This chapter analyses how India's workforce is structured and why output growth has not produced enough good jobs. The headline facts: the bulk of Indian workers are in the informal (unorganised) sector with no job or social security, agriculture still employs the largest share although that share is falling, and the country faces several distinct types of unemployment, with disguised unemployment especially common in agriculture.
- A worker is anyone engaged in a productive activity that contributes to national income, including the self-employed.
- The workforce is the total number of workers; the labour force is everyone willing and able to work (workers plus the unemployed who are seeking work).
- The worker-population ratio (workforce as a share of total population) measures how many people are actually employed; it is higher in rural areas and lower for women, reflecting undercounting of unpaid female work and lower female participation.
- Workers fall into three categories: self-employed (the largest group in India), regular salaried (wage employees with continuity), and casual wage labourers (hired on a day-to-day basis, the most vulnerable).
- By sector: the primary sector (agriculture) still employs the largest share, but its share has fallen over time; the secondary (industry) and tertiary (services) shares have risen. The services share of output has risen much faster than its share of employment.
- By location: most workers are still rural.
- By gender: men dominate the recorded workforce; much of women's productive work, especially in agriculture and the home-based economy, is unpaid and under-recorded.
- The formal / organised sector comprises government establishments and private enterprises above a certain size that are registered and follow labour laws. Its workers get job security, regular wages, pensions, provident fund and other social-security benefits. It is a small minority of the workforce.
- The informal / unorganised sector comprises small, often unregistered units, the self-employed, casual labour, farm workers and home-based workers. Its workers have no job security, no social security and irregular incomes. The overwhelming majority of India's workforce, well over four-fifths, is informal.
- Informalisation (or casualisation) is the worrying trend by which even formal-sector firms increasingly use contract and casual labour without benefits, so the share of secure jobs shrinks.
- Disguised unemployment: more people are engaged in an activity than are actually needed, so the marginal product of the extra workers is near zero. It is classic in Indian agriculture, where a family farm is "worked" by more hands than the land requires; removing some workers would not reduce output.
- Seasonal unemployment: workers are unemployed during certain parts of the year, again common in agriculture between sowing and harvest.
- Structural unemployment: a mismatch between the skills workers have and the skills the economy demands, often persistent.
- Cyclical unemployment: caused by a downturn in the business cycle, when demand and output fall.
- Open unemployment (people willing to work but with no work at all) and educated unemployment (the qualified unable to find suitable jobs) are also widely discussed.
- Jobless growth is the phenomenon, prominent after the 1991 reforms, where GDP grows but employment grows little or not at all, because growth is concentrated in capital-intensive and high-skill services.
- The government's responses include public employment-generation programmes (the rural employment guarantee, urban livelihood missions), skill-development missions, promotion of small and micro enterprises, and a push for labour-intensive manufacturing.
- Worker-population ratio: workers as a share of total population.
- Formal / organised sector: registered, law-abiding, social-security-providing employment, a small minority.
- Informalisation / casualisation: the rising share of insecure, benefit-less work.
- Disguised unemployment: surplus labour whose marginal product is near zero, classic in agriculture.
- Jobless growth: output rising without matching employment growth.
Unemployment, especially educated and youth unemployment, is a recognised driver of radicalisation and of recruitment into extremist and criminal networks, which makes it part of the internal-security picture the CAPFs manage. The vulnerability of informal workers, who lack any social-security floor, is the human-rights and labour-rights dimension; schemes that extend social security to the unorganised sector are the State's corrective. The CAPFs themselves are a major source of secure, formal employment for rural youth.
- Disguised unemployment is most characteristic of which sector in India? (Answer: agriculture, where more hands work the land than the land needs.) Authored practice, not a verbatim PYQ.
- The phenomenon where GDP grows but employment barely rises is called: (a) structural unemployment (b) jobless growth (c) seasonal unemployment (d) frictional unemployment. (Answer: b.) Authored practice, not a verbatim PYQ.