Key takeaways
- A worker is anyone in an economic activity; the worker-population ratio was about 40 in 1999-2000.
- Workers are self-employed, regular salaried or casual; casual labour is the most vulnerable.
- The farm share of jobs fell from 74 to 60 per cent, but about 93 per cent of workers were informal.
- Jobless growth is output growth without enough jobs.
- Open, seasonal and disguised unemployment all occur.
This is Chapter 7 of the Indian Economic Development chapter list for Class 11 Economics. It builds on Chapter 4 and Chapter 6.
7.1Workers and Employment
A worker is anyone engaged in an economic activity, whether self-employed, hired or helping on a family enterprise, including those temporarily absent through illness or festivals. Economic activities are those that add to gross national product. India had about 400 million workers in 1999-2000, three-quarters in rural areas, and about 70 per cent were men.
People work for earning a living, for a sense of self-worth and to relate to others. Gross domestic product is the money value of goods and services produced in a country in a year; adding the net earnings from foreign transactions gives gross national product. Activities that contribute to it are economic activities, and everyone engaged in them is a worker.
Women do much unpaid work, such as cooking, fetching water and fuelwood, and unpaid farm labour on family land, which is not counted as work. This narrow definition leads to under-recording of women workers. Economists argue that these women should also be called workers.
7.2Participation of People in Employment
The worker-population ratio is the number of workers divided by population, multiplied by 100. It shows the share of people actively contributing to production. In 1999-2000 about 40 of every 100 Indians worked; the ratio was higher in rural areas, about 42, than in urban areas, about 34, and much lower for women, especially urban women at about 14.
WPR = (number of workers ÷ population) × 100
Rural people have fewer resources and less access to education and training, so more of them enter work early, while urban people study longer and look for jobs matching their skills. Rural women participate more (about 30 per 100) than urban women (about 14), partly because many family chores and farm tasks go unrecognised, and families with high male incomes discourage women from taking jobs.
7.3Self-Employed and Hired Workers
Workers are classified by status. The self-employed own and run their enterprise and make up just over half the workforce. Regular salaried employees are hired and paid regularly and form about 15 per cent. Casual wage labourers are hired day to day or for short spells and are about 33 per cent, the most vulnerable group.
| Category | Who | Example |
|---|---|---|
| Self-employed | Owns and operates an enterprise for a livelihood | A cement shop owner, a farmer on own land |
| Regular salaried employee | Hired by an employer and paid regularly | A civil engineer in a construction company |
| Casual wage labourer | Casually hired, paid for work done | A construction worker, a farm labourer |
Casual wage work is a larger source of work for women (37 per cent of female workers) than for men; regular salaried jobs employ 18 per cent of men but only 8 per cent of women, since such jobs need skills and literacy. Self-employed and casual workers are more common in rural areas, where most people cultivate their own plots, while urban areas have more regular salaried jobs.
Why status matters for the quality of work
The three categories differ in security and income. A regular salaried worker usually has a contract, a fixed pay date and, often, benefits such as provident fund and leave. A casual wage labourer is paid only for the days worked and has no assurance of work tomorrow. A self-employed person earns an uncertain income that depends on the market and on the capital and skills available, and may range from a prosperous shop owner to a roadside vendor.
For this reason, economists look not only at how many people have work but at the share in each status. A shift from regular and self-employed work towards casual work signals falling quality of employment even if more people are employed.
7.4Employment by Sector and Changing Structure
Economic activities fall into primary, secondary and service sectors. As an economy develops, workers shift out of agriculture towards industry and services. In India the primary sector’s share of the workforce fell from about 74 per cent in 1972-73 to 60 per cent in 1999-2000, with secondary rising to 16 per cent and services to 24 per cent.
In 1999-2000 more than three-fourths of rural workers were in agriculture and mining, while about 60 per cent of urban workers were in services. More than three-fourths of women workers were in the primary sector against about half of men. Between 1972-73 and 1999-2000 workers also moved from self-employment and regular salaried work to casual work, a trend called casualisation.
Growth of employment and jobless growth
Between 1960 and 2000 employment grew at a steady 2 per cent a year, while GDP growth was higher but fluctuated. In the late 1990s employment growth fell to levels last seen in the early planning years, widening the gap with GDP growth. This means more goods and services were produced without creating jobs, which economists call jobless growth.
7.5Informalisation of the Workforce
The formal (organised) sector comprises public sector establishments and private establishments with ten or more hired workers; everything else is the informal (unorganised) sector. About 93 per cent of Indian workers were in the informal sector in 1999-2000. Informal workers lack regular income, protection from regulation and social security, and can be dismissed without compensation.
| Feature | Formal sector | Informal sector |
|---|---|---|
| Size of workforce (1999-2000) | About 28 million (7 per cent of about 400 million) | About 93 per cent |
| Employer | All public sector and private units with 10 or more hired workers | Small units and the self-employed with no hired workers |
| Protection | Labour laws, trade unions, provident fund, pension, maternity benefit | Little regulation; no assured benefits |
| Women | About 17 per cent of formal workers (4.8 million of 28 million) | Majority of women workers |
| Technology and accounts | Often modern and recorded | Often outdated; no accounts |
The public sector employed about 20 million of the 28 million formal workers in 2001, and reforms of the 1990s reduced formal jobs. In Ahmedabad, the closure of textile mills pushed about 80,000 permanent and 50,000 non-permanent workers into the informal sector, bringing poverty and social distress. Since the 1970s, attention has turned to the informal sector, supported by the ILO, with efforts to modernise it and extend social security to its workers.
7.6Unemployment
A person is unemployed when, lacking work, they are seeking or willing to take work at the prevailing wage. India has open, seasonal and disguised unemployment. Open means looking for work and not finding any, seasonal arises when farm work is available only part of the year, and disguised means more people work on a farm than it needs.
| Kind | Meaning | Example |
|---|---|---|
| Open | Willing to work at the going wage but unable to find work | People waiting at labour markets or registering at employment exchanges |
| Seasonal | Work only in some months | Farm labour out of season; migrants who return when the rains begin |
| Disguised | More workers than needed; removing some would not cut output | Five hired workers and family members on a farm that needs two |
A study in the late 1950s found about one-third of agricultural workers to be disguisedly unemployed. Data come from the Census, the NSSO’s employment and unemployment surveys, and employment exchange registrations. Because very poor people cannot remain without work for long, they often take unpleasant or unsafe jobs, so India’s problem shows as low-quality work as much as open unemployment.
Why unemployment figures differ across sources
Estimates of unemployment come from the Census, from household surveys and from employment exchange registrations, and they differ. Exchanges record only those who register, which excludes many job seekers, and surveys depend on how work and seeking work are defined and over what period. A person who works a few days a week may be counted as employed in one survey and as under-employed in another.
Always state which source and which definition a figure comes from.
7.7Government and Employment Generation
Governments create jobs directly by employing people and running enterprises, and indirectly when growth of government enterprises raises output and jobs in private firms that supply or buy from them. Programmes such as the National Rural Employment Guarantee Act, 2005 promise assured wage work, with the aim of improving the quality as well as the number of jobs.
The Union and state governments hire for administration and run industries, hotels and transport. When a public steel company expands, suppliers and users raise output and jobs, which is indirect generation. The Act of 2005 promises 100 days of assured wage employment to rural households whose adult members volunteer for unskilled manual work. Employment policy also aims at safer, more satisfying work, not only at more jobs.
Worked Examples
Example 1: Worker-population ratio
- Given
- A district has a population of 40 lakh, of whom 15.8 lakh are workers.
- Formula
- WPR = workers ÷ population × 100
- Steps
- 15.8 ÷ 40 × 100 = 39.5.
- Answer
- The worker-population ratio is 39.5, close to India’s 1999-2000 figure of about 40.
Example 2: Size of the formal sector
- Given
- India had about 400 million workers, of whom 28 million were in the formal sector, and 4.8 million of those were women.
- Formula
- Share = part ÷ whole × 100
- Steps
- 28 ÷ 400 × 100 = 7. 4.8 ÷ 28 × 100 = 17.1. Informal = 100 − 7 = 93.
- Answer
- 7 per cent of workers were formal and 93 per cent informal; women were about 17 per cent of the formal workers.
Example 3: Unemployment rate
- Given
- A town has a labour force of 5 lakh, of whom 35,000 are unemployed.
- Formula
- Unemployment rate = unemployed ÷ labour force × 100
- Steps
- 35,000 ÷ 5,00,000 × 100 = 7.
- Answer
- The unemployment rate is 7 per cent.
Example 4: Jobless growth
- Given
- GDP grows 6 per cent a year while employment grows 1 per cent.
- Formula
- Employment elasticity = employment growth ÷ GDP growth
- Steps
- 1 ÷ 6 = 0.17.
- Answer
- Each 1 per cent of GDP growth creates only 0.17 per cent more jobs: growth is largely jobless.
Example 5: Disguised unemployment
- Given
- A four-acre farm needs the farmer and two workers. It actually employs the farmer, five hired workers, his wife and one child.
- Formula
- Surplus workers = employed − needed
- Steps
- Employed = 1 + 5 + 1 + 1 = 8. Needed = 3. Surplus = 5.
- Answer
- Five workers are disguisedly unemployed; removing them would not reduce output.
Common Mistakes
- Saying only salaried people are workers. The self-employed and unpaid family helpers are workers too.
- Treating a low urban worker-population ratio for women as proof of idleness. Much of their work is unrecorded.
- Confusing the formal sector with the public sector. Large private firms with 10 or more workers are formal too.
- Calling disguised unemployment visible. The workers are on the job but add nothing to output.
10 Important Questions for Class 11 Board and School Examinations
Questions are written in original words. Marks are shown beside each question.
Q1The formal sector includes private establishments with at least (a) 5 (b) 10 (c) 20 (d) 50 hired workers 1 mark · MCQ
The correct option is (b) 10 hired workers, plus all public sector establishments.
Q2Employment that does not reduce output when some workers leave is called (a) seasonal (b) open (c) disguised (d) frictional unemployment 1 mark · MCQ
The correct option is (c) disguised unemployment.
Q3Assertion (A): Casual wage labourers are the most vulnerable workers. Reason (R): They have no job security or regular income. Which is correct? 1 mark · Assertion-reason
Both A and R are true, and R explains A.
Q4Define the worker-population ratio. What does it tell us? 3 marks
The worker-population ratio is the number of workers divided by the population, multiplied by 100.
It shows the share of the population actively contributing to production, so a higher ratio means greater participation. In 1999-2000 it was about 40 for India, about 42 in rural areas and about 34 in urban areas, and much lower for women. It is the starting point for studying employment, though it does not show the quality of work.
Q5Distinguish between self-employed, regular salaried and casual wage workers. 3 marks
Self-employed workers own and run their enterprise, regular salaried employees are paid regularly by an employer, and casual wage labourers are casually hired and paid for the work done.
- Self-employed: about half of the workforce, such as a shop owner.
- Regular salaried: about 15 per cent, such as a civil engineer in a company.
- Casual wage labourers: about 33 per cent, such as construction workers; they are the most vulnerable because they lack job security.
Q6Why do women have a lower worker-population ratio, especially in urban areas? 4 marks
Women’s worker-population ratio is low because much of their work is unpaid and not counted, and many families discourage them from working.
- Cooking, fetching water and fuelwood, and work on family farms without payment are not recognised as productive work.
- Where men earn high incomes, families discourage women from taking jobs.
- Salaried jobs need skills and literacy, which fewer women have.
- Only about 14 of every 100 urban women work, against about 30 in rural areas.
This narrow definition of work leads to under-counting of women workers.
Q7What is informalisation of the workforce? Why is it a concern? 4 marks
Informalisation is the growing share of workers in the informal sector, where they lack regular income, protection and benefits.
- The formal sector has public sector units and private units with ten or more hired workers; everything else is informal.
- About 93 per cent of Indian workers were informal in 1999-2000.
- Informal workers have no secure income, can be dismissed without compensation and lack social security.
- In Ahmedabad, the closure of textile mills pushed about 80,000 permanent workers into informal work and poverty.
Reforms of the 1990s reduced formal sector employment further.
Q8Explain the types of unemployment in India with examples. 6 marks
India has open, seasonal and disguised unemployment.
- Open unemployment: people willing to work at the going wage but unable to find work, as with people waiting at labour markets or registering at employment exchanges.
- Seasonal unemployment: farm work is available only in some months, so workers migrate to cities and return when the rains begin.
- Disguised unemployment: more workers than needed, such as five hired workers and family members on a farm that needs two; a late-1950s study put about one-third of farm workers in this group.
- Data come from the Census, the NSSO surveys and employment exchanges.
Very poor people cannot stay unemployed long, so they accept unpleasant or unsafe jobs.
These forms show that India’s employment problem is as much about low-quality work as about lack of work.
Q9What is jobless growth? Why is it a problem and how can the government respond? 6 marks
Jobless growth is a rise in output without a matching rise in employment.
- From 1960 to 2000 employment grew at about 2 per cent a year, while GDP growth was higher but uneven.
- In the late 1990s employment growth fell to the level of the early planning years, widening the gap with GDP.
- Workers shift into casual and informal work, so security and quality of jobs fall.
- The government can create jobs directly, by employing people and running enterprises, and indirectly, when output of public enterprises raises demand for private suppliers.
- The Employment Guarantee Act of 2005 promises 100 days of wage work to rural households.
Labour-intensive industries and small enterprises can also help.
So the question is not only how many jobs are created but of what kind.
Q10A country has 50 crore people, of whom 20.5 crore work. The formal sector has 2.5 crore workers. Find the worker-population ratio and the formal sector’s share of workers. 4 marks · Numerical
The worker-population ratio is 41 and the formal sector’s share is about 12.2 per cent.
Steps: 20.5 ÷ 50 × 100 = 41; 2.5 ÷ 20.5 × 100 = 12.2.
10 Points for State PSC and UPSC Aspirants
- The Periodic Labour Force Survey (PLFS), started by the NSO in 2017, reports the labour force participation rate, worker-population ratio and unemployment rate; check its latest release for current figures.Why it matters: India’s official source for employment data.Source: MoSPI
- LFPR is the share of the population that is working or seeking work; WPR counts only those working; unemployment rate is the unemployed as a share of the labour force.Why it matters: learn the three definitions.Source: MoSPI
- The Unorganised Workers’ Social Security Act, 2008 provides welfare schemes for informal workers; the e-Shram portal (2021) registers them.Why it matters: informal sector policy.Source: Ministry of Labour and Employment; PIB
- The four labour codes (on wages, industrial relations, social security, occupational safety) consolidate 29 central labour laws; check their implementation status.Why it matters: the major recent labour reform.Source: Ministry of Labour and Employment; PIB
- The MGNREGA is a demand-driven wage employment entitlement of 100 days per rural household; verify whether it has been amended before quoting it.Why it matters: India’s largest public works scheme.Source: Ministry of Rural Development; PIB
- PMEGP (2008) gives credit-linked subsidy for self-employment ventures, and MUDRA loans (2015) support micro enterprises.Why it matters: self-employment support.Source: PIB; Ministry of MSME
- The National Career Service portal (2015) modernised the employment exchange system.Why it matters: the digital successor of employment exchanges.Source: Ministry of Labour and Employment
- The ILO’s 1972 Kenya mission helped popularise the idea of the informal sector.Why it matters: an origin of the concept.Source: International Labour Organization
- Structural, frictional, cyclical, seasonal and disguised unemployment are the standard types; India mainly has structural, seasonal and disguised forms.Why it matters: typology for mains answers.Source: NCERT; standard economics textbooks
- Jobless growth and casualisation are recurring themes in Economic Survey chapters on employment.Why it matters: use them in analysis questions.Source: Economic Survey
These are revision notes, not official predictions of exam content.
Quick Revision
- Worker = anyone in an economic activity.
- WPR = workers ÷ population × 100 (about 40 in 1999-2000).
- Status: self-employed 52%, casual 33%, regular 15%.
- Primary share fell from 74% to 60% (1972-73 to 1999-2000).
- Formal sector about 7%; informal 93%.
- Unemployment: open, seasonal, disguised.
- Jobless growth: output rises without jobs.
Related Glossary Terms and Chapters
Glossary:
Worker-population ratioInformal sectorDisguised unemploymentCasualisationJobless growth
Related chapters: Poverty, closely linked to the nature of employment; Rural Development, for diversification into non-farm work.
Sources
- NCERT textbooks: Indian Economic Development, Class 11, National Council of Educational Research and Training. Syllabus reference. Accessed 23 October 2026.
- Ministry of Statistics and Programme Implementation (MoSPI), Government of India. Accessed 23 October 2026.
- Ministry of Labour and Employment, Government of India. Accessed 23 October 2026.
- Press Information Bureau, Government of India. Accessed 23 October 2026.
- Economic Survey, Ministry of Finance, Government of India. Accessed 23 October 2026.
About this page
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Syllabus year 2026-27 · Last updated