who are willing and able to work at the existing wage rate doesn’t get work.

Types of unemployment

♦ Disguised unemployment or hidden unemplyment

It refers to a situation wherein the number of workers engaged in a job is much more than the number of people actually required to do the same amount of job. i.e., even if some people are withdrawn from the job, the total product doesn’t fall.
Example- 4 persons are required to do the job of cultivation but there are 9 persons who are performing the same job. It means that the productivity of extra 5 units of labour is zero.

♦ Fictional unemployment (temporary unemployment)

It refers to the unemployment which exist during the period when workers leave one job and join the other i.e., when people are moving or changing occupations.

♦ Seasonal unemployment

It refers to a situation in which people are unemployed during few months (off season) of a year due to their seasonal work.
In other words, it is a type of unemployment which occurs at certain seasons of the year.
Example- industries where demand, production and employment are seasonal such as tourism and leisure, farming, etc.

♦ Open unemployment or involuntary unemployment

It refers to a condition of unemployment in which all those who are willing and able to work at the existing wage rate doesn’t get work.
It is called open unemployment because it can be seen and counted in terms of numbers to find the number of unemployment person in a country.

♦ Structural unemployment

It refers to the type of unemployment which is caused by a mismatch between the skills that workers in the economy can offer and the skills demanded by the employers. It is often brought by technology up gradation that makes a job skill of many workers obsolete.
Example- decrease in demand of typewriter would leads to structural unemployment in the typewriter industry.

♦ Cyclical unemployment

It refers to the type of unemployment which arises to business cycle fluctations, i.e., normal ups and downs of the economy.

When the economy is at boom period the cyclical unemployment is minimum whereas at the time of recession it is maximum.

♦ Educated unemployment

It refers to a situation when a educated person doesn’t have the right job for himself because of lack of employment opportunities in an economy, also their qualifications doesn’t match with the job.
Faulty education system, lack of employable skills, preference of white collar jobs and some of the reasons responsible for this unemployment.

Causes of unemployment

♦ Slow rate of economic growth

The rate of economic growth in India is very low due to which the economy is unable to generate adequate amount of employment opportunity for the people of the economy. Moreover, the rate of labour force is much higher than the rate of employment opportunities.

♦ Population explosion

The constantly rise is population is one of main reason of unemployment in India. India is treated to be a work force country, where majority of population comes under workforce, due to this even after implementing various policies and plans the rate of unemployment tends to rise.

♦ Defective educational system

The education system of the economy is around 100 years old, due to continuous change in the economic activities the system doesn’t fits the present scenario. The education system in India is degree oriented and not job oriented, due to this the educational unemployment increases.

♦ Faulty planning

The economic planning of our country is not primarily designed for employment generation. Five years plans are not efficient enough to absorb the increasing rate of unemployment from the country. Moreover the plans could not be able to stop the migration of rural population to urban areas.

♦ Excessive use of foreign technology

india is considered to be a labour intensive country, where the amount of available labour force is exceptionally high. Such country should adopt labour intensive technique of production so that it can give employment opportunities to maximum number of people but due to excessive use of foreign technology, capital intensive technique of production is promoted which substitute capital for labour.

♦ Under-developed agriculture

The agriculture sector in India is under-developed and it provides only seasonal employment. The majority of people of the country relay on agriculture for employment but the seasonal nature of agriculture does not provide a stable job to the farmers for the complete year.

♦ Decline of cottage and small industry

After independence the number of small industries has declined due to change in the pattern of demand and preferences of general public.
Emergence of large industries with latest modern technology and capital intensive technique of production has reduces the employment opportunities in the economy and hence results in unemployment.

♦ Low capital formation

♦ Increase in labour force

Remedial measures for unemployment

♦ Accelerating growth rate of GDP

In order to achieve the state of full employment growth rate of the economy must rise. The growth rate of the economy must rise by 3-4% (5.6% – 9%) in the coming years to absorb the increasing unemployment.

♦ Control over population

The rate of population growth of the country should be decreased so that the additional job opportunities don’t fall short off for the large number of existing workforce.
Programs like single child norm, family planning should be introduced.

♦ Encouragement of small scale industries

In order to reduce the problem of unemployment small scale and cottage industries must be encouraged by the government in several ways such as tax free, liberally credit, subsidized rate for raw materials etc, as it promotes labour intensive technique of production which increases employment opportunities.

♦ Change in educational system

The education system of the economy must be reformed. A new model based on work and skill development must be included along with the vocational studies.
More emphases should be given on training and development of an individual rather than degree oriented education.

♦ Encouragement of self-employment

Government must provide various facilities to the public to generate more self- employment. It includes facilitaties like marketing, technical training, easy credit etc.
Increase in the amount of self employment reduces the burden of providing employment from the government.

♦ Change in technique of production

Basically there exist 2 types of techniques of production

1. Labour intensive technique (more labour and less machines)

2. Capital intensive technique (more capital and less labour)

India is a labour oriented country, it is essential that labour intensive technique must be encouraged by the government in place of capital intensive in order to provide more employment opportunities.

Government policies and programmes

The government of our country has implemented various programmes in order to develop technical skills and to remove poverty from the economy. Such as:-

♦ National rural employment guarantee Act (NREGA)

♦ Sompoorna Gramin Rozgar Yojana (SGRY)

♦ Skill India campaign

♦ Make in India

♦ Start up India campaign

Summary

♦ Worker

♦ Self-employed

♦ Hired workers

♦  Regular workers

♦  Casual workers (part time labour)

♦ Labour force

♦ Work force

♦ Labour supply

♦ Jobless growth

♦ Casualisation of employment

♦ Informalisation of employment

♦  Formal sector employment

♦  Informal sector employment

♦ Unemployment

♦ Types of unemployment

♦  Disguised unemployment or hidden unemployment

♦  Fictional unemployment (temporary unemployment)

♦  Seasonal unemployment

♦  Open unemployment or involuntary unemployment

♦  Structural unemployment

♦  Cyclical unemployment

♦  Educated unemployment

♦ Causes of unemployment

♦  Slow rate of economic growth

♦  Population explosion

♦  Defective educational system

♦  Faulty planning

♦  Excessive use of foreign technology

♦  Under-developed agriculture

♦  Decline of cottage and small industry

♦  Low capital formation

♦  Increase in labour force

♦ Remedial measures for unemployment