Employment

The essentials

A worker is a person engaged in an economic activity that contributes to GDP. The workforce is the number of people actually working; the labour force includes those working and those seeking work. The worker-population ratio = (number of workers ÷ total population) × 100; it shows what share of the population is actively contributing to production.

Status of workers

• Self-employed: owners and operators of their own enterprise, such as a farmer on his own land or a shopkeeper.
• Regular salaried employees: hired by others and paid wages or salaries on a regular basis.
• Casual wage labourers: hired on a daily or temporary basis without regular income or social security.
• In India, self-employment is the largest category, especially in rural areas.

Formal and informal sectors

• The formal (organised) sector includes all public sector establishments and private establishments that employ 10 or more hired workers. Formal workers enjoy social security, such as provident fund and paid leave.
• The informal sector includes all other enterprises and workers, such as farmers, small shopkeepers and casual labourers. Most of India's workforce is in the informal sector.
• Informalisation means a rising share of workers in the informal sector.

Unemployment

• Open unemployment: people willing and able to work cannot find any work.
• Disguised unemployment: more people work on a job than needed; removing some does not reduce output. Common in family farms.
• Seasonal unemployment: lack of work in certain seasons, as in agriculture between harvest and sowing.
• Policies: direct job creation by government, poverty alleviation programmes, and the Mahatma Gandhi National Rural Employment Guarantee Act (2005), which guarantees 100 days of wage employment a year to rural households whose adults volunteer for unskilled manual work.

Common mistakes

• Assuming any work done counts as employment; it must be an economic activity contributing to GDP.