Employment: Growth, Informalisation and Other Issues – Class 11 Economics notes, important questions and MCQs

Chapter overview

Employment gives people income, dignity and a sense of self-worth. In India, most workers are self-employed or casual wage workers, and the majority work in the informal sector without job security or social security. Rapid GDP growth has not always created enough jobs, a situation called jobless growth, and different types of unemployment exist.

Workers and their status

• A worker is anyone engaged in an economic activity that contributes to GDP.
• Worker-population ratio = (number of workers ÷ total population) × 100; it shows the share of people working.
• Workers may be self-employed, regular salaried employees or casual wage labourers; self-employment is the largest category in India.

Formal and informal sectors

• The formal sector includes all public sector establishments and private establishments with 10 or more hired workers; workers get job security and social security benefits.
• The informal sector includes small enterprises, farm workers and casual labour, without regular wages or protection.
• Informalisation means an increasing share of workers in the informal sector.

Unemployment and policy

• Types of unemployment: open unemployment, disguised unemployment (more people working than needed, common in agriculture) and seasonal unemployment.
• Jobless growth means GDP grows without a proportionate rise in employment.
• Government programmes such as MGNREGA (2005) guarantee 100 days of wage employment a year to rural households, along with self-employment and skill programmes.

Key terms

Worker-population ratio

the percentage of the population that is working

Formal sector

public establishments and private firms with 10 or more hired workers, offering job and social security

Informal sector

small enterprises and casual work without job security or social security

Disguised unemployment

a situation where more people work than needed, so some add nothing to output

Jobless growth

economic growth without a corresponding increase in employment

Important questions with answers

Quick revision

• Self-employed, regular, casual workers.
• Formal vs informal sector; informalisation.
• Open, disguised, seasonal unemployment.
• Jobless growth; MGNREGA 100 days.

Exam tips

• Remember the three categories of workers and which is largest in India.
• Use the family farm example to explain disguised unemployment.

Practice MCQs

1. People engaged in activities that contribute to GDP are called

   1. dependents
   2. workers
   3. students
   4. retirees
   Show answer

   Answer: (b) workers. Their work adds to output.

2. The largest category of workers in India is

   1. regular salaried
   2. self-employed
   3. casual wage labourers
   4. government employees
   Show answer

   Answer: (b) self-employed. Many are farmers and small traders.

3. MGNREGA guarantees rural households wage employment of

   1. 50 days
   2. 100 days
   3. 200 days
   4. 365 days
   Show answer

   Answer: (b) 100 days. It was passed in 2005.

4. A private firm is in the formal sector if it has at least

   1. 2 hired workers
   2. 10 hired workers
   3. 100 hired workers
   4. 1,000 hired workers
   Show answer

   Answer: (b) 10 hired workers. Workers there get social security.

5. When more family members work on a farm than needed, it is

   1. open unemployment
   2. frictional unemployment
   3. disguised unemployment
   4. full employment
   Show answer

   Answer: (c) disguised unemployment. Removing some would not reduce output.

6. Unemployment during certain months of the year in agriculture is

   1. technological unemployment
   2. structural unemployment
   3. disguised unemployment
   4. seasonal unemployment
   Show answer

   Answer: (d) seasonal unemployment. Farm work is not needed all year.

7. Growth of GDP without a proportionate increase in jobs is called

   1. inflation
   2. full employment
   3. jobless growth
   4. informalisation only
   Show answer

   Answer: (c) jobless growth. Output rose using fewer workers.

8. Informalisation of the workforce means

   1. more workers getting job security
   2. all jobs moving to government
   3. a rising share of workers in the informal sector
   4. higher pensions
   Show answer

   Answer: (c) a rising share of workers in the informal sector. Fewer workers have protection.