Employment

 

Workers And Employment

People do a variety of work. Some work on farms, in factories, banks, shops and many other workplaces; yet a few others work at home. Work at home includes not only traditional work like weaving, lace making or variety of handicrafts but also modern jobs like programming work in the IT industry. Earlier factory work meant working in factories located in cities whereas now technology has enabled people to produce those factory-based goods at home in villages.

Why do people work? Work plays an important role in our lives as individuals and as members of society. People work for ‘earning’ a living. Some people get, or have, money by inheriting it, not working for it. This does not completely satisfy anybody. Being employed in work gives us a sense of self-worth and enables us to relate ourselves meaningfully with others. Every working person is actively contributing to national income and hence, the development of the country by engaging in various economic activities — that is the real meaning of ‘earning’ a living. We do not work only for ourselves; we also have a sense of accomplishment when we work to meet the requirements of those who are dependent on us. Having recognised the importance of work, Mahatma Gandhi insisted upon education and training through a variety of works including craft.

Studying about working people gives us insights into the quality and nature of employment in our country and helps in understanding and planning our human resources. It helps us to analyse the contribution made by different industries and sectors towards national income. It also helps us to address many social issues such as exploitation of marginalised sections of the society, child labour etc.

What is employment? Who is a worker? When a farmer works on fields, he or she produces food grains and raw materials for industries. Cotton becomes cloth in textile mills and in power-looms. Lorries transport goods from one place to another.

  • The total money value of all such goods and services produced in a country in a year is called its gross domestic product for that year.
  • When we also consider what we pay for our imports and get from our exports we find that there is a net earning for the country which may be positive (if we have exported more in value terms than imported) or negative (if imports exceeded exports in value terms) or zero (if exports and imports were of the same value). When we add this earning (plus or minus) from foreign transactions, what we get is called the country’s gross national product for that year.

Those activities which contribute to the gross national product are called economic activities.

All those who are engaged in economic activities, in whatever capacity — high or low, are workers. Even if some of them temporarily abstain from work due to illness, injury or other physical disability, bad weather, festivals, social or religious functions, they are also workers. Workers also include all those who help the main workers in these activities. We generally think of only those who are paid by an employer for their work as workers. This is not so. Those who are self-employed are also workers.

The nature of employment in India is multifaceted

  • Some get employment throughout the year.
  • Others get employed for only a few months in a year.
  • Many workers do not get fair wages for their work.
  • While estimating the number of workers, all those who are engaged in economic activities are included as employed.

During 1999-2000, India had about a 400 million strong workforce. Since majority of our people reside in rural areas, the proportion of workforce residing there is higher. The rural workers constitute about three-fourth of this 400 million. Men form the majority of workforce in India. About 70 per cent of the workers are men and the rest are women (men and women include child labourers in respective sexes). Women workers account for one-third of the rural workforce whereas in urban areas, they are just one-fifth of the workforce. Women carry out works like cooking, fetching water and fuel-wood and participate in farm labour. They are not paid wages in cash or in the form of grains; at times they are not paid at all. For this reason, these women are not categorised as workers. Economists have argued that these women should also be called workers.

 

Participation Of People In Employment

Worker-population ratio is an indicator which is used for analysing the employment situation in the country. This ratio is useful in knowing the proportion of population that is actively contributing to the production of goods and services of a country –

  • if the ratio is higher, it means that the engagement of people is greater;
  • if the ratio for a country is medium, or low, it means that a very high proportion of its population is not involved directly in economic activities.

What is the meaning of the term ‘population’? Population is defined as the total number of people who reside in a particular locality at a particular point of time.

If you want to know the worker-population ratio for India, divide the total number of workers in India by the population in India and multiply it by 100, you will get the worker-population ratio for India.

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Above table shows the different levels of participation of people in economic activities. For every 100 persons, about 40 (by rounding off 39.5) are workers in India. In urban areas, the proportion is about 34 whereas in rural India, the ratio is about 42.

Why is there such a difference? People in rural areas have limited resources to earn a higher income and participate more in the employment market. Many do not go to schools, colleges and other training institutions. Even if some go, they discontinue in the middle to join the workforce; whereas, in urban areas, a considerable section is able to study in various educational institutions. Urban people have a variety of employment opportunities. They look for the appropriate job to suit their qualifications and skills. In rural areas, people cannot stay at home as their economic condition may not allow them to do so.

Compared to females, more males are found to be working. The difference in participation rates is very large in urban areas : for every 100 urban females, only about 14 are engaged in some economic activities. In rural areas, for every 100 rural women about 30 participate in the employment market.

Why are women, in general, and urban women, in particular, not working? It is common to find that where men are able to earn high incomes, families discourage female members from taking up jobs.

Many activities for the household engaged in by women are not recognised as productive work. This narrow definition of work leads to non-recognition of women’s work and, therefore, to the underestimation of the number of women workers in the country.

Think of the women actively engaged in many activities within the house and at family farms who are not paid for such work. As they certainly contribute to the maintenance of the household and farms, do you think that their number should be added to the number of women workers?

 

Self-Employed And Hired Workers

Does the worker-population ratio say anything about workers’ status in society or about the working conditions? By knowing the status with which a worker is placed in an enterprise, it may be possible to know one dimension — quality of employment in a country. It also enables us to know the attachment a worker has with his or her job and the authority she or he has over the enterprise and over other co-workers.

Let us take three workers from the construction industry — a cement shop owner, a construction worker and a civil engineer of a construction company. Since the status of each one of them is different from another, they are also called differently –

  • Workers who own and operate an enterprise to earn their livelihood are known as self-employed. Thus the cement shop owner is self-employed. More than half the workforce in India belongs to this category.
  • The construction workers are known as casual wage labourers; they account for 33 per cent of India’s workforce. Such labourers are casually engaged in others’ farms and, in return, get a remuneration for the work done.
  • Workers like the civil engineer working in the construction company account for 15 per cent of India’s workforce. When a worker is engaged by someone or an enterprise and paid his or her wages on a regular basis, they are known as regular salaried employees.

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From the above chart, you’ll notice that self-employment is a major source of livelihood for both men and women as this category accounts for more than 50 per cent of the workforce in both diagrams. Casual wage work is the second major source for both men and women, more so for the latter (37 per cent). When it comes to regular salaried employment, men are found to be so engaged in greater proportion. They form 18 per cent whereas women form only 8 per cent. One of the reasons could be skill requirement. Since regular salaried jobs require skills and a higher level of literacy, women might not have been engaged to a great extent.

When we compare the distribution of workforce in rural and urban areas (see chart below), you will notice that the self-employed and casual wage labourers are found more in rural areas than in urban areas. In the latter, both self-employed and regular wage salaried jobs are greater. In the former, since majority of those depending on farming own plots of land and cultivate independently, the share of self-employed is greater.

The nature of work in urban areas is different. Obviously everyone cannot run factories, shops and offices of various types. Moreover enterprises in urban areas require workers on a regular basis.

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Employment In Firms, Factories And Offices

In the course of economic development of a country, labour flows from agriculture and other related activities to industry and services. In this process, workers migrate from rural to urban areas. Eventually, at a much later stage, the industrial sector begins to lose its share of total employment as the service sector enters a period of rapid expansion. This shift can be understood by looking at the distribution of workers by industry.

Generally, we divide all economic activities into eight different industrial divisions. They are –

  • (i) Agriculture
  • (ii) Mining and Quarrying
  • (iii) Manufacturing
  • (iv) Electricity, Gas and Water Supply
  • (v) Construction
  • (vi) Trade
  • (vii) Transport and Storage and
  • (viii) Services.

For simplicity, all the working persons engaged in these divisions can be clubbed into three major sectors viz. –

  • (a) primary sector which includes (i) and (ii)
  • (b) secondary sector which includes (iii), (iv) and (v) and
  • (c) service sector which includes divisions (vi), (vii) and (viii).

Primary sector is the main source of employment for majority of workers in India.

Secondary sector provides employment to only about 16 per cent of workforce.

About 24 per cent of workers are in the service sector.

Above table also shows that –

  • more than three-fourth of the workforce in rural India depends on agriculture and mining and quarrying;
  • about 10 per cent of rural workers are working in manufacturing industries, construction and other divisions;
  • service sector provides employment to only about 13 per cent of rural workers;
  • agriculture and mining are not a major source of employment in urban areas where people are mainly engaged in the service sector;
  • about 60 per cent of urban workers are in the service sector;
  • the secondary sector gives employment to about 30 per cent of urban workforce.

Though both men and women workers are concentrated in the primary sector, women workers’ concentration is very high there. More than three-fourth of the female workforce is employed in the primary sector whereas only half of males work in that sector. Men get opportunities in both secondary and service sectors.

 

Growth And Changing Structure Of Employment

Two developmental indicators are — growth of employment and GDP. Fifty years of planned development have been aimed at expansion of the economy through increase in national product and employment.

During the period 1960–2000, Gross Domestic Product (GDP) of India grew positively and was higher than the employment growth. However, there was always fluctuation in the growth of GDP. During this period, employment grew at a stable rate of about 2 per cent.

Above chart also points at another disheartening development in the late 1990s: employment growth started declining and reached the level of growth that India had in the early stages of planning. During these years, we also find a widening gap between the growth of GDP and employment. This means that in the Indian economy, without generating employment, we have been able to produce more goods and services. Scholars refer to this phenomenon as jobless growth.

How the growth pattern of employment and GDP affect different sections of workforce?
What types of employment are generated in our country?

India is an agrarian nation; a major section of population lives in rural areas and is dependent on agriculture as their main livelihood. Developmental strategies in many countries, including India, have aimed at reducing the proportion of people depending on agriculture.

Distribution of workforce by industrial sectors shows substantial shift from farm work to non-farm work (see table below). In 1972-73, about 74 per cent of workforce was engaged in primary sector and in 1999-2000, this proportion has declined to 60 per cent. Secondary and service sectors are showing promising future for the Indian workforce. You may notice that the shares of these sectors have increased from 11 to 16 per cent and 15 to 24 per cent respectively.

The distribution of workforce in different status indicates that over the last three decades (1972-2000), people have moved from self-employment and regular salaried employment to casual wage work. Yet self-employment continues to be the major employment provider. Scholars call this process of moving from self-employment and regular salaried employment to casual wage workforce. This makes the workers highly vulnerable. How? Look at the case study of Ahmedabad below.

Informalisation in Ahmedabad

Ahmedabad is a prosperous city with its wealth based on the produce of more than 60 textile mills with a labour force of 1,50,000 workers employed in them.

These workers had, over the course of the century, acquired a certain degree of income security. They had secure jobs with a living wage; they were covered by social security schemes protecting their health and old age. They had a strong trade union which not only represented them in disputes but also ran activities for the welfare of workers and their families.

In the early 1980s, textile mills all over the country began to close down. In some places, such as Mumbai, the mills closed rapidly. In Ahmedabad, the process of closure was long drawn out and spread over 10 years.

Over this period, approximately over 80,000 permanent workers and over 50,000 non-permanent workers lost their jobs and were driven to the informal sector. The city experienced an economic recession and public disturbances, especially communal riots. A whole class of workers was thrown back from the middle class into the informal sector, into poverty. There was widespread alcoholism and suicides, children were withdrawn from school and sent to work.

Source: Renana Jhabvala, Ratna M. Sudarshan and Jeemol Unni (Ed.) Informal Economy at Centre Stage: New Structures of Employment, Sage Publications, New Delhi, 2003, pp.265.

 

Informalisation Of Indian Workforce

One of the objectives of development planning in India, since India’s independence, has been to provide decent livelihood to its people. It has been envisaged that the industrialisation strategy would bring surplus workers from agriculture to industry with better standard of living as in developed countries. But even after 60 years of planned development, three-fifth of Indian workforce depends on farming as the major source of livelihood.

Economists argue that, over the years, the quality of employment has been deteriorating. Even after working for more than 10-20 years, why do some workers not get maternity benefit, provident fund, gratuity and pension? Why does a person working in the private sector get a lower salary as compared to another person doing the same work but in the public sector?

Only a small section of Indian workforce is getting regular income. The government, through its labour laws, protects them in various ways. This section of the workforce forms trade unions, bargains with employers for better wages and other social security measures.

Who are they? To know this we classify workforce into two categories : workers in formal and informal sectors, which are also referred to as organised and unorganised sectors.

  • All the public sector establishments and those private sector establishments which employ 10 hired workers or more are called formal sector establishments and those who work in such establishments are formal sector workers.
  • All other enterprises and workers working in those enterprises form the informal sector. Thus, informal sector includes millions of farmers, agricultural labourers, owners of small enterprises and people working in those enterprises as also the self-employed who do not have any hired workers.

 

Formal Sector Employment

The information relating to employment in the formal sector is collected by the Union Ministry of Labour through employment exchanges located in different parts of the country. Do you know who is the major employer in the formal sector in India? In 2001, out of about 28 million formal sector workers, about 20 million workers were employed by the public sector. Here also men form the majority, as women constitute only about one-sixth of the formal sector workforce. Economists point out that the reform process initiated in the early 1990s resulted in a decline in the number of workers employed in the formal sector. What do you think?

 

Those who are working in the formal sector enjoy social security benefits. They earn more than those in the informal sector. Developmental planning envisaged that as the economy grows, more and more workers would become formal sector workers and the proportion of workers engaged in the informal sector would dwindle. But what has happened in India? Look at the following chart which gives the distribution of workforce in formal and informal sectors.

During 1999-2000, India had about a 400 million strong workforce.

  • There are about 28 million workers in the formal sector. About seven per cent (28/400×100)!
  • Out of 28 million formal sector workers, only 4.8 million, that is, only 17 per cent (4.8/28×100) are women.
  • The rest 93 per cent are in the informal sector.
  • In the informal sector, male workers account for 69 per cent of the workforce.

Since the late 1970s, many developing countries, including India, started paying attention to enterprises and workers in the informal sector as employment in the formal sector is not growing. Workers and enterprises in the informal sector do not get regular income; they do not have any protection or regulation from the government. Workers are dismissed without any compensation. Technology used in the informal sector enterprises is outdated; they also do not maintain any accounts. Workers of this sector live in slums and are squatters. Of late, owing to the efforts of the International Labour Organisation (ILO), the Indian government has initiated the modernisation of informal sector enterprises and provision of social security measures to informal sector workers.

 

Informalisation in Ahmedabad

Ahmedabad is a prosperous city with its wealth based on the produce of more than 60 textile mills with a labour force of 1,50,000 workers employed in them.

These workers had, over the course of the century, acquired a certain degree of income security. They had secure jobs with a living wage; they were covered by social security schemes protecting their health and old age. They had a strong trade union which not only represented them in disputes but also ran activities for the welfare of workers and their families.

In the early 1980s, textile mills all over the country began to close down. In some places, such as Mumbai, the mills closed rapidly. In Ahmedabad, the process of closure was long drawn out and spread over 10 years.

Over this period, approximately over 80,000 permanent workers and over 50,000 non-permanent workers lost their jobs and were driven to the informal sector. The city experienced an economic recession and public disturbances, especially communal riots. A whole class of workers was thrown back from the middle class into the informal sector, into poverty. There was widespread alcoholism and suicides, children were withdrawn from school and sent to work.

Source: Renana Jhabvala, Ratna M. Sudarshan and Jeemol Unni (Ed.) Informal Economy at Centre Stage: New Structures of Employment, Sage Publications, New Delhi, 2003, pp.265.

 


 

Bibliography : NCERT – Indian Economic Development

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