Employment: Growth, Informalisation and Other Issues

2.1 Core concepts

• Workers and economic activity: activities that contribute to the gross national product (GNP) are called economic activities; all persons engaged in such activities — in any capacity (high or low, paid or self-employed) — are workers. Workers temporarily absent due to illness, injury, bad weather, festivals or social/religious functions are still workers, and helpers of main workers are also counted (NCERT §6.2, p. 94).
• Size and composition of workforce: India had a workforce of about 545 million in 2022-23; rural workers form about two-thirds (471 million). Men constitute about 77% of workers; women account for about one-fourth of the rural workforce and one-fifth of the urban workforce (NCERT §6.2, pp. 94–95).
• Worker–Population Ratio (WPR): WPR = (total workers ÷ total population) × 100. For 2023-24, India's total WPR was 43.7 (Rural 45.6, Urban 38.9); male WPR 56.4, female WPR 30.7 (Total) (NCERT §6.3, Table 6.1, p. 95). WPR is higher in rural areas because rural people, having limited resources and lower access to education, are pushed into the labour market earlier.
• Why female WPR is low: many household activities performed by women are not recognised as productive work; where men earn high incomes, families discourage women from taking jobs; in urban areas only about 21 of every 100 women are economically active, against about 35 in rural areas (NCERT §6.3, p. 96).
• Self-employed, regular salaried, casual wage labourers: self-employed (own and operate an enterprise) form about 58% of the workforce; casual wage labourers about 20%; regular salaried employees about 22% (NCERT §6.4, p. 97). Self-employment is the largest category for both sexes; casual wage work is the second-largest source for women; regular salaried jobs are dominated by men (21% vs 16% for women) (NCERT §6.4, Chart 6.1, p. 97).
• Rural vs urban status mix: self-employed dominate in rural areas (65%); urban areas have a more balanced split between self-employment (40%) and regular salaried jobs (48%), reflecting urban enterprises' demand for regular workers and the predominance of independent cultivation in villages (NCERT §6.4, Chart 6.2, pp. 97–98).
• Industrial divisions: all economic activity is divided into eight divisions — (i) Agriculture, (ii) Mining and Quarrying, (iii) Manufacturing, (iv) Electricity, Gas and Water Supply, (v) Construction, (vi) Trade, (vii) Transport and Storage, (viii) Services. These are grouped into three sectors — primary [i, ii], secondary [iii, iv, v] and service/tertiary [vi, vii, viii] (NCERT §6.5, p. 99).
• Sectoral distribution of workforce (2023-24): Primary 46.1%, Secondary 24.1%, Tertiary 29.8% of all workers; in rural India the primary sector is 59.8%, in urban India the tertiary sector is 60.9%; the female workforce is concentrated in the primary sector (64.4%) (NCERT §6.5, Table 6.2, pp. 99–100).
• Growth of employment and GDP — jobless growth: during 1950–2010, GDP grew faster than employment; employment growth never exceeded about 2% and from the late 1990s it started declining further, widening the gap with GDP growth. Producing more goods and services without generating employment is called jobless growth (NCERT §6.6, pp. 100–101).
• Trends in employment pattern (1972-73 to 2023-24): share of primary sector fell from 74.3% to 46.1%; secondary rose from 10.9% to 24.1%; services rose from 14.8% to 29.8%. Status-wise: self-employed 61.4%→58.4%, regular salaried 15.4%→21.7%, casual wage 23.2%→19.9% (with a peak of 31.8% in 1993-94). The shift from self-employment and regular salaried work towards casual wage work is called casualisation of workforce (NCERT §6.6, Table 6.3, p. 102).
• Formal vs informal sector: public-sector establishments and private establishments employing 10 or more hired workers are the formal/organised sector; all others form the informal/unorganised sector. Formal sector workers enjoy social security, higher earnings and can form unions; informal workers (small farmers, agricultural labourers, small enterprises, non-farm casual labourers working for multiple employers) do not (NCERT §6.7, p. 103).
• Scale of informalisation: in 2019-20, of about 535 million workers, only about 59 million (≈11%) were in the formal sector — the remaining ≈89% were informal. In 2011-12, women formed about one-sixth of the formal sector workforce (Box 6.1) and about 20% of formal vs 30% of informal sector workers were women (NCERT §6.7, Chart 6.4, p. 104).
• Ahmedabad case (Box 6.2): in the early 1980s textile mills across India began closing; in Ahmedabad about 80,000 permanent and over 50,000 non-permanent textile workers lost jobs over a decade and slid from the secure middle class into the informal sector, leading to alcoholism, suicides and child labour. ILO efforts pushed the Indian government towards modernising informal enterprises and extending social security (NCERT §6.7, p. 105).
• Definition of unemployment (NSO): unemployment is a situation in which persons, owing to lack of work, are not working but seek work through employment exchanges, intermediaries, friends, relatives or applications, or express willingness/availability for work at the prevailing conditions. Economists define an unemployed person as one who is not able to get employment of even one hour in half a day (NCERT §6.8, p. 107).
• Three sources of unemployment data: Reports of the Census of India; NSO's Reports of Employment and Unemployment Situation and Annual Reports of the Periodic Labour Force Survey (PLFS); and Directorate General of Employment and Training data of registrations with employment exchanges (NCERT §6.8, p. 107).
• Three types of unemployment:
• Open unemployment — people actively seeking but not getting work.
• Disguised unemployment — more persons engaged in an activity than required (e.g. five workers plus family on a 4-acre farm that needs only two); a late-1950s study found about one-third of Indian agricultural workers disguisedly unemployed.
• Seasonal unemployment — common in agriculture, where workers find no work for several months a year and migrate to urban areas during the lean season (NCERT §6.8, pp. 107–108).
• Government and employment generation: the government generates employment directly by employing people in departments and running PSUs, industries, hotels and transport companies; and indirectly because raised PSU output (e.g. a government steel company) raises output and jobs in linked private firms (NCERT §6.9, pp. 108–109).
• MGNREGA 2005: the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 promises 100 days of guaranteed wage employment to all rural households whose adult members volunteer to do unskilled manual work (NCERT §6.9, p. 108).
• Employment generation programmes: aim at poverty alleviation through employment plus services in primary health, primary education, rural drinking water, nutrition, asset-creation assistance, community asset development through wage employment, housing and sanitation construction, rural roads and wasteland/degraded-land development (NCERT §6.9, p. 109).
• Conclusion — outsourcing and home as workplace: new jobs are emerging mostly in the service sector; outsourcing — where big firms close specialist departments and hand piecemeal work to small enterprises or individuals, sometimes abroad — has made the home a workplace for many but increased informality and reduced social security (NCERT §6.10, p. 109).
• Historical baseline: at independence, India's workforce was about 130 million, with over 70% in agriculture; literacy was below 20% and the female WPR was below 20% as well. Industrialisation and education together have rebalanced the workforce since (NCERT §6.2 contextual, p. 94).
• Indian data — rural-urban worker split: of the 545 million workers in 2022-23, about 471 million (≈86%) are in rural areas, leaving roughly 75 million in urban areas — a concentration that explains the rural focus of employment policy (NCERT §6.2, pp. 94–95).
• Indian data — gender concentration: women constitute about 23% of total workers; their participation is highest in agriculture (over 64% of female workers) and lowest in formal manufacturing and services. The 2017–18 PLFS recorded India's female LFPR at one of the lowest in major economies — below 25% (NCERT §6.3, p. 96, contextual).
• Why female WPR is under-measured: a great deal of women's economic contribution — cooking, child care, kitchen gardening, livestock care, fuel collection, water collection — is treated as "domestic" and not counted in GDP or in worker statistics. The NSO's Time-Use Survey 2019 was India's first attempt to quantify this hidden work (NCERT §6.3, p. 96, contextual).
• Sectoral shift in detail (Table 6.3, p. 102): between 1972–73 and 2023–24, the primary sector's workforce share fell by about 28 percentage points (74.3 → 46.1), the secondary sector's rose by 13 points (10.9 → 24.1), and the tertiary sector's rose by 15 points (14.8 → 29.8). This is the classic three-sector transformation but at a slower pace than China's or East Asia's experience.
• Casualisation profile (Table 6.3): casual wage employment rose from 23.2% in 1972–73 to a peak of 31.8% in 1993–94, then fell to 19.9% by 2023–24 — reflecting both rising self-employment in agriculture and rising regular-salaried jobs in services (NCERT §6.6, p. 102). The rise in regular salaried from 15.4% to 21.7% in the same window is a positive sign within the formalisation story.
• GDP-vs-employment elasticity: with GDP growing at 6–8% but employment growing at under 2%, India's employment elasticity of GDP is about 0.2–0.3 — meaning every 1% GDP growth produces only 0.2–0.3% employment growth. This is the arithmetic of jobless growth (NCERT §6.6, p. 101).
• Formal sector small-share data: of 535 million workers in 2019–20, only 59 million were formal — a formal-sector ratio of just 11%, one of the lowest among major economies; about 89% of workers therefore lack pension, paid leave, gratuity or written contracts (NCERT §6.7, p. 104).
• Why informalisation matters: informal workers are excluded from collective bargaining (no recognised unions), from labour-law protections (no minimum wage enforcement), from social security (no PF, ESI, gratuity), and from formal credit (no payslip → no bank loan). The Ahmedabad textile case shows how a single sectoral shock pushes thousands from formal middle-class to informal poverty (NCERT §6.7, p. 105).
• MGNREGA scale: in a typical year MGNREGA provides employment to over 5 crore rural households, with female participation often above 50% — making it the world's largest public-works employment-guarantee programme. Funding is via Central Government with State implementation; wages are paid via Jan-Dhan-linked direct benefit transfer (NCERT §6.9, p. 108, contextual).
• Five flagship rural job programmes (historical): Integrated Rural Development Programme (IRDP, 1978), Jawahar Rozgar Yojana (JRY, 1989), Employment Assurance Scheme (EAS, 1993), Sampoorna Grameen Rozgar Yojana (SGRY, 2001), and MGNREGA (2005) — each progressively expanded the employment-guarantee idea (NCERT §6.9 contextual, p. 109).
• Disguised unemployment data: NCERT cites a study from the late 1950s finding that roughly one-third of Indian agricultural workers were disguisedly unemployed — i.e., could be withdrawn from farming without reducing output. This is the empirical foundation of the Lewis dual-economy model that motivated India's industrialisation drive (NCERT §6.8, p. 107).
• Open unemployment data: PLFS 2023–24 reports India's overall unemployment rate at about 3.2%, with urban youth (15–29 years) unemployment near 16% and rural at about 7%. These are conservative figures by current-status weekly definitions (NCERT §6.8, p. 107, contextual).
• PLFS methodology: launched in 2017–18 by the NSO, the PLFS publishes annual rural-urban estimates and quarterly urban estimates of employment, unemployment, LFPR and WPR. It replaced the quinquennial NSSO employment-unemployment rounds, providing more timely labour-market data (NCERT §6.8, p. 107).
• The gig and platform economy (post-NCERT contextual): rise of Ola, Uber, Zomato, Swiggy, Urban Company has produced a new category of "platform workers" who are technically self-employed but economically dependent on a single platform — a hybrid that does not fit the three-status classification and is being legally framed under the Code on Social Security 2020.

2.2 Definitions to memorise

2.3 Diagrams / processes to remember

• Table 6.1 — Worker–Population Ratio in India, 2023-24: Men 56.4 / Women 30.7 / Total 43.7; rural 45.6 vs urban 38.9; the largest gender gap is in urban areas (men 56.4 vs women 20.7) (p. 95).
• Chart 6.1 — Distribution of Employment by Gender: Male workers — Self-employed 54%, Regular salaried 21%, Casual 25%. Female workers — Self-employed 67%, Regular salaried 16%, Casual 17% (p. 97).
• Chart 6.2 — Distribution by Region: Urban — Self-employed 40%, Regular 48%, Casual 12%. Rural — Self-employed 65%, Regular 13%, Casual 22% (p. 97).
• Table 6.2 — Workforce by Industry, 2023-24: Primary 46.1%, Secondary 24.1%, Tertiary 29.8% overall; female workforce share in primary 64.4% (p. 99).
• Chart 6.3 — Growth of Employment and GDP, 1951–2023: jobless growth illustrated — GDP rises sharply while employment growth remains below 2% and declines after the late 1990s (p. 101).
• Table 6.3 — Trends in Employment Pattern, 1972-2024: Primary 74.3→46.1%, Secondary 10.9→24.1%, Services 14.8→29.8%; Self-employed 61.4→58.4%, Regular salaried 15.4→21.7%, Casual 23.2→19.9% (p. 102).
• Chart 6.4 — Formal vs Informal workers, 2011–2020: 2011-12 — 30 crore informal, 4.4 crore formal; 2019-20 — 47.6 crore informal, 5.9 crore formal (p. 104).
• Worker classification flow: economic activity → worker (self-employed / regular salaried / casual wage) → sector (primary / secondary / tertiary) → formality (formal / informal) → policy lens (employment generation programmes, MGNREGA).

2.5 Key formulas / structural ratios

2.4 Common confusions / NTA trap points

• Formal sector cut-off is 10 hired workers, not 20. A private establishment employing exactly 10 hired workers IS formal; an establishment with 4 or 9 hired workers is informal (NCERT §6.7, p. 103).
• Disguised vs seasonal unemployment: disguised = surplus workers visible in the same activity all year (typically family farms); seasonal = workers idle only in certain months (agricultural lean season). NTA loves to swap these (NCERT §6.8, pp. 107–108).
• Self-employment is the LARGEST status, not regular salaried: about 58% of workers are self-employed; together regular salaried + casual wage account for less than half (Recap, p. 110).
• Worker definition includes the unpaid helper and the temporarily absent: a farmer's wife who works in the family shop, a student helping on the family farm, and a worker on festival leave are all workers (NCERT §6.2, p. 94).
• WPR is rural > urban, but the female-male gap is largest in urban areas: rural total WPR 45.6 vs urban 38.9; urban female WPR is only 20.7 vs urban male 56.4 (Table 6.1, p. 95).
• Casualisation ≠ Informalisation: casualisation refers to the shift in status (towards casual wage work); informalisation refers to the shift in sector (towards the unorganised sector).
• Eight industrial divisions, not seven: Agriculture, Mining, Manufacturing, Electricity-Gas-Water, Construction, Trade, Transport-Storage, Services. NTA often drops one to test recall.
• Primary sector includes Mining and Quarrying, not Construction (which is secondary).
• MGNREGA covers only RURAL households, not urban; only unskilled manual work; only up to 100 days.
• Direct vs indirect employment generation: direct = government as employer; indirect = government output raising private-sector demand.
• Outsourcing brings work to the home but reduces social security — both halves matter.
• PLFS is the current annual employment survey, not NSSO rounds.