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Economics – Indian Economic Development

Employment: Growth - Informalisation and Other Issues

Employment: Growth - Informalisation and Other Issues

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Study Action Plan (Sorted by Difficulty)
Employment and Economic Activity
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Government Employment Policies
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Gross Domestic Product and Gross National Product
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Informalisation of Workforce
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Jobless Growth
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Sectoral Distribution of Workforce
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Types of Employment
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Unemployment Types and Measurement
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Worker-Population Ratio
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Learning Objectives

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Learning Objectives

  • Understand basic concepts relating to employment such as economic activity, worker, workforce, and unemployment.
  • Understand the nature of participation of men and women in various economic activities across different sectors.
  • Know the nature and extent of unemployment.
  • Assess government initiatives in generating employment opportunities across various sectors and regions.

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Revision Notes & Summary

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Employment: Growth, Informalisation and Other Issues

Understanding Employment

  • Basic Concepts: Economic activity, worker, workforce, unemployment.
  • Gender Participation: Nature of participation of men and women in various economic activities across sectors.
  • Unemployment: Nature and extent of unemployment in India.
  • Government Initiatives: Assessment of initiatives taken by the government to generate employment opportunities.

Employment Patterns

Trends in Employment Pattern (Sector-wise and Status-wise), 1972-2023 (in %)

Item1972-7319831993-942011-20122017-2018
Sector
Primary74.368.66448.946.1
Secondary10.911.51624.324.9
Services14.816.92026.829.0
Total100.0100.0100.0100.0100.0

Employment Status

Status1972-7319831993-942011-20122017-2018
Self-employed61.457.354.652.055.6
Regular Salaried Employees15.413.813.618.021.1
Casual Wage Labourers23.228.931.830.023.3
Total100.0100.0100.0100.0100.0

Nature of Employment

  • Self-Employment: Major employment provider, especially in rural areas.
  • Casualisation of Workforce: Movement from self-employment and regular salaried employment to casual wage work, leading to vulnerability.
  • Gender Disparities: Higher concentration of women in the primary sector compared to men.

Government Initiatives

  • Employment Generation: Government's role in generating employment through various schemes and policies.
  • Sectoral Employment: Service sector growth post-reform, with new jobs primarily in the informal sector.

Conclusion

  • Workforce Composition: Majority of India's workforce is self-employed, with significant reliance on agriculture.
  • Challenges: Deceleration in employment growth and the prevalence of disguised unemployment in rural areas.
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Practice Test – MCQs, True/False

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Multiple Choice Questions

A.

Regular income and job security

B.

High level of social security benefits

C.

Lack of regulation and protection

D.

Predominantly government employment
Correct Answer: C

Solution:

The informal sector is characterized by a lack of regulation and protection, which makes it distinct from the formal sector.

Chapter Concept:

Informalisation of Workforce

A.

GNP will be higher than GDP.

B.

GNP will be lower than GDP.

C.

GNP will be equal to GDP.

D.

GNP will be unrelated to GDP.
Correct Answer: A

Solution:

When exports exceed imports, the net foreign income is positive, which increases the GNP compared to the GDP.

Chapter Concept:

Gross Domestic Product and Gross National Product

A.

Self-employment is more prevalent in urban areas due to diverse job opportunities.

B.

Self-employment is more prevalent in rural areas due to the majority of people owning and cultivating land.

C.

Self-employment rates are equal in both rural and urban areas.

D.

Self-employment is negligible in both rural and urban areas.
Correct Answer: B

Solution:

Self-employment is more prevalent in rural areas because many people own plots of land and cultivate them independently, leading to a higher share of self-employed individuals in these regions.

Chapter Concept:

Types of Employment

A.

Urban areas have more employment opportunities leading to higher engagement.

B.

Urban people have more opportunities for education and may delay joining the workforce.

C.

Urban areas have a higher level of economic activity.

D.

Urban areas have a higher population density.
Correct Answer: B

Solution:

The lower worker-population ratio in urban areas compared to rural areas can be attributed to the fact that urban residents often have more opportunities for education and may delay entering the workforce to pursue higher qualifications.

Chapter Concept:

Worker-Population Ratio

A.

$480 billion

B.

$500 billion

C.

$520 billion

D.

$540 billion
Correct Answer: C

Solution:

GNP is calculated by adding the net income from abroad to the GDP. Therefore, GNP = 500billion+500 billion + 20 billion = $520 billion.

Chapter Concept:

Gross Domestic Product and Gross National Product

A.

It provides stable employment opportunities.

B.

It leads to economic instability due to lack of social security.

C.

It increases government revenue through taxes.

D.

It reduces unemployment rates significantly.
Correct Answer: B

Solution:

The informal sector impacts economic stability negatively as it often lacks social security measures, leading to economic instability for workers.

Chapter Concept:

Informalisation of Workforce

A.

A greater engagement of people in economic activities

B.

A lower level of economic activity

C.

A higher level of unemployment

D.

A decrease in national income
Correct Answer: A

Solution:

A higher worker-population ratio indicates that a larger proportion of the population is actively contributing to the production of goods and services, reflecting greater engagement in economic activities.

Chapter Concept:

Worker-Population Ratio

A.

Lack of sufficient formal sector jobs and the flexibility of informal employment.

B.

Higher wages offered in the informal sector compared to the formal sector.

C.

Better working conditions in the informal sector.

D.

Government policies favoring informal sector growth.
Correct Answer: A

Solution:

The informal sector in India is large due to insufficient formal sector jobs and the flexibility it offers, despite often lacking job security and benefits.

Chapter Concept:

Unemployment Types and Measurement

A.

Lack of formal sector jobs

B.

Increase in agricultural productivity

C.

Government policies favoring informal sector

D.

Higher wages in the informal sector
Correct Answer: A

Solution:

The informalisation of the workforce in India is primarily due to the lack of formal sector jobs, which has led many workers to seek employment in the informal sector.

Chapter Concept:

Informalisation of Workforce

A.

Because GDP growth has not led to proportional employment growth

B.

Because employment has grown faster than GDP

C.

Because employment opportunities are only in the informal sector

D.

Because the service sector is not expanding
Correct Answer: A

Solution:

The term 'jobless growth' refers to the phenomenon where GDP growth does not result in proportional employment growth, indicating that more goods and services are produced without a corresponding increase in jobs.

Chapter Concept:

Sectoral Distribution of Workforce

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Employment: Growth - Informalisation and Other Issues

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True or False

Correct Answer: True

Solution:

Jobless growth is defined as economic growth that does not lead to an increase in employment opportunities.

Chapter Concept :

Jobless Growth

Correct Answer: False

Solution:

Disguised unemployment is primarily a rural phenomenon, often occurring in agricultural settings where more people are employed than necessary.

Chapter Concept :

Employment and Economic Activity

Correct Answer: True

Solution:

The Mahatma Gandhi National Rural Employment Guarantee Act indeed promises 100 days of guaranteed wage employment to all rural households who volunteer to do unskilled manual work as a measure to generate employment.

Chapter Concept :

Government Employment Policies

Correct Answer: True

Solution:

The Mahatma Gandhi National Rural Employment Guarantee Act is designed to provide 100 days of guaranteed wage employment to rural households willing to perform unskilled manual labor.

Chapter Concept :

Government Employment Policies

Correct Answer: True

Solution:

The worker-population ratio is indeed used to analyze the employment situation, as it indicates the proportion of the population actively contributing to the production of goods and services.

Chapter Concept :

Employment and Economic Activity

Correct Answer: True

Solution:

Disguised unemployment is a situation where more people are employed than actually needed for a task, leading to no additional output.

Chapter Concept :

Unemployment Types and Measurement

Correct Answer: True

Solution:

Disguised unemployment is a situation where more workers are employed than necessary, and their removal would not affect the total output. This is common in agricultural sectors.

Chapter Concept :

Unemployment Types and Measurement

Correct Answer: False

Solution:

Government employment generation initiatives include both direct and indirect methods. Direct methods involve employing people in various departments, while indirect methods involve increasing the output of government enterprises, which in turn increases employment opportunities in private enterprises.

Chapter Concept :

Government Employment Policies

Correct Answer: True

Solution:

Gross National Product (GNP) is calculated by adding net earnings from foreign transactions to the Gross Domestic Product (GDP).

Chapter Concept :

Gross Domestic Product and Gross National Product

Correct Answer: True

Solution:

The worker-population ratio indicates the proportion of the population that is actively contributing to the production of goods and services in a country. A higher ratio suggests greater engagement in economic activities.

Chapter Concept :

Worker-Population Ratio

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