Employment

Generation in
India
Updated as of SEP 2020

ECONOMICS

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Employment Generation in
India
• The state of being employed is known as employment. It denotes the relationship
between an employer and an employee.

• People engaged in productive activities i.e. in activities that contribute to the national
product of the country constitute the workforce. Labour force refers to the number of
workers willing and able to offer their Labour at a wage rate.

Types of Workers
1. Hired Worker: Workers who are employed by others (employers) and receive a
salary/wage as compensation for work. These again are of 2 types:

• Casual Worker: Workers who are engaged by employers temporarily for

some specific work. Their work is not permanent and they do not receive any
social security or other work benefits. Example: Construction workers are
given hired only for specific projects.

• Regular Salaried Worker: Workers hired by employers permanently and are

paid regular salaries/wages for their work. Example: Chartered accountants,
teachers, sports trainers at a sports club.

2. Self-Employed: These are those workers who are not employed by some employer
but who own and work for their enterprise. Example: Proprietors, business persons.

15-29 Years 30+ Years

Sector Male Female Total Male Female Total

2017-18

Rural 58.9 15.9 38.1 87.3 29.6 58.3

Urban 58.5 17.5 38.6 83.8 21.9 52.8

Total 58.8 16.4 38.3 86.2 27.2 56.6

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15-29 Years 30+ Years

Sector Male Female Total Male Female Total

2011-12

Rural 64.9 27.1 46.4 91.7 41.0 66.3

Urban 60.7 18.1 40.5 86.7 22.0 54.9

Total 63.6 24.4 44.6 90.2 35.4 62.9

2004-05

Rural 77.2 42.8 60.2 91.7 53.7 72.6

Urban 68.3 21.6 46.6 87.1 26.3 57.3

Total 74.6 37.1 56.4 90.4 46.4 68.5

Important Terminologies
Labor Force participation rate:
• The labor force participation rate is a measure of an economy's active workforce.

• The formula for the number is the sum of all workers who are employed or actively
seeking employment divided by the total noninstitutionalized, civilian working-age
population.

Worker population ratio:

• Worker population ratio is defined as the number of persons employed per thousand
persons.

• Worker Population Ratio is an indicator used for analyzing the employment situation
in the country.

Unemployment Rate:
• The unemployment rate is the proportion of the labor force that is not currently
employed but could be.

• Unemployment Rate = (No. of Unemployed Persons / Total Labour force) x 100

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Three Major Sources of Data on Employment are as

Follows
• Census of India

• National sample survey organization

• Directorate General of Employment

Census of India:
• The last survey was conducted during 2011-12. According to it, the total workforce is
estimated at 47.41 crore, out of which 33.69 crore were rural workers and 13.72
crore were urban workers.

• The total number of women workers in 2011, including rural and urban, as per
population Census 2011 was 15.0 crore. In the rural areas, it was 12.2 while in
urban areas it was 2.8. The total workforce participation rate of women workers was
25.5 per cent.

• While 23.18 crore persons were employed in agriculture and allied sectors in 2011-
12, 11.50 crore were employed in industries sector and 12.73 in the services sector.

Directorate General of Employment:

• The Directorate General of Employment (DGE) in Ministry of Labour is the apex
organization for development and coordination at National level for the programmes
relating to vocational training including Women’s Vocational Training and
Employment Services.

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Types of Unemployment

Rural Unemployment:
• 70% of Indian population lives in rural areas. And most of the rural workforce
is involved in agriculture. But, not enough employment is available for all
those living in rural areas thus leading to unemployment.

Urban Unemployment:
• The unemployment present in urban areas is known as urban unemployment.

Open Unemployment:
• This is the situation where people who are willing and able to work cannot
find any work.

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Disguised Unemployment:
• It is a phenomenon wherein more people are employed than needed. The
marginal physical productivity of many workers remains zero. It is primarily
traced in the agricultural and the unorganized sectors of India. The classic
example is when almost the entire family engages in farm production.

Seasonal Unemployment:
• In this case, workers remain out of work for a particular season. For example,
workers hired only for the harvest season remain unemployed for the
remaining period of the year.

Structural Unemployment:
• This type of unemployment arises when there is a mismatch between the
jobs available in the market and the skills of the available workers in the
market. This type of unemployment is very common in India.

Cyclical Unemployment:
• It is the result of the business cycle, where unemployment rises during
recessions and declines with economic growth. Cyclical unemployment
figures in India are negligible. It is a phenomenon that is mostly found in
capitalist economies.

Technological Unemployment:
• Loss of jobs due to changes in technology is known as technological
unemployment.

Frictional Unemployment:
• This unemployment arises when a person wastes his time in shifting from one
job to another. When an employee requires time for searching a new job or
shifting from the existing to a new job, this unavoidable time delay causes
frictional unemployment. This is also called as voluntary unemployment
because it is not caused due to the shortage of job, but in fact, the workers
themselves quit their jobs in search of better opportunities.

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Vulnerable Employment:
• This means, people, working informally, without proper job contracts and thus
sans any legal protection. These persons are considered ‘unemployed’ since
records of their work are never maintained. This is the main reason of
unemployment in India.

Measurement of Employment
On the basis of time and willingness criteria open unemployment and underemployment
have been estimated using the following three approaches which were recommended
by an expert committee headed by Prof. M L. Dantwala:

I. Usual Status Approach:

 This approach records only those persons as unemployed who had no gainful
work for a major time during the 365 days preceding the date of survey and
are seeking or are available for work.

 Thus, the estimates of unemployment obtained on the basis of usual status

approach are expected to capture long-term open unemployment.

II. Weekly Status Approach:

 In this approach current activity status relating to the week preceding the date
of survey is recorded and those persons are classified as unemployed who
did not have gainful work even for an hour on any day in the preceding week
and were seeking or were available for work.

 The persons who may be employed on usual status approach may however
become intermittently unemployed during some seasons or parts of the year.

 Thus, unlike the usual status approach, weekly status approach would
capture not only open chronic unemployment but also seasonal
unemployment. Besides, this approach provides weekly average rate of
unemployment.

III. Daily Status Approach:

• The weekly status approach records a person employed even if he works only for an
hour on any day of the whole week.

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• It is thus clear that the weekly status approach would tend to underestimate
unemployment in the economy because it does not appear to be proper to treat all
those who have been unemployed for the whole week except an hour as employed.

Challenges to Employment Generation

in India
• Increasing Population

• Underqualified Jobs for educated youth

• Lack of investment and infrastructural development

• Lack of small scale industries

• Technology overtaking manual labour

• People leaving agricultural occupations due to low productivity

• Lack of skill development Education

Various Employment Generation

Programmes by Government of India
To mitigate the problem surrounding unemployment apart from private enterprises, the
GOI (Government of India) has time and time again come up with various employment
generation programs. Some of which include:

Integrated Rural Development Programme (IRDP)

• Launch Date: 1978 and Implemented during 1980

• Ministry: The Ministry of Rural Development

• Implementation Body: District Rural Development Agencies (DRDAs)

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• Objectives:

 The objective of Integrated Rural Development Program is to help families

who live below the poverty line to enhance their state of living and to
empower the poor by helping them develop at every level.

 The program’s objectives are met by providing productive assets and inputs
to its target groups.

 The assets, which could be in the primary, secondary or tertiary sector are
provided as financial assistance to these families in the form of government
subsidies as well as loans or credit from financial institutions.

• Beneficiaries:

 Rural artisans

 Laborers

 Marginal Farmers

 Scheduled castes and scheduled tribes

 Economically backward classes with an annual income of less that Rs 11,000

• Important Highlights:

Subsidies are provided to the following people as follows:

 Small farmers (25%)

 Marginal farmers and Agricultural laborers (33.33%)

 SC/ST families and differently abled people (50%)

Swarna Jayanti Gram Swarozgar Yojana (SGSY)

• Launch Date: April 1, 1999

• Ministry: Ministry of Rural Development

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• Objectives:

 The objective of SGSY is to ensure that the assisted poor families have a
monthly income of at least Rs. 2000 so that to bring those families above the
poverty line in three years.

 The assisted families may be individuals (swarozgari) or groups (self-help

groups).

• Beneficiaries:

Beneficiaries Reservation Subsidy

PWDs 3.00% 30% or Rs.7500/- whichever is less.

SC/ST 50.00% 50% or Rs.10000/- whichever is less.

Women 40.00% 30% or Rs.7500/- whichever is less.

S.H.Gs – 50% or Rs.1.25 lakh whichever is less.

Irrigation projects — No monitoring limit on subsidy.

• Important Highlights:

 It emphasized on organizing rural poor into self-help groups (SHG’s),

infrastructure support, capacity building, planning activity clusters and credit
marketing linkages.

Jawahar Rozgar Yojana/ Jawahar Gram Samridhi

Yojana (JGSY)
• Launch Date: 1st April 1999

• Ministry: The Ministry of Rural Development

• Objectives:

 The main objective of the Yojana was additional gainful employment for the
unemployed and under-employed persons in rural areas.

 The other objective was the creation of sustained employment by

strengthening rural economic infrastructure and assets in favour of rural poor
for their direct and continuing benefits.

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• Beneficiaries: Rural poor people

• Important Highlights:

 Jawahar Rozgar Yojna was launched on April 1, 1989 by merging National

Rural Employment Program (NREP) and Rural Landless Employment
Guarantee Program.

 Jawahar Gram Samridhi Yojana (JGSY) is the restructured, streamlined and

comprehen­sive version of the erstwhile Jawahar Rozgar Yojana (JRY),
launched on 1st April 1999.

 The Sampoorna Grameen Rozgar Yojana was launched on 1 September

2001 by merging the provisions of Employment Assurance Scheme (EAS)
and Jawahar Gram Samridhi Yojana (JGSY).

Sampoorna Gramin Rozgar Yojana (SGRY)

• Launch Date:

 The JGSY and food for work programme were revamped under a single head
of Sampoorna Gramin Rozgar Yojana in Sept 2001.

• Ministry: The Ministry of Rural Development

• Objectives:

 Major aims included wage employment, creation of durable economic

infrastructure and food and nutrition security for the poor.

• Beneficiaries: Rural Poor

• Important Highlights:

 Minimum wages paid to the workers through a mix of minimum five kg of food
grains and at least 25 per cent of wages in cash.

 Implemented by all the three tiers of Panchayati Raj Institutions. Each level of
Panchayat was an independent unit for formulation of Action.

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Mahatma Gandhi National Rural Employment

Guarantee Act (MGNREGA)
Launch Date: February 2, 2005

Ministry: Ministry of Rural Development

Implementation Body: Implemented mainly by gram panchayats (GPs).

Objectives:

 Aimed to provide 100 days assured employment every year to every rural
household.

 Social protection for the most vulnerable people living in rural India by
guaranteeing wage employment opportunities.

 Enhance livelihood security of the rural poor through generation of wage

employment opportunities in works leading to creation of durable assets.

 Rejuvenate natural resource base of rural areas.

 Create a durable and productive rural asset base.

 Empowerment of the socially disadvantaged, especially, women, Scheduled

Castes (SCs) and Scheduled Tribes (STs), through the processes of a rights-
based legislation.

 Strengthen decentralized, participatory planning through convergence of

various anti-poverty and livelihoods initiatives.

 Deepen democracy at the grassroots by strengthening Panchayati Raj

Institutions

• Beneficiaries:

 One-third of the jobs would be reserved for women.

• Important Highlights:

 If an applicant doesn’t get a job within 15 days of application, he shall be

given daily unemployment allowance.

 National and State Level Employment Guarantee Funds will be set up for
implementation of the scheme

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National Food For Work Programme

• Launch Date: November 14, 2004

• Ministry: Ministry of Rural Development

• Objectives:

 The objective of the programme was to provide additional resources apart

from the resources available under the Sampoorna Grameen Rozgar Yojana
(SGRY) to 150 most backward districts of the country so that generation of
supplementary wage employment and providing of food-security through
creation of need based economic, social and community assets in these
districts are further intensified.

• Beneficiaries: Every rural household whose members volunteer to do unskilled

manual work.

• Important Highlights:

 The scheme was 100 per cent Centrally sponsored.

 The programme has since been subsumed in National Rural Employment

Guarantee Act which has come in force in 200 identified districts of the
country including 150 NFFWP districts.

National Rural Livelihood Mission

• Launch Date: June 2011

• Ministry: Ministry of Rural Development

• Objectives:

 Aimed to provide jobs to rural poor with regular income every month.

 Self Help Group formation at the level of the village to help the needy.

• Beneficiaries:

 In case of extremely vulnerable persons like Persons with Disabilities (PwDs),

elders etc., NRLM mobilizes both men and women.

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 Further, other interventions of NRLM like Rural Self Employment Training

Institutes (RSETIs), Aajeevika Skills would reach out to poor in general.

• Important Highlights:

 National Rural Livelihood Mission seek to improve livelihood options of rural

poor

 By setting up a large number of new manufacturing industries and

agribusiness centres in rural areas.

 By strengthening Self-Help Groups and providing skill development

Pradhan Mantri Kaushal Vikas Yojana

• Launch Date: 2015

• Ministry: Ministry of Skill Development and Entrepreneurship

• Implementation Body: National Skill Development Corporation.

• Objectives:

 Primary focus on new labour entrants into the labour market and high school
and secondary school dropouts.

• Beneficiaries:

 In line with the scheme objectives, the scheme is applicable to any candidate
of Indian nationality who:

 Is an unemployed youth, college / school dropout

 Has a verifiable identity proof - Aadhaar / Voter id and a bank account.

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National Heritage Development and Augmentation

Yojana (HRIDAY)
• Launch Date: 21st January 2015

• Ministry: Ministry of Urban Development.

• Objectives: To preserve and rejuvenate the rich cultural heritage of the country.

• Beneficiaries: All National heritage sites.

• Important Highlights:

 Multiple institutions and unclear regulatory framework for financing and

managing urban heritage assets and landscapes, as well as weak capacity of
Urban Local Bodies have created major challenges for managing these
heritage cities.

Startup India Scheme

• Launch Date: 16th January, 2016

• Ministry: Ministry of Commerce and Industry (Department for Promotion of Industry

and Internal Trade)

• Objectives:

 Attracting more innovation and entrepreneurs

 Job creation

 Boost to Make in India initiative and foreign exchange earnings in the long run

 Simplification and hand-holding

 Funding support and incentive

• Important Highlights:

 The Action Plan is divided across the following areas:

 Simplification and Handholding

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 Funding Support and Incentives

 Industry-Academia Partnership and Incubation

Standup India Scheme

• Launch Date: 2016

• Ministry: Ministry of Finance

• Implementation Body: Department of Financial Services (DFS)

• Objectives:

 The objective of the Stand-Up India scheme is to facilitate bank loans

between 10 lakh and 1 Crore to at least one Scheduled Caste (SC) or
Scheduled Tribe (ST) borrower and at least one woman borrower per bank
branch for setting up a greenfield enterprise.

• Beneficiaries:

 SC/ST and/or woman entrepreneurs, above 18 years of age.

 Loans under the scheme is available for only green field project. Green field
signifies, in this context, the first time venture of the beneficiary in the
manufacturing or services or trading sector.

 In case of non-individual enterprises, 51% of the shareholding and controlling

stake should be held by either SC/ST and/or Women Entrepreneur.

 Borrower should not be in default to any bank/financial institution.

• Important Highlights:

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Suggestions to Create More

Employment
• Decentralization of industrial activities so that industrially backward regions can
develop.

• Development of rural areas thus leading to employment generation.

• Promote entrepreneurship among youths

• Special package for labor-intensive industries.

• Easy availability of loans.

• Public investment in sectors like health, education, police, judiciary, and other
government jobs.

• Special concessions for start-ups.

• Support for MSMEs.

• Need to make the starting of new business easy and free of red-tapism.

• Restructuring industrial and trade policy according to the present needs.

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• Reducing interest rates leading to an increase in money supply in the market.

• Empowering women to take the lead.

• Promotion of those sectors having potential.

• Development of skills in youth.

• Unemployment allowance can also boost up the economy in general so ultimately

leading to employment creation in so many sectors.

• Cutting taxes so that firm can Invest the saved money.

• Strict watch on the Indian education system.

• Public-private partnership is the need of the hour. Tapping the potential of under
optimal sectors.

Apart from the above-mentioned suggestions, there is an urgent need on part of the
government to bring a new employment policy which will ensure:

 Descent quality job creation.

 Enhancement of human capital.

 Strengthening of social cohesion and enquiry in the labour market.

 Supporting private sector.

 Supporting a self-employed person.

 Supporting minimum wages.

 Coordination in different programmes of government.

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