Unemployment

29 in India

CHAPTER OUTLINES
• Concept, Meaning, and Types
of Unemployment A-92
• Nature of Unemployment in India A-93
• Factors Responsible for Unemployment A-95
• Steps to Reduce Unemployment A-97
• Government Policy Measures to Reduce
Unemployment A-99
• Status of Employment in India A-100
• Gender Dimension of Employment A-106
• McKinsey Report A-113

CONCEPT, MEANING, AND TYPES

OF UNEMPLOYMENT
Concept of Unemployment
The ugly calamity that The ugly calamity that can affect the life of a nation is the ‘problem of unemployment’.
can affect the life of a The unemployment in our country is quite different from that of advanced countries
nation is the ‘problem
of unemployment’. The of the world. The well-developed countries like the United States and England
unemployment in our usually suffer from a frictional or cyclical unemployment, but in the case of India it
country is quite different
is a permanent feature. In fact, it has become a multi-dimensional phenomenon and
from that of advanced
countries of the world. in recent years, it has assumed alarming proportions. In the opinion of late President
V. V. Giri, ‘unemployment’ is the ‘problem of problems’. Unemployment has made
our youths ‘nexalites’. Educated youth are deprived of all deserving comforts and
their growing discontent has given scope for the speedy growth of ‘nexalism’.
Unemployment in India is of a complex nature. In a sense, it is a colossal waste of
human resources which further hurdles the tempo of economic development of a
country. It, thus, calls for a remedial action at the earliest possible.

Meaning of Unemployment
In a common sense, In a common sense, unemployment is a situation characterised when any one is not
unemployment is a gainfully employed in a productive activity. It means that an unemployed person is
situation characterised
when any one is not the one who is seeking any work for wages but is unable to find any job suited to his
gainfully employed in a capacity. From this view, one can easily make an idea of voluntarily and involuntarily
productive ­activity.
unemployed. Obviously, in an economy, there is a section of working population who
are not interested in any gainful job and, still, others who are interested in employment
A-92

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 Unemployment in India | A-93

at wage rates higher than those prevailing in the labour market. Professor Keynes calls
this type of labour force as voluntarily unemployed. According to him, involuntary
unemployment refers to a situation in which though people are ready to accept work
at prevailing wage rate they fail to get the same wage.

Types of Unemployment
Broadly, unemployment is of many types like (i) cyclical, (ii) frictional, (iii) techno-
logical, (iv) seasonal, (v) structural, (vi) voluntary, (vii) involuntary, (viii) disguised,
and (ix) casual. But in most of the underdeveloped countries, unemployment can be
of three main forms. They are (a) open, (b) disguised, and (c) under.
Let us see each of them in detail as follows:
(a) Open Unemployment: Under this category, unemployment refers to a Open unemployment
situation wherein a large labour force does not get employment opportunities refers to a situation
wherein a large labour
that may yield a regular income. In a sense, workers are willing to work and force does not get
able to work, but they are not getting any job. This type of unemployment is employment opportunities
that may yield a regular
the result of a lack of complementary resources, especially capital. The rate income.
of capital accumulation lags behind the rate of population growth. This type
of unemployment can be identified as ‘structural unemployment’.
(b) Disguised Unemployment: Basically, disguised unemployment is associated Disguised unemployment
with the agricultural, underdeveloped countries like India. Still, it is also suitable is associated with
the agricultural,
to industrially developed countries which are hit by cyclical unemployment. underdeveloped countries
However, it implies to that unemployment that is not open for everyone and like India.
remains concealed. In fact, such employment is a work-sharing device, that
is, existing work is shared by a large number of workers. In such a situation,
even if many workers are withdrawn the same work can be continued by few
workers. The contribution of such labourers to production is zero or near to
zero. In Indian villages, this form of unemployment is a common feature.
(c) Underemployment: This form of unemployment can be defined in two
ways. They are (a) a situation in which a labourer does not get the type of A situation in which a
work he is capable of doing though he has the abilities and can yield larger labourer does not get the
type of work he is capable
income; but he is denied the opportunity due to lack of suitable jobs and of doing though he has
(b) a situation in which a labourer does not get sufficient work to absorb the abilities and can yield
larger income; but he is
him for the total length of working hours a day. Some time, the second form denied the opportunity due
of unemployment is known as ‘seasonal unemployment’. The first form of to lack of suitable jobs.
underemployment can be explained with the help of an example. ­Suppose
a degree-holding engineer wants an appropriate job, but he starts as an
operator, then, he may be said as ‘underemployed’. He may be deemed as
working and earning in a production activity but, in reality, he is not working
to his full capability. Thus, he is in the state of underemployment.
In rural areas, about
70 per cent of the
population are directly
NATURE OF UNEMPLOYMENT IN INDIA or indirectly dependent
on the agricultural
sector. This situation
The Indian experience of the relationship between employment and development is leads to the problem of
vastly different from that in the developed countries. The unemployment in those disguised as well as rural
unemployment.
countries is basically temporary and every one gets the employment in the course

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 A-94 | Chapter 29

of time. This happens due to technological improvements or cyclical fluctuations.

But, here, the tale of unemployment is chronic rather than temporary, which can be
called ‘structural’. It is mainly due to the slow growth of capital formation when
compared to the increase in labour force. A close analysis explains that there is a
negligible change in the occupational structure of the country. Agriculture and allied
occupations were occupying the same position in 2008 as they did in 1931 or even
in 1911. In rural areas, about 70 per cent of the population are directly or indirectly
dependent on the agricultural sector. This situation leads to the problem of disguised
as well as rural unemployment. For convenience, we shall classify unemployment as
1. Disguised unemployment or Rural unemployment
2. Industrial unemployment or Urban unemployment
3. Educated unemployment or White-collar unemployment

Disguised Unemployment or Rural

Unemployment
Both unemployment and underemployment exist side by side in the rural sector
and it is difficult to make a distinction between the two. In rural areas, it exhibits in
seasonal and perennial apart from chronic and disguised unemployment. It is due
to increasing heavy pressure on land, decline of handicrafts and village and cottage
industries, backward nature of cultivation, and ­absence of alternative occupations.
This has largely contributed to the problem of unutilised labour or disguised
unemployment in the agricultural sector. In the recent years, the introduction
of agricultural machinery has tended to add more rural unemployed force.
Moreover, a large number of labourers accumulate around primary occupations,
and inelasticity of the occupational structure prevents any movement away
from that position in the period of slack demand. This further leads to seasonal
unemployment and its incidence varies from region to region and even, within the
region over different seasons, depending on climate, cropping pattern, and socio-
Seasonal unemployment economic factors. Therefore, seasonal unemployment is closely associated with
is closely associated the problem of underemployment of manpower. This type of unemployment is
with the problem of
underemployment of estimated between 20 per cent and 30 per cent.
manpower. This type
of unemployment is
estimated between 20 per Industrial Unemployment or Urban
cent and 30 per cent. Unemployment
Industrial unemployment is largely the offshoot of rural unemployment. In the face
Industrial unemployment of increasing pressure of population on land, a mass exodus of population from
is largely the offshoot of rural areas has migrated to the urban areas in search of employment. They are
rural unemployment.
uneducated and unskilled. This type of migration swells the size of labour force in
urban areas and, in turn, adds to the number of unemployed army of labour.

The educational system Educated Unemployment or White-collar

is ill-planned which
provides very little scope
Unemployment
to cater the needs of the In the urban areas, this is the special class that emerged due to mere educational
nation.
facilities in towns. The rate of unemployment is higher among the educated than

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 Unemployment in India | A-95

among the uneducated persons. This is also, perhaps, due to the reason that tertiary
sector could not grow speedily to that extent to which the people are being educated
in the urban areas. The educational system is ill-planned which provides very little
scope to cater the needs of the nation. In 1971, the total educated unemployed
was recorded as 22.9 lakh against its number 5.79 lakh in 1961. In August 1983,
the number of persons registered on the employment exchange was 211 lakh and
further, on 31 December 1985, its number had increased to 262 lakh. They all hanker
after ‘white-collar jobs’, which result in a great scramble for ‘clerical jobs’.

FACTORS RESPONSIBLE FOR

UNEMPLOYMENT
Apparently, the widespread unemployment in the urban as the well as the rural
India is a complex problem caused by many factors. The major causes can be
discussed as follows:

Slow Pace of Growth

The foremost cause of unemployment is the slow pace of growth. The size of The foremost cause of
employment, generally, depends on the level of development to a large extent. unemployment is the slow
pace of growth.
During the phase of planning, our country has made tremendous development in
all sectors but the rate of growth is comparatively very low than the targeted rate.
Thus, employment in adequate number could not be created.

Backward Agriculture
The appalling nature of underdevelopment and unemployment in India is the The appalling nature of
backward ­agriculture. Methods of techniques and organisation of agriculture is underdevelopment and
unemployment in India is
primitive and ­outdated. As a result, agricultural productivity is low per worker and the backward agriculture.
per unit of labour. Nearly, 70 per cent population is directly or indirectly dependent Methods of techniques
and organisation of
on agriculture. Land-holding is uneconomic. Further, agriculture is a seasonal agriculture is primitive and
occupation. Absence of supplementary ­employment opportunities is evident. In outdated.
mid-1960s, India witnessed green revolution but it benefitted the rich farmers and
widened the gulf between the poor and rich farmers. The institutional reforms like
land reforms, consolidation, and ceiling of land-holding and tenancy reforms had
not been in a true spirit due to political and administrative inefficiency and further
non-cooperative attitude of the farmers.

Explosive Population Growth

India is experiencing an explosive population growth since 1951. In fact, the population India is experiencing
an explosive population
increased at a rate of 2.5 per cent annually. Therefore, employment situation has been growth since 1951. In fact,
adversely affected in two ways. Firstly, increasing the number of labour force and the population increased
secondly, reducing the available resources for capital formation. About 90 lakh of at a rate of 2.5 per cent
annually.
new entrants were recorded in the First Plan, 118 lakh in the Second Plan, 170 lakh
in the Third Plan, and 230 lakh in the Fourth Plan. New additions of 650 lakh and
340 lakh were estimated in the Fifth and Sixth Five-Year Plans, respectively. Again, it
was estimated to add 390 lakh of labour force in the Seventh Plan.

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 A-96 | Chapter 29
Although the planning is
in operation since 1951, it
has not contributed to the
solution of the problem.
Underdeveloped
countries are in the grip of
a vicious circle of poverty,
which in turn, greatly
influences the pattern of
employment opportunities
in the country.
In India, capital is scarce
and labour is available in
surplus quantity. Under
these circumstances,
the country should
adopt labour-intensive
techniques of production.
India’s education policy
merely produces clerks
and lower-cadre executives
for the government and
private concerns.
There is a wide scale
of unemployment among
engineers, doctors,
technically trained
persons, and other
technocrats.
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Inadequate and Defective Employment Planning
Still, another cause to the higher growth of job opportunities in the country is the
inadequate and defective job planning. Although the planning is in operation since
1951, it has not contributed to the solution of the problem. It has absolutely neglected
the employment problem and the underrating of human resources. Employment, till
recent times, has not become the integral part of the planning strategy. In fact, very
little has been done to utilise the Nurksian variety of surplus labour in the rural sector.
Poverty
It is a condition where a person is poor. Underdeveloped countries are in the
grip of a vicious circle of poverty, which in turn, greatly influences the pattern of
employment opportunities in the country. Being poor, a person does not make any
gainful use of the existing resources.
More Emphasis on Capital-intensive Techniques
In India, capital is scarce and labour is available in surplus quantity. Under these
circumstances, the country should adopt labour-intensive techniques of production.
But it has been observed that not only in the industrial sector but also in the
agricultural sector, there is a substantial increase of capital rather than labour. In
the case of Western countries, where the capital is in abundant supply, the use of
automatic machines and other sophisticated equipment is justified, whereas in our
country the abundant labour results in a large number of unemployment.
Defective Education System
The education system in our country too has failed to respond to the existing inter-
generation gap. It is the same old system, which Macaulay had introduced during the
colonial period. It simply imparts general and literary education, devoid of any practical
content, in fact; and no sincere efforts have been made to develop the educational system
in accordance to the manpower requirements of the economy. India’s education policy
merely produces clerks and lower-cadre executives for the government and private
concerns. The open-door policy at the secondary and university level has increased
manifold unemployment among the educated, who are fit only for white-collar jobs.
Slow Growth of Tertiary Sector
When the expansion of tertiary sector comprising commerce, trade and
transportation, and so on, is limited, which could not provide employment even
to the existing labour force, then the new entrants’ position stands a question. As
a result of this, there is a wide scale of unemployment among engineers, doctors,
technically trained persons, and other technocrats.
Decay of Cottage and Small-scale Industries
The traditional handicraft has a glorious past and was the main source of employment,
especially to the village craftsman, artisans, as well as non-agricultural workers.
Unfortunately, most of the rural, traditional crafts have been ruined or faded, partly,
due to the unfavourable policy of the foreign rulers and, partly, due to the tough
competition from the machine-made goods. Consequently, these labourers were out
of job. Most of them turned as landless labourers.
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 Unemployment in India | A-97

Lack of Vocational Guidance and Training Facilities

As, already discussed, our education system is defective as it provides purely
academic and bookish knowledge which is not job oriented. The need of the hour The need of the hour
is that there must be a sufficient number of technical-training institutions and other is that there must be
a sufficient number
job-oriented courses at the village level. Most of the students in rural areas remain of technical-training
ignorant of possible venues of employment and choice of occupation. institutions and other
job-oriented courses at the
Less Means for Self-employment village level.

Another hurdle in generation of more employment opportunities is that there are

inappropriate means for self-employment in rural and semi-urban areas of the Another hurdle in
country. Like other developed countries, most of our engineers, technocrats, and generation of more
employment opportunities
other well-qualified persons do not possess ample means for self-employment. is that there are
They go about in search of paid jobs. inappropriate means for
self-employment in rural
Defective Social System and semi-urban areas of
the country.
The defective social systems of the country also add fuel for the seriousness of the
problem. People are still superstitious and illiterate, who still believe that family
planning is a great sin, with the result—population is increasing at a very high The defective social
systems of the country
speed. It is equally difficult rather impossible to feed them with food, clothes, and also add fuel for the
shelter. Then, where is the question of making a provision of employment? seriousness of the
problem.

STEPS TO REDUCE UNEMPLOYMENT

The problem of unemployment in the country is alarming. It has adversely affected
the social life of many individuals. Thus, keeping in view the different aspects of
the problem, some steps are suggested which will be helpful to solve the problem of
rural unemployment and other types of urban unemployment, as follows:

Reconstruction of Agriculture
Indian agriculture is a mode of living rather than a profitable occupation. It is a Indian agriculture
tale of woe to tell. Therefore, it needs overhauling and reconstruction, making it is a mode of living
rather than a profitable
an economic pursuit. Methods of cultivation should undergo a radical change occupation. It is a tale of
according to the condition of local needs. Irrigation facilities should be improved so woe to tell. Therefore, it
needs overhauling and
that agriculture should not be at the mercy of monsoons. Institutional framework
reconstruction, making it
and agrarian relations should vigorously be adopted to provide social justice and an economic pursuit.
economic equality.

Adoption of Labour-intensive Techniques

Despite the usage of the strategy of Prof. Mahalanobis for basic and key industries,
which are based on the capital-intensive techniques, our government should try to
adopt labour-intensive techniques for new fields of production.

Rapid Industrialisation To solve the problem of

industrial unemployment,
To solve the problem of industrial unemployment, stepping up of industrial stepping up of industrial
efficiency is the remedy.
efficiency is the remedy. It means the expansion of the existing and the development

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 A-98 | Chapter 29
There is no second
opinion to say that
population in India is
rising at a very high speed.
Unless this problem is not
checked, the problem of
unemployment cannot be
solved properly.
As regards the
problem of educated
unemployment in urban
areas, India should
reconstruct the education
system and overhaul
according to the changing
environment of the
country.
It is advisable to
encourage industries
around small towns,
preferably, according to
the local endowments.
To provide the
opportunities for self-
employment, small-scale
industries should be given
top priority.
M29 Saleem 4 48160.indd 98
of new industries are urgently required. Some basic industries like iron and steel
industries, defence, chemicals, power generation, atomic, and so on, should be set
up. At the same time, to improve the defective and uneconomic centralisation, it is
a pre-requisite to introduce rationalisation on scientific grounds.
Population Control
There is no second opinion to say that population in India is rising at a very high speed.
­Unless this problem is not checked, the problem of unemployment cannot be solved
­properly. ­Efforts should be made to raise the agricultural and industrial production.
Therefore, a special drive should be made to make the programme of family planning
a good success, especially in the rural and backward regions of the country.
Reorientation of Education System
As regards the problem of educated unemployment in urban areas, India should
reconstruct the education system and overhaul according to the changing environment
of the country. There must be vocationalisation of education. Proper education should
be imparted to the younger men, who will be in a position to start certain cottage and
small-scale industries of their own choice, especially at the village level.
Extension of Social Services
India is still lagging behind in the sphere of education, medical science, and other
services, when compared to the advanced countries of the West. Therefore, efforts
should be made to extend these services to rural folks and to the backward regions of
the country. It will go a long way to impart awakening among the common masses.
Decentralisation
Experience shows that lack of gainful opportunities of employment in villages and
small towns has led to the migration of people to metropolitan cities in search of
alternative jobs. This has created the problem of overcrowdedness and urbanisation.
Under these circumstances, it is advisable to encourage industries around small
towns, preferably, according to the local endowments.
Encouragement of Small Enterprises
To provide the opportunities for self-employment, small-scale industries should be
given top priority. They should be provided with liberal loans, training, facilities
of raw material and infrastructures, and market facilities, and so on. It is fortunate
that the Sixth Five-Year Plan (1980–85) had given due consideration to dispel these
facilities under the scheme of self-employment. Similar steps had been proposed in
the Eighth Five-Year Plan and in the successive plans, these steps were carried out
and small-scale industry development has been given encouragement to provide
opportunity for self-employment.
Guiding Centres and More Employment Exchanges
The economists are of a unanimous view that more employment exchanges should
be opened in both rural as well as urban areas to give guidance to the people to search
for employment. They should also be motivated for self-employment proposals.
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 Unemployment in India | A-99

Rural Development Schemes

As rural sector is dominated and agriculture is the basic occupation of the people, As rural sector is
the urgent need of the hour is to introduce rural development schemes. It is correctly dominated and agriculture
is the basic occupation of
believed that there is no other remedy than a massive programme of investment, the people, urgent need
in rural development and massive injection of science and technology, into the of the hour is to introduce
rural development
methods of production followed in the rural areas, in their agricultural and non-
schemes.
agricultural activities.

GOVERNMENT POLICY MEASURES

TO REDUCE UNEMPLOYMENT
National Rural Employment Programme
The National Rural Employment Programme was started as a part of the Sixth Plan
and remained continued under the Seventh Five-Year Plan. It envisages to create
employment opportunities of the order of 300 million to 400 million man-days
every year. It aims to provide employment in the lean agricultural season. During It aims to provide
the Seventh Plan, the outlay for this programme was targeted at ` 3,092 crore and it employment in the lean
agricultural season.
created 1,477 million man-days.

Rural Landless Employment Guarantee Programme

Rural Landless Employment Guarantee Programme (RLEGP) was started in 1983. The basic objective
The basic objective of the programme was (a) to improve and expand employment of the programme was
to improve and expand
opportunities for rural landless workers and (b) to strengthen the rural infrastructure. employment opportunities
During the Seventh Five-Year Plan, about 1,154 million man-days of employment for rural landless workers.
were created under this programme.

Integrated Rural Development Programme

The Integrated Rural Development Programme aims at to raise the poor people The Integrated Rural
above the poverty line. It was expected to cover 18 million families in all the blocks Development Programme
aims at to raise the poor
of the country during the Seventh Plan. On an average, about 3,000 families in a people above the poverty
block were provided assistance through this programme. line.

Food-for-work Programme
Its objectives were to
This programme was started in 1977. Its objectives were to generate employment, generate employment,
have improvement in income, create durable community assets, and strengthen have improvement in
income, create durable
the rural infrastructure. This scheme was directly beneficial to the poor people. community assets, and
According to an estimate, the scheme was to generate an additional employment of strengthen the rural
­infrastructure.
40 crore man-days in a year.

Training Rural Youth for Self-employment The TRYSEM or Training

Rural Youth for Self-
The TRYSEM or Training Rural Youth for Self-employment was started in 1979 employment was started in
with the objective of removing unemployment among the rural youth. It aimed 1979 with the objective of
to provide training to about two lakh rural youth every year, so that they may be removing unemployment
among the rural youth.
self-employed. Under this scheme, 40 youths were selected from each block. In the

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 A-100 | Chapter 29

selection process, selection, members of SC/ST were given preference. Under the
scheme, a minimum of 331/3 per cent of rural youth trained were to be women.
During the Seventh Plan 10 lakh rural youth received training under TRYSEM.

Operation Flood II
This programme is expected to benefit eight million milk-producing families. The other
Dairy Development Schemes would benefit about five million additional families.

Employment Guarantee Scheme

It provides gainful and This scheme was started by the Government of Maharashtra in 1972–73. It provides
productive employment gainful and productive employment to the rural unskilled labour by raising durable
to the rural unskilled
labour by raising durable community assets like roads, canals, and so on. The scheme provides right to work
community assets like at a wage of ` 6 per day. Similar schemes have been started in Tamil Nadu, Gujarat,
roads, canals, and so on.
Andhra Pradesh, Madhya Pradesh, and Karnataka.

Jawahar Rozgar Yojana

Its aims are to generate Jawahar Rozgar Yojana (JRY) was started in 1989–90. Its aims are to generate
additional employment by additional employment by taking up productive works in rural areas. During the
taking up productive works
in rural areas. Seventh Plan, it had generated 3,497 million man-days of employment.

Nehru Rozgar Yojana

Nehru Rozgar Yojana was started in October 1989. It consists of three sub-
schemes, viz., Scheme of Urban Micro-Entreprises (SUME), Scheme of Urban Wage
Employment (SUWE), and Scheme of Housing and Shelter Upgradation (SHASU).
In 1991–92, 1.59 lakh families were assisted under SUME and 13 million man-day of
employment were generated under SUME and SHASU.

Minimum Needs Programme

The various components of the minimum needs programme are meant to create
substantial additional employment in the infrastructure and social services in the
rural areas.

STATUS OF EMPLOYMENT IN INDIA

Employment generation coupled with improving employability has been the
priority of the government. Various steps are being taken for generating employment
in the country, like encouraging private sector of economy, fast-tracking various
projects involving substantial investment and increasing public expenditure on
schemes such as Prime Minister’s Employment Generation Programme (PMEGP),
Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Pt.
Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) and Deendayal
Antodaya Yojana-National Urban Livelihoods Mission (DAY-NULM). As a result
of these policy interventions, the nature of employment has changed significantly.
As per Periodic Labour Force Survey (PLFS) estimates, the share of regular
wage/salaried employees has increased by 5 percentage points from 18 per cent

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 Unemployment in India | A-101

in 2011–12 to 23 per cent in 2017–18 as per usual status (Figure 29.1). In absolute
terms, there was a significant jump of around 2.62 crore new jobs in this category
with 1.21 crore in rural areas and 1.39 crore in urban areas (Table 29.1). Noticeably,
the proportion of women workers in regular wage/salaried employees category
Urban (2011-12) Urban (2017-18)
Own Account
< Figure 29.1
Casual
workers
Own Account
Casual
workers
Workers
29%
Distribution of Workers
Workers 15%
15% 31%
(principal status plus
subsidiary status, all
Regular Employee
Wage/Salaried
Workers
2%
Employee
3% ages) by Sector, Sex
43%
Unpaid Family
Labours
Regular
Wage/Salaried
Unpaid Family
Labours
and Employment Status
9% Workers 6%
47% in India
Male (2011-12) Male (2017-18)
Casual
workers
Own Account Casual
29% Own Account
Workers workers
Workers
38% 24%
42%

Employee
2% Regular
Regular Wage/Salaried
Workers Employee
Wage/Salaried Unpaid Family
23% Unpaid Family 3%
Workers Labours Labours
20% 11% 8%

Rural+Urban (2011-12) Rural+Urban (2017-18)

Casual Own Account Casual
workers Workers workers Own Account
30% 33% 25% Workers
36%

Employee
1%
Employee
Regular 2%
Wage/Salaried Unpaid Family
Labours Regular Unpaid Family
Workers
18% Wage/Salaried Labours
18%
Workers 14%
23%

Rural (2011-12) Rural (2017-18)

Own Account
Casual Workers Casual
workers 34% workers Own Account
35% 29% Workers
39%

Employee
1% Regular Employee
Regular Unpaid Family Wage/Salaried 2%
Wage/Salaried Labours Workers Unpaid Family
Workers 21% 13% Labours
9% 17%

Female (2011-12) Own Account

Female (2017-18)
Own Account
Casual Workers Casual
Workers
workers 20% workers
20%
31% 27%
Employee
0.4% Employee
0.5%

Unpaid Family
Regular Labours Unpaid Family
Regular
Wage/Salaried 36% Labours
Wage/Salaried
Workers 32%
Workers
13% 21%

Source: Estimated from unit level data of NSO 68th Round Employment-Unemployment Survey (EUS)
2011–12 Source:
and Periodic Labour
Estimated from Force Survey
unit level (PLFS),
data of 2017–18.
NSO 68th Round Employment-Unemployment Survey (EUS)
Note: The 2011–12 and to
figures are Periodic
be readLabour
along Force Survey
with (PLFS), 2017–18.
explanatory note for comparability.
Note: The figures are to be read along with explanatory note for comparability.

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 A-102

M29 Saleem 4 48160.indd 102

in India (in crore)
and Employment Status
ages) by Sector, Sex
subsidiary status, all
(principal status plus
Number of Workers
Table 29.1
| Chapter 29

>

Male Female Rural Urban Total

Employment Status 2011–12 2017–18 2011–12 2017–18 2011–12 2017–18 2011–12 2017–18 2011–12 2017–18

Self Employed 17.33 18.68 7.20 5.54 18.81 18.26 5.73 5.95 24.54 24.21

Own Account Workers 12.94 14.90 2.55 2.15 11.26 12.45 4.21 4.60 15.47 17.05

Employers 0.64 0.9 0.06 0.06 0.39 0.49 0.31 0.47 0.7 0.96

Unpaid Family Labour 3.75 2.88 4.6 3.33 7.16 5.32 1.21 0.88 8.37 6.20

Regular Wage/ 7.10 9.00 1.74 2.45 2.93 4.14 5.91 7.30 8.83 11.45
Salaried Employees

Casual labourer 9.95 8.61 3.97 2.86 11.91 9.18 2.02 2.28 13.92 11.46

Total 34.38 36.29 12.91 10.85 33.64 31.59 13.65 15.53 47.29 47.12

Source: Estimated from unit level data of NSO 68th Round EUS 2011–12 and NSO PLFS, 2017–18.
Note:
1. Projected population as on 1st January, 2018 was 135.74 crore which has been derived using the NSO-EUS (2011–12) formula, A = A1 * [1 + R 100]82/120, where
A1 is the census population as on 1st March 2011, R is the percentage decadal change in population between census 2001 and 2011 and A is the projected population
as on 1st January, 2018.
2. The figures are to be read along with explanatory note for comparability.

12/06/20 5:41 PM
 Unemployment in India | A-103

have increased by 8 percentage points (from 13 per cent in 2011–12 to 21 per cent in
2017– 18) with addition of 0.71 crore new jobs for female workers in this category
(Table 29.1 and Figure 29.1).
Among the self-employed category (consists of employers, own account
workers and unpaid family labour), while the proportion of own account workers
and employers increased, the proportion of unpaid family labour (helper) has
declined, especially for females 5 between 2011–12 and 2017–18. The proportion of
total self-employed workers however remained unchanged at 52 per cent during
this period (Table 29.1 and Figure 29.1).
The distribution of workers in casual labour category decreased by 5 percentage
points from 30 per cent in 2011–12 to 25 per cent in 2017–18 with the decline being
in rural areas (Figure 29.1 and Table 29.1).

Formalization of Jobs
With introduction of GST, digitization of payments, direct benefit transfer of
subsidies/scholarships/wages and salaries to bank accounts, opening of Jan Dhan
accounts, extending social security coverage to more workers, the government
has been making efforts to formalize the economy (Box 29.1). As a result of these
initiatives, an increase in formal employment is evident as is shown through multiple
data sources.
According to the Annual Survey of Industries (ASI), there has been an increase
in employment in the organized manufacturing sector. Between 2014–15 and
2017–18, the total number of workers engaged in the sector increased by 14.69 lakh
while total persons engaged (inclusive of employees and employers) increased by
17.33 lakh (Figure 29.2).

Box 29.1 Steps Taken Towards Formalisation of the Labour Market

• For portability of Provident Fund accounts, EPFO
launched a “Universal Account Number” service for
contributing members.
• Government is paying 12 per cent of employer
contribution to EPFO in respect of the new
employees drawing salary up to `15,000 per month
for the first three years of their employment, under
Pradhan Mantri Rozgar Protsahan Yojana (PMRPY).
The scheme has ended on 31 March 2019.
• Mandatory wage ceiling of subscription to EPS
increased from `6,500 to `15,000 per month.
The Code on Wages Act, 2019 to ensure minimum
wages to all and timely payment of wages to all
employees irrespective of the sector of employment
without any wage ceiling, except MGNREGA.
• MUDRA and STAND-UP India for creating formal
credit to businesses.
• Rate of ESI contribution reduced from 6.5 per cent to
4 per cent with effect from 1 July 2019. Employer’s
share of contribution reduced from 4.75 per cent to
3.25 per cent and employees’ share from 1.75 per
cent to 0.75 per cent.
• National Career Service (NCS) Project launched
in 2015, provides a host of career-related
services such as dynamic job matching, career
counselling, job notifications and information on
skill development courses and rich career content
on a digital platform (www.ncs.gov.in). NCS works
towards bridging the gap between job-seekers
and employers candidates seeking training and
career guidance, agencies providing training and
career counselling by transforming the National
Employment Service.

M29 Saleem 4 48160.indd 103 12/06/20 5:41 PM

 A-104 | Chapter 29

Figure 29.2 > 160

Employment in 140
Organized Manufacturing
120
in India (in lakh)
100
80
60
40
20
0

P)
6

07

7
-0

-0

-0

-1

-1

-1

-1

-1

-1

-1

-1

9(
6-
05

07

08

09

10

11

12

13

14

15

16

-1
00
20

20

20

20

20

20

20

20

20

20

20

17
20

20
Number of workers Total person engaged
Source: Annual Survey of Industries various issuse (P: Provisional Estimates), MoSPI.
Source: Annual Survey of Industries various issuse (P: Provisional Estimates), MoSPI.

To indicate the extent of
formalization of workforce
by extending coverage
of organized social
security, the Government
since September 2017
publishes the monthly
payroll data indicating the
number of new subscribers
who have availed benefits
under three major social
security schemes, viz., the
Employees’ Provident Fund
(EPFO), Employees’ State
Insurance Scheme (ESIC)
and the National Pension
Scheme (NPS).
To indicate the extent of formalization of workforce by extending coverage
of organized social security, the Government since September 2017 publishes the
monthly payroll data indicating the number of new subscribers who have availed
benefits under three major social security schemes, viz., the Employees’ Provident
Fund (EPFO), Employees’ State Insurance Scheme (ESIC) and the National Pension
Scheme (NPS). Of these, EPFO has more than 6 crore active members (with at least
one-month contribution during the year). EPFO manages social security funds of
workers in the organized/semi-organized sector in India. The pay roll data of EPFO
for 2019–20 as on 20 December 2019 shows a net increase of 55.6 lakhs as EPFO
subscriber compared to 61.12 lakhs in 2018–19 (Figure 29.3). These estimates are net
of the members newly enrolled, exited and re-joined during the year as per records
of the EPFO.
The estimates of share of workers in informal sector in non-agricultures and
AGEGC (Agricultural sector excluding only growing of crops, market gardening,
horticulture and growing of crops combined with farming of animals) sectors
obtained from the NSO-EUS and PLFS 2017–18, also show a decline from 77.5 per
cent in 2004–05 to 68.4 per cent in 2017–18, with the decline being more pronounced
among females (Table 29.2).
To get a holistic picture of the extent of formal-informal employment in the
economy, the NCEUS (2007a) definition was applied upon the workforce estimates
of PLFS to identify the total number of formal and informal workers employed
in the organized and unorganized sector. It was observed that the proportion of
workers in organized sector increased from 17.3 per cent in 2011–12 to 19.2 per cent
in 2017–18 (Table 29.3). In actual terms, the number of workers in the organized
sector increased to about 9.05 crore workers in 2017-18, an increase of 0.87 crore
over 2011–12. This was mainly due to the increase in formal employment, the share

M29 Saleem 4 48160.indd 104 12/06/20 5:41 PM

 Unemployment in India | A-105

140
132.2 < Figure 29.3
Net Employees’
120 Provident Fund
Subscriber (in lakh)
100

80 61.1 55.6
60

40
15.5
20

0
2017-18 2018-19 2019-20 Total
(Sep-17 to (Apr-19 to (Apr-19 to (Sep-17 to
Mar-18) Mar-19) Oct-19) Oct-19)
Source: EPFO.

Category of EUS 61st EUS 66th EUS 68th

< Table 29.2
Employment in Informal
Workers Round 2004–05 Round 2009–10 Round 2011–12 PLFS 2017–18
Sector Enterprises
Male 76.7 71.5 73.4 71.1 Among Usual Status
Workers Engaged in
Female 79.7 69.8 69.2 54.8
Non-agriculture and
Person 77.5 71.1 72.4 68.4 AGEGC Sectors
(in per cent)
Source: NSO (EUS) various rounds and PLFS (2017–18).
Note: The figures are to be read along with explanatory note for comparability.

Organized Unorganized Total Organized Unorganized Total

< Table 29.3
Employment (in per cent) (in per cent) (in per cent) (in crore) (in crore) (in crore) Formal-Informal
Employment Across
2004–05
Organized and
Formal 53.42 0.36 7.46 3.34 0.14 3.41
Unorganized Sector
Informal 46.58 99.64 92.38 2.91 39.35 42.26
Total 13.68 86.32 100 6.25 39.49 45.67
2011–12
Formal 45.4 0.40 8.1 3.71 0.16 3.83
Informal 54.6 99.6 91.9 4.47 38.95 43.46
Total 17.3 82.7 100 8.18 39.11 47.29
2017–18
Formal 48.91 0.74 9.98 4.43 0.28 4.70
Informal 51.09 99.26 90.02 4.62 37.79 42.43
Total 19.2 80.8 100 9.05 38.07 47.13

Source: Estimated from unit level data of NSO (EUS) various rounds and PLFS (2017–18)
Note: The figures are to be read along with explanatory note for comparability.

M29 Saleem 4 48160.indd 105 12/06/20 5:41 PM

 A-106 | Chapter 29

of which in organized sector increased from 45 per cent in 2011–12 to 49 per cent in
2017–18. Total formal employment increased from 8 per cent to 9.98 per cent during
this period. In absolute terms, the number of workers with formal employment
increased from 3.8 crore in 2011–12 to 4.7 crore in 2017–18 (Table 29.3).

GENDER DIMENSION OF EMPLOYMENT

Gender equality in labour
market is considered to
be smart economics to
achieve faster economic
growth and wealth
creation.
Gender equality in labour market is considered to be smart economics to achieve
faster economic growth and wealth creation as it has the potential to impact upon
poverty, inequality and economic well-being of a country through increase in income
of the household, spending on health and education of children, improvement in
saving, investment and consumption growth. In an era of globalization, no country
can develop and achieve its full potential if half of its population is locked in non-
remunerative, less productive and non-economic activities (World Bank, 2011).

Female Participation in Labour Market

According to NSO-EUS and PLFS estimates, female labour force participation rate
(LFPR) for productive age-group (15–59 years) as per usual status (ps+ss)1 subsidiary
status) shows a declining trend. Female labour force participation declined by 7.8
percentage points from 33.1 per cent in 2011–12 to 25.3 per cent in 2017–18. Though
female LFPR is higher in rural areas as compared to urban areas, the rate of decline
was also sharper in rural areas compared to urban areas (Figure 29.4A). As a result
of this, gender disparity in India’s labour market has increased which is reflected
from declining trend in ratio of female to male labour force participation rate except
for urban females. In urban areas, female labour force participation more or less
remained constant. Therefore, ratio of female to male labour force also remained
constant between 2011–12 and 2017–18 (Figure 29.4B).

Figure 29.4A >

52.4
52.1

60
48.7

Female Labour Force

45.4
45.2
41.7

Participation Rate 50
37.8

(ps+ss, 15–59 ages)

33.1

40
by Location (per cent)
26.6

26.1
25.1

25.3
22.2

22.2
22.3

30

20

10

0
Rural Urban Total (R+U)
1993-94 1999-2000 2004-05 2011-12 2017-18

Source:Estimated
Source: Estimatedfrom
fromunit
unitlevel
leveldata
dataofofNSO
NSO(EUS)
(EUS) various
various rounds
rounds and
and PLFS
PLFS (2017–18).
(2017–18).
Note:The
Note: Thefigures
figuresare
aretotobe
beread
readalong
alongwith
withexplanatory
explanatory note
note forfor comparability.
comparability.

1. ps: principal status; ss: subsidiary status.

M29 Saleem 4 48160.indd 106 12/06/20 5:41 PM

 Unemployment in India | A-107

0.70
0.58 0.59
< Figure 29.4B
0.60 0.55 Ratio of Female to
Male Labour Force
0.50 0.45
0.51 0.52 Participation Rate
0.48
0.40
0.33 (ps + ss, 15–59 ages)
0.40
0.30 0.32
0.30 0.31
0.27 0.27 0.28
0.20

0.10

0.00
1993-94 1999-2000 2004-05 2011-12 2017-18
Rural Urban Total (R+U)
Source: Estimated from unit level data
Source: of NSOfrom
Estimated (EUS) various
unit rounds
level data of and
NSOPLFS
(EUS)(2017–18).
various rounds and PLFS (2017–18).
Note: The figures are to beNote:
read along with explanatory
The figures notealong
are to be read for comparability.
with explanatory note for comparability.

Female Worker Population Ratio (WPR) also shows a similar trend7. As

per PLFS, female WPR for productive age group (15–59 ages) stood at 23.8 per
cent (25.5 per cent in rural areas and 19.8 per cent in urban areas) in 2017–18 as
compared to 32.3 per cent in 2011–12 (Figure 29.5A). As a result of this, ratio of
female to male work participation rate has also shown consistent declining trend
in India except for urban females (Figure 29.5B).
Based on the activity status—principal and subsidiary—indicates that par-
ticipation of females, especially in rural areas, who were engaged in subsidiary
activities has drastically declined (from 25 per cent in 2004–05 to 5.7 per cent in
2017–18) (Figure 29.5D) as compared to females engaged as per principal status
(Figure 29.5C). This clearly indicates that those female workers who had stable
jobs continued while those who were not full time workers are dropping out of
the labour market.

< Figure 29.5A

51.6

51.4

60
48.2

Female Worker
44.4

44.2
40.9

50 Population Ratio
37.2

(ps+ss, 15-59 ages)

32.3

40
by Location (per cent)
25.5

24.2

23.8
23.4
20.9

21.0

30
19.8

20

10

0
Rural Urban Total (R+U)
1993-94 1999-2000 2004-05 2011-12 2017-18
Source: Estimated from unit level Estimated
Source: data of NSO (EUS)
from unitvarious rounds
level data and (EUS)
of NSO PLFS (2017–18).
various rounds and PLFS (2017–18).
Note: The figures are to be readThe
Note: along with explanatory
figures are to be readnote for comparability.
along with explanatory note for comparability.

M29 Saleem 4 48160.indd 107 12/06/20 5:41 PM

 A-108 | Chapter 29

Figure 29.5B > 0.70

0.58 0.59
Ratio of Female to Male 0.60 0.56
Work Participation Rate 0.50 0.45
(ps+ss, 15–59 ages) 0.52 0.48 0.52
0.40 0.34
0.40
0.30 0.32
0.29 0.30
0.20 0.27 0.27 0.27

0.10

0.00
1993-94 1999-2000 2004-05 2011-12 2017-18
Rural Urban Total (R+U)
Source: Estimated from unit level data of NSO (EUS) various rounds and PLFS (2017–18).
Source:
Note: TheEstimated
figures arefrom unit
to be level
read datawith
along of NSO (EUS) various
explanatory note forrounds and PLFS (2017–18).
comparability.
Note: The figures are to be read along with explanatory note for comparability.
Figure 29.5C >
38.0
37.2
36.7

Female Worker 40

33.1
32.0
32.0
Population Ratio 35
26.2

(principal status,

23.8
30
25.5

21.3
15–59 ages) by
19.7

25
18.7
18.4
17.6

17.9

Location (per cent)

20
15
10
5
0
Rural Urban Total (R+U)
1993-94 1999-2000 2004-05 2011-12 2017-18

Source:Estimated
Source: Estimatedfrom
fromunit
unitlevel
leveldata
dataofofNSO
NSO(EUS) various
(EUS) rounds
various and
rounds PLFS
and PLFS (2017–18).
(2017–18).
Note:The
Note: Thefigures
figuresare
aretotobe
beread
readalong
alongwith
withexplanatory
explanatorynote
noteforforcomparability.
comparability.

Figure 29.5D >

27.7

30
25.0

Female Worker
22.3
22.3

Population Ratio 25
19.9

(subsidiary status,
17.5
17.4

15–59 ages) by 20
13.3

Location (per cent) 15

6.3

10
5.8
5.7

4.4
4.2

3.6

5
1.5

0
Rural Urban Total (R+U)
1993-94 1999-2000 2004-05 2011-12 2017-18

Source:Estimated
Source: Estimatedfrom
fromunit
unitlevel
leveldata
dataofofNSO
NSO(EUS)
(EUS) various
various rounds
rounds and
and PLFS
PLFS (2017–18).
(2017–18).
Note:The
Note: Thefigures
figuresare
aretotobe
beread
readalong
alongwith
withexplanatory
explanatorynote
noteforforcomparability.
comparability.

M29 Saleem 4 48160.indd 108 12/06/20 5:41 PM

 Unemployment in India | A-109

2004–05 2011–12 2017–18

< Table 29.4
Distribution of Out-of-
Activities Male Female Male Female Male Female Work Force (principal
15–29 Age group status + subsidiary
status, 15–59 age)
Unemployed (A) 3.91 2.18 3.77 1.62 10.45 2.94
Population into Major
Out of labour force (B) Activities by Sex
Attending Education 23.19 15.88 34.33 25.44 38.47 30.30 (per cent)
Institutes

Attending domestic 0.47 45.92 0.51 49.25 1.03 52.29

Duties

Others 1.72 1.12 1.60 0.91 1.72 1.00

Total Out-of-Work 29.28 65.09 40.21 77.25 51.68 86.53

Force (A + B)

30–59 Age group

Unemployed (A) 0.43 0.49 0.36 0.24 1.29 0.48

Out of labour force (B)

Attending Education 0.03 0.05 0.03 0.05 0.10 0.11

Institutes

Attending domestic 0.24 46.03 0.22 58.52 0.37 65.39

Duties

Others 2.26 1.89 1.96 1.84 2.69 2.84

Total Out-of-Work 2.96 48.47 2.57 60.63 4.45 68.82

Force (A + B)

15–59 Age group

Unemployed (A) 2.01 1.24 1.86 0.83 5.30 1.51

Out of labour force (B)

Attending Education 10.50 7.07 15.11 10.89 16.90 12.75

Institutes

Attending domestic 0.34 45.98 0.35 54.57 0.66 59.90

Duties

Others 2.01 1.55 1.81 1.44 2.27 2.07

Total Out-of-Work 14.86 55.83 19.12 67.72 25.13 76.24

Force (A + B)

Source: Estimated from unit level data of NSO (EUS) various rounds and PLFS (2017–18)
Note: The figures are to be read along with explanatory note for comparability; and ‘Others’ includes
recipient of remittances, disabled and others.

M29 Saleem 4 48160.indd 109 12/06/20 5:41 PM

 A-110 | Chapter 29
While women account
for almost half of
India’s population, their
participation in the labour
market is almost one-third
as well as declining over
several Survey Rounds.
It is lack of attainment
of appropriate education
level/skill sets that are
confining women to
domestic duties.
Table 29.5
Distribution of Female
Attending Domestic
Duties (ps+ss) by Age
Group and Level of
Education in India,
2017-18 (per cent)
M29 Saleem 4 48160.indd 110
Factors Influencing Female Labour
Force Participation
While women account for almost half of India’s population, their participation
in the labour market is almost one-third as well as declining over several Survey
Rounds. To understand this declining trend, the activity status of females outside
the workforce was examined separately for youth (15–29) as well as for the age
groups (30–59 and 15–59). As seen in Table 29.4, in 2017–18, higher proportion of
young males (10.5 per cent) were unemployed compared to young females (3 per
cent). The proportion of youth attending educational institutions has increased
at a faster rate from 23 per cent in 2004–05 to 38.5 per cent in 2017–18 for young
males, while for young females the proportion almost doubled from 15.8 per cent in
2004–05 to 30.3 per cent in 2017–18. It may be considered a remarkable achievement
that around one-third of youth were engaged in acquiring skills and delayed their
entry into labour market. However, among young females around 52.3 per cent
were engaged in domestic activities in 2017–18 and this proportion has increased
over the last two decades. Similarly, in the productive age group 30-59, where
females were out of education, the proportion of females attending domestic duties
increased from 46 per cent in 2004–05 to 65.4 per cent in 2017–18 (Table 29.4). For
the productive age group (15–59 years) as compared to less than 1 per cent of males,
about 60 per cent of working age females were outside labour market attending to
domestic duties only.
The educational attainment of out of workforce productive age group females
shows interesting results. It was found that those with middle-level and secondary-
level education were engaged in domestic duties compared to highly educated
women for all age sub-groups. For the productive age group (15–59 years), only 5.3
per cent of highly educated women are engaged in full time domestic duties while
remaining 54.6 per cent of women attending domestic duties are up to secondary
level educated (Table 29.5). Thus, it is lack of attainment of appropriate education
level/skill sets that are confining women to domestic duties.
Considerable amount of research work has been done to identify the reasons
behind low and declining female labour force participation rates for India. The
arguments advanced in support of the declining and low female LFPR are from both
> Age Groups
Level of Education 15–29 30–59 15–59
Illiterate 8.0 26.1 18.5
Up to Middle Level 23.9 24.7 24.4
Secondary 14.3 9.8 11.7
Graduate and above 6.0 4.7 5.3
Total 52.3 65.4 59.9
Source: Annual Report, PLFS 2017-18.
Note: Graduate and above includes diploma/certificate courses.
12/06/20 5:41 PM
 Unemployment in India | A-111

supply and demand side. On the supply side, it was argued that as more women
in rural areas are now pursuing higher education has delayed their entry into the
labour market (Rangarajan et. al., 2011). It could also be because the household
incomes have risen in rural areas on account of higher wage levels which is dragging
women out of the labour market (Himanshu, 2011). The female LFPR could be low
also due to cultural factors, social constraints and patriarchal norms restricting
mobility and freedom of women (Das, 2006, Banu, 2016). The relatively higher
responsibilities of unpaid work and unpaid care work could also be constraining
women participation in the labour market (World Economic Forum, 2018). On the
demand side, absence of job opportunities and quality jobs and significant gender
wage gap are restraining factors (World Bank, 2010; Chowdhury, 2011; Kapsos et.
al, 2014). Sanghi et. al. (2015) using NSSO-EUS data concluded that besides income
effect, education effect and the problem of underestimation, what is left unnoticed is
the structural transformation of the economy and its resultant impact on the female
labour market. Mehrotra and Sinha (2017) also pointed out that structural shift
away from agricultural employment, and increased mechanization of agriculture
were factors behind declining female employment trends in rural areas. In addition,
it was also observed that the decline in animal husbandry, and in urban areas a The decline in animal
fall in international demand for products of labour-intensive industries have led to husbandry, and in urban
areas a fall in international
lowering of female LFPR in India. demand for products of
Low female wages in agriculture sector were driving out females engaged as labour-intensive industries
have led to lowering of
unpaid labour. The structural transformation of the economy did not change the female LFPR in India.
labour market commensurately. The fall in employment in agriculture has not
shown concomitant increase in opportunities for women in the manufacturing sector
where most women with middle to secondary levels of education and from middle
income groups are likely to look for employment (Chandrasekhar and Ghosh, 2011).
Withdrawal of men from agriculture and shift to the construction sector in urban
areas, led to loss of jobs for rural women who were engaged as unpaid labour along
with the men. The loss of jobs as casual labour in agriculture also led to withdrawal of The loss of jobs as casual
women from labour force (Kannan and Raveendran, 2012). Thus, the achievements labour in agriculture
also led to withdrawal of
in female education and the subsequent loss of female dominated jobs in agriculture women from labour force.
and manufacturing sector could have contributed to the continued decline in female
LFPR. Though substantial exploration has been undertaken to explain declining
female work participation from demand as well as supply side but there is still no
consensus among the scholars regarding the declining trend in female employment
in recent decades.

Initiatives to Improve Female Work

Participation
To encourage female participation in the economy, various programmes/legislative
reforms are in place. A number of protective provisions have been incorporated in The Equal Remuneration
various labour laws for creating congenial work environment for women workers Act, 1976 provides
such as child care centres, time-off for feeding children, enhancement in paid for payment of equal
remuneration to men
maternity leave from 12 weeks to 26 weeks, provisions for mandatory crèche facility and women workers for
in the establishments having 50 or more employees, permitting women workers same work or work of
in the night shifts with adequate safety measures, etc. The Equal Remuneration similar nature without any
discrimination.

M29 Saleem 4 48160.indd 111 12/06/20 5:41 PM

 A-112 | Chapter 29

Act, 1976 provides for payment of equal remuneration to men and women workers
for same work or work of similar nature without any discrimination. Under the
provisions of the Minimum Wages Act, 1948, the wages fixed by the appropriate
Government are equally applicable to both male and female workers without any
gender discrimination. In order to enhance the employability of female workers, the
Government is providing training to them through a network of women industrial
training institutes, national vocational training institutes and regional vocational
training institutes. Besides these, various initiatives have been implemented for
empowerment of women across the country. The details of these major schemes are
as under:

1. Safety of Women at Workplace: Safety and security of women in the country

is of utmost priority for the Government. The Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013 covers all women,
irrespective of their age or employment status and protects them against
sexual harassment at all workplaces both in public and private sector, whether
organized or unorganized. The Act mandates all the workplace having more
than 10 workers to constitute Internal Complaint Committee (ICC) for receiving
complaints of sexual harassment. Similarly, the appropriate Government is
authorized to constitute Local Complaint Committee (LCC) in every district
which will receive complaints from organizations having less than 10 workers
or if the complaint is against the employer himself.
2. Mahila Shakti Kendra Scheme: This scheme aims to empower rural women
through community participation. The scheme envisages community
engagement through College Student Volunteers to empower rural women in
115 aspirational districts as part of block level initiatives.
3. Provision of Safe and Affordable Accommodation: To provide safe and
affordable accommodation to working women, Working Women Hostels have
been established. These hostels have day care facility for the children of inmates
too.
4. Women Helpline Scheme (WHL): WHL implemented since 1 April 2015 to
provide 24 hours emergency and non-emergency response to women affected
by violence through referral and information about women related government
schemes/programmes across the country through a single uniform number
(181).
5. One Stop Centre (OSC): This scheme facilitates access to an integrated range of
services including police, medical, legal, psychological support and temporary
shelter to women affected by violence. One Stop Centres are being set up in all
districts of the country.
6. Female Entrepreneurship: To promote female entrepreneurship, the
Government has initiated schemes like: MUDRA, Stand Up India and Mahila
e-Haat (online marketing platform to support women entrepreneurs/SHGs/
NGOs). Pradhan Mantri Mudra Yojana (PMMY) provides access to institutional
finance to micro/small business units upto `10 lakh. Out of total beneficiaries,
almost 75 per cent were women borrowers. To encourage further coverage
of women borrowers, the Micro Units Development and Refinance Agency

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Ltd. (MUDRA) extends a rebate of 0.25 per cent on its refinance interest rate
for PMMY loans given by Micro Finance Institutions to women borrowers.
Stand-UP India, the Government provides bank loans between `10 lakh and
`1 crore to at least one Scheduled Caste (SC)/Scheduled Tribe (ST) borrower
and at least one-woman borrower per bank branch for setting up greenfield
enterprises in the manufacturing, services or the trading sector.
7. Rashtriya Mahila Kosh (RMK): is an apex micro-finance organization that
provides micro-credit at concessional terms to poor women for various
livelihood and income generating activities. Among other things, RMK
also promotes and supports expansion of entrepreneurship skills among
women.
8. Prime Minister’s Employment Generation Programme (PMEGP): Under
the scheme, women entrepreneurs are provided 25 per cent and 35 per cent
subsidies for the project set up in urban and rural areas respectively. For women
beneficiaries, own contribution is only 5 per cent of the project cost while for
general category it is 10 per cent. All the entrepreneurs including women are
eligible for 2 weeks Entrepreneurship Development Programme (EDP) after the
sanction of their projects from banks for financial assistance to setup their unit
and also imparting training under EDP.
9. Deendayal Antyodaya Yojana–National Rural Livelihoods Mission (DAY-
NRLM): seeks to reach out to 8-9 crore rural poor households and organize
one-woman member from each household into affinity-based women SHGs
and federations at village and at higher levels. Support is provided to the
women for employment and self-employment venture under the scheme
to enhance their farm livelihoods and non-farm livelihood through various
components of schemes such as organic farming, Krishi Sakhi, Pashu Sakhi,
dairy value chain interventions, Aajeevika Grameen Express Yojana, Start-up
Village Entrepreneurship Programme, etc. DAY-NRLM provides Revolving
Funds (RF) at the rate of `10,000–15,000 per SHG and Community Investment
Support Fund (CISF) to the extent of `2.5 lakh per SHG to support their income
generating and livelihood activities.

McKINSEY REPORT
India Needs to Create 115 Million Non-Farm Jobs through Cross-
Cutting Reforms and Targeted Public Investment
India needs 115 million new non-farm jobs over the next decade to accommodate
a growing population and to reduce the share of agriculture in employment. The
manufacturing and construction sectors can form the backbone of this effort, as
these sectors are well-suited to absorbing lower-skilled labour moving out of
farm jobs (Figure 29.6). Labour-intensive s­ ervices—such as tourism, hospitality,
retail trade, and transportation—will also need to add 35 million to 40 million
jobs.
The government can catalyse job creation by rebalancing its spending pattern
to increase public investment in the economy. The subsequent uptick in growth and

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 A-114 | Chapter 29

Figure 29.6 > Incremental job creation in inclusive reforms scenario, 2012–22E
Head count, million
Compound annual
growth rate
India’s Industrial
Sector will Need to 80
Lead the Way on Job Industry 75–80 5.6%1 Others1,2 3 3.8%

Creation, Especially
in Construction and Manufacturing1 27 3.9%
Services 35–40 2.4%1
Manufacturing

Agriculture 20 –0.9%

Total 95 0.9% Construction1 50 7.4%

1. C
 alculated assuming 80 million new industry and 35 million new services jobs.
2. Includes mining and quarrying, electricity, gas, and water supply.
Note: Numbers may not sum due to rounding.
Source: McKinsey Global Institute analysis.

investor sentiment would crowd in private investment. Put together, the overall
investment rate would rise from an average of 36 per cent since 2005 to an average
of 38 per cent over the next decade in the inclusive reforms scenario.
Almost half of the required jobs will need to be generated for the workforce in
states with particularly difficult starting conditions (including challenges with the
quality of education, which exacerbates skills shortages, as well as low levels of
urbanisation). Uttar Pradesh’s labour force, for example, will need some 23 million
non-farm jobs (approximately one-fifth of the national requirement), although the
state is largely rural and organised enterprises account for only 9 per cent of its
employment. Some 11 million workers from Bihar will need to be absorbed into the
non-farm sector in an even less advantageous climate. India’s job-creation strategy
must provide broad-based reforms that invigorate job growth both in these regions
and across the entire country.
As China moves up the value chain, India and other emerging economies with
low ­labour costs have an opportunity to capture a larger share of labour-intensive
industries by integrating domestic manufacturing with global supply chains.
But today an array of barriers limits the ability of Indian businesses—both
large and small—to invest and become more competitive, scale up, and create jobs.
Revitalising India’s job-creation engine will require decisive reforms and a laser
focus on implementation in six high-priority areas:
●● Accelerate Critical Infrastructure for Power and Logistics. Infrastructure gaps,
­especially in power and transportation, hinder economic growth, particularly
in manufacturing. For the better execution of projects, the government could
establish a high-level National Infrastructure Delivery Unit in the prime
minister’s office to build an integrated view of the country’s infrastructure

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needs, coordinate across m ­ inistries and functions, set and monitor schedules,
and address bottlenecks. This unit could work with the Cabinet Committee on
Investment to expedite infrastructure projects. A State Chief Minister’s Office
could also set up a State Infrastructure Delivery Unit for the same purpose.
●● Reduce the Administrative Burden on Businesses. Complex and archaic
regulations pose a significant cost, especially for micro-, small, and medium
sized businesses, discouraging both investment and their move into the formal
economy. India can reduce this burden in a phased manner, starting with
quick wins that require simple changes in administrative rules and procedures
rather than new legislation. In the medium term, the rollout of e-government
platforms and ‘one-stop shops’ supported by automated government processes
can be accelerated, with more fundamental improvements such as selective
outsourcing to private-sector providers and extending the Right to Public
Services laws to business services as the third phase.
●● Remove Tax and Product-market Distortions. India’s many taxes result in
high compliance costs, and differences across states and sectors balkanize
the national market, harming the ability of businesses to achieve economies
of scale. If implemented, the proposed goods and services tax, a harmonized
consumption tax across nearly all goods and services, represents a step towards
reducing complexity and lowering the tax burden. In addition to cross-cutting
tax reform, India can spur growth by removing tax and duty distortions in
individual sectors—especially those that will be the most significant sources of
non-farm job creation, such as garment manufacturing and tourism.
●● Rationalise Land Markets. In 2013, India enacted the Land Acquisition,
Rehabilitation and Resettlement Bill, which was intended to create a framework
to deal fairly with the displaced. However, inefficient land markets remain
a major impediment to economic growth, as property rights are sometimes
unclear and the process for land acquisition is time-consuming. India can
reinforce property rights by demarcating land holdings through geospatial
surveys and providing standardised title to landowners through digitising
records, as Karnataka has done. Similarly, restrictions on monetizing land can
be loosened or eliminated to facilitate private transactions for major projects
and encourage the farm to non-farm shift.
●● Take Phased Steps to Make Labour Markets more Flexible. At least 43 national
laws—and many more state laws—create rigid operating conditions and
discourage growth in labour-intensive industries. But ironically, they secure
rights for only a tiny minority of workers. India can make its labour market more
flexible in a phased manner, and states that have begun this process have higher
job-creation rates on average than those that have not. A multitude of rules that
restrict terms of work and work conditions can be simplified or eliminated. In
the medium term, India could rationalise laws governing dismissal, pairing this
with measures to reinforce income security for the unemployed.
●● Help Poor Workers Build Skills with Government-funded Mechanisms.
Vocational education is needed most acutely by the poorest workers—those
with little or no education and those who live in rural areas. There are 278
million Indians of working age in these segments, but they are underserved.

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Providers such as IL&FS Skills have built effective models that focus on
providing low-cost delivery, fostering interactive learning, and teaching skills
that are in demand. The government can scale up this approach by giving poor
workers vouchers that can be redeemed for vocational training with accredited
providers that are subject to monitoring and certification. Workers in informal
sectors and the self-employed (for example, caregivers, cooks, nursing aides,
hairdressers, shop assistants, plumbers, and electricians) can raise their incomes
through skill building. Short training courses of a few months’ duration, along
with certification systems, could help.

Investment in ‘Job-Creation Engines’ Can Promote More

Geographically Balanced Growth and be Selfsustaining
Along with making broad-based reforms to improve the business environment,
India can invest in stimulating specific ‘job-creation engines’. Our research finds that
investing in 70 to 100 sites, such as industrial townships or service hubs, tourism
circuits, and food-processing parks, can add 11 million incremental jobs within a
decade, and many more as these sites grow in scale. To be successful, they would
need to be located in areas with potentially high competitive advantages (where
natural endowments, traditional skills, and some base of ­entrepreneurs already
exist, for example)—and there are hundreds of such locations in India across most
states.
These job-creation engines would need to be seeded by public investment in
infrastructure and services, including reliable and low-cost power, road and rail
connections, and ­affordable housing and schools for workers’ families. By our
estimates, launching 35 industrial townships over a decade could require capital
expenditure for infrastructure averaging some ` 30,000 crore (US$6 billion)
annually for the first eight years, after which cash flows turn positive. (Launching
tourism circuits or food-processing zones is significantly less capital-intensive.)
Such investments can be self-sustaining, yielding internal rates of return to the
government in excess of 25 per cent per year and generating funds for additional
investment. Creating thriving new job centres across the country would encourage
more geographically balanced economic growth, raising the share of population in
small and medium-sized cities. This could alleviate some of the pressures on basic
services in India’s largest cities.

CASE STUDY
Literate State with the Highest Unemployment
The state with the highest literacy rate—almost 97 per cent—has the highest
unemployment rate too, when compared to the other states in India. That state is
none but our neighbour, Kerala.
Kerala is known for a large-scale migration of skilled labour to other states and
­countries.
What ails the state that has such a high literacy rate and is also blessed by vast
natural resources to have the highest unemployment rate in the country?

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 Unemployment in India | A-117

No industrialist wants to set up any industry in Kerala due to labour problems.

The state is bankrupt, besides being corrupt and largely politicised. Trade unionism
is still alive in Kerala.
One important feature of the Kerala economy, which makes it different from the
rest of the country, is the net out-migration of the labour force, particularly, to Gulf
and the inflow of huge remittances into the economy. The Centre for Development
Studies (CDS) has been doing an interesting work on emigration and the impact
of NRI remittances on Kerala’s economy. Kerala vitally depends on the transfers
only—US$5.8 billion in 2007 or 20.2 per cent of net state domestic product—from its
Diaspora overseas. CDS has now scaled up its efforts statewide through its regular
Migration Monitoring Studies (MMS).
The latest MMS 2007 round data indicated stability in Kerala’s migration
pattern. The number of emigrants (18.5 lakh), return emigrants (8.9 lakh), non-
resident Keralites (27.3 lakh), and the proportion of households with a non-resident
Keralite (25.8 per cent) has remained virtually the same since 2003.
Emigration has had a major impact on the labour market of a state that has,
perhaps, the highest unemployment rate (12.2 per cent) in India. If among the
unemployed, the emigration rate is as high as 43.5 per cent, the process of going
abroad for work lowers Kerala’s unemployment rate than it would otherwise have
been. Inspite of the fact that a large section of the population has migrated out to
Gulf, and elsewhere, for jobs, the rate of unemployment here is way above the all-
India average. Instead of migrating to other states for jobs, Keralites should use
their knowledge and expertise in establishing new productive activity on their own.
Many of them should look at self-employment for overcoming the serious problem
of unemployment.
As on 30 September 2006, there were close to 40 lakh registered job seekers in the
Live Register of Employment Exchanges in Kerala. This constituted about 46 per cent
of the state’s population in the age group of 19–29. Of the total number registered,
58 per cent are females. There are few illiterates among Kerala’s unemployed,
while the largest number of job seekers boasted academic qualification up to the
matriculation level.
Kerala’s unemployment problem is not only a serious problem of educated
unemployment but also a substantial portion of this problem is simple
unemployment of low-skilled workers. The population in the productive age
group (15–29 years) in Kerala was 201.83 lakh (2001 Census) and they are the
work seekers. The problem of unemployment in Kerala is very acute and has been
worsening over time. The worsening unemployment situation is obviously related
to the inability of the economy of the state to generate any fresh employment
during the last decade or so, particularly, after the advent of liberalization in the
country. While this phenomenon of ‘jobless growth’ is observable in all the states
in the country, the situation in Kerala appears to be particularly distressing in this
regard. The growth rate in employment during the period 1993–94 and 1999–2000
in Kerala was a meagre number of 0.07 per cent per annum.
The problem of ‘simple unemployment’ (unemployment of simple, low-
skilled labour) is also quite significant in Kerala. The National Rural Employment
Guarantee Scheme, under the NREG Act, 2005, is aimed at enhancing the livelihood
security in the rural areas. ­National Rural Employment Guarantee Act (NREGA) is

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 A-118 | Chapter 29

being implemented in Wayanad and Pallakad districts of Kerala, which is a right-

based constitutional approach. The Registration of rural unemployed has already
begun in Wayanad and Palakkad districts under the scheme.
It is clear that the problem of unemployment is not just one of unemployment
among the educated youth. The unemployment and underemployment among
workers in the traditional sectors like agriculture and household industries are
indeed major concerns. One of the most important groups of such workers is the
traditional agricultural workers. According to the 2001 Census, the number of
agricultural workers in Kerala was around 16.20 lakh and this is more than twice,
the number of cultivators (7.20 lakh) and more than four times, the number in the
household industry (3.70 lakh). About three-fourth of workers in the household
industry are in rural areas and close to half of them are female workers. The
unemployment rate among the youth and females is also found to be high.
The Department of Employment operates about 96 institutions and they provide
placement service, vocational guidance, employment-market information, self-­
­
employment guidance, unemployment assistance, and self-employment scheme
for the registered ­unemployed. But these services have been considered inadequate
to tackle the problem of unemployment in the state, since most of the unemployed
do not possess marketable skills, and this reduces their employability. This would
call for a convergent action by the Employment Department and Industrial Training
Department.
Internal migration has also made a difference to the overall joblessness.
Simultaneously, employment also had significantly increased by over 3 lakh persons
during 2003–2007, with a 100 per cent increase in the private sector employment
and a 20 per cent increase in the self-employment.
But the biggest message of MMS 2007 is the shift from remittance-based
consumption to remittance-based investments as the key driver of Kerala’s growth.
In the early years of large-scale emigration, Gulf remittances went into subsistence,
children’s education, and housing. The return emigrants, then, also lacked the
educational background or the know-how to start any businesses. But times are
changing, as more than a million emigrants have returned with their accumulated
savings and are ready to invest. Note that only less than 2 per cent of the surveyed
households used remittances for starting a business.
Much, of course, depends on the investment environment in the state, which
determines how productively resources can be used. Unfortunately, Kerala is a
laggard on this, in contrast to the experience of investment-friendly states like Tamil
Nadu and Karnataka, which have harnessed resources from their non-residents and
returned emigrants rather well.

Questions
1. What are the reasons for unemployment in Kerala inspite of having a
97 per cent literacy?
2. Do you think emigration is a major reason for the unemployment in Kerala?
3. Migration of labour force is the highest in Kerala, to Gulf or any other state
of the country. How can this feature of Kerala economy be used positively for
generating employment in Kerala?

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SUMMARY
◆ Unemployment is a situation characterised
when any one is not gainfully employed
in a productive activity. It means that an
unemployed person is the one who is seeking
any work for wages but is unable to find any job
suited to his capacity.
◆ Broadly, unemployment is of many types like
(i) cyclical, (ii) frictional, (iii) technological,
(iv)seasonal, (v) structural, (vi) voluntary, (vii)
involuntary, (viii) disguised, and (ix) casual.
But in most of the underdeveloped countries,
unemployment can be of three main forms.
They are (a) open, (b) disguised, and (c) under.
◆ The Indian experience of the relationship
between employment and development is vastly
different from that in the developed countries.
The unemployment in those countries is basically
temporary and every one gets the employment in
the course of time. This happens due to technological
improvements or cyclical fluctuations. But, here,
the tale of unemployment is chronic rather than
temporary, which can be called ‘structural’. It is
mainly due to the slow growth of capital formation
when compared to the increase in labour force.
KEY WORDS
● Cyclical Unemployment ● National Commission
● Open Unemployment for Enterprises in the
Unorganised Sector (NCEUS)
● Disguised Unemployment
● Organised Sector
● Underemployment
Employment
● Usual Principal Status (UPS)
● Explosive Population
Current Daily Status (CDS)
● Growth
QUESTIONS
1. Discuss the nature and extent of unemployment
in ­India.
2. Unemployment problem in India is primarily a
problem of structural unemployment. Do you agree?
3. What are the causes of unemployment in India?
What measures would you recommend to solve
the ­problem?
M29 Saleem 4 48160.indd 119
Unemployment in India | A-119
◆ Both unemployment and underemployment exist
side by side in the rural sector and it is difficult
to make a distinction between the two. In rural
areas, it exhibits in seasonal and perennial apart
from chronic and disguised unemployment.
Industrial unemployment is largely the offshoot
of rural unemployment. In the face of increasing
pressure of population on land, a mass exodus
of population from rural areas has migrated to
the urban areas in search of employment. In the
urban areas, this is the special class that emerged
due to mere educational facilities in towns. The
rate of unemployment is higher among the
educated than among the uneducated persons.
◆ Employment generation coupled with
improving employability has been the priority
of various governments. Many steps are being
taken for generating employment in the country,
like encouraging private sector of economy, fast-
tracking various projects involving substantial
investment and increasing public expenditure
on various employment schemes.
● Inadequate and Defective
Employment Planning
Capital-intensive Techniques
●
Labour-intensive Techniques
●
● Population Control
● Decentralisation
4. Economic planning has not been able to solve the
problem of unemployment. Explain?
5. Unemployment is a chronic problem, which
needs structural transformation of the economy.
To what extent do economic reforms help to solve
the problem?
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REFERENCES
➣ Government of India. Ministry of Finance. Union
Budget and Economic Survey. Budget 2007–2008.
Retrieved from https://www.indiabudget.gov.
in (Accessed on April 21, 2020).
➣ Government of India. Planning Commission. 5
Year Plans. Retrieved from https://niti.gov.in
(Accessed on April 20, 2020).
➣ Government of India. Ministry of Statistics and
Programme Implementation. National Sample
M29 Saleem 4 48160.indd 120
Survey Office (NSSO). Various Rounds of National
Sample Surveys. Retrieved from http://www.
mospi.gov.in (Accessed on May 15, 2020).
➣ Government of India. Ministry of Finance.
Department of Economic Affairs. The
Economic Survey 2019-20, Volume 2, Chapter 10:
Social Infrastructure, Employment and Human
Development. Retrieved from https://www.
indiabudget.gov.in (Accessed on April 7, 2020).
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