EMPLOYMENT CONCEPTS

EMPLOYMENT CONCEPTS

Employment

·         The Oxford dictionary has defined employment, the situation in which people have work.

·          The work especially when it is done to earn money.

·          Another definition of the employment is, the capacity in which a worker pursued gainful activity during the reference week. Every working person is actively contributing to National income and hence, the development of the country by engaging in various economic activities i.e., the real meaning of earning and living.

Under-employment

(i)      Visible under-employment

(ii)    Invisible under-employment

·         It is commonly defined as the under-utilization of labour time of the workers. Some of the persons categorized as usually employed, do not have work throughout the year due to seasonality in work or otherwise and their labour time is not fully utilized.

·         They are, therefore, under-employed. Their under-employment is termed visible under-employment if they report themselves to be not working with respect to a shorter reference period.

·   Some employed persons, particularly the self-employed, may appear to work throughout the year. But the work they pursue may not fully meet their needs in terms of generating sufficient income, giving fulfillment to them etc.

·    They may, therefore, want additional or alternative work. Such under-employment is termed as Invisible Under-employment and therefore, not directly measurable.

Types of employment

Employed persons are categorized into three broad groups according to their status of employment. These broad groups are:

1.       Self employed workers: Workers, who own and operate an enterprise to earn their livelihood  are known as self-employed worker.

2.       Casual wage labourers: The construction workers are known as casual wage labourers. Such labourers are casually engaged in other’s farms and, in return, get remuneration for the work done.

3.       Regular salaried/wage employee: When a worker is engaged by someone or an enterprise and paid his or her wages on a regular basis, they are known as Regular salaried employees.

Key indicators

·         Labour Force Participation Rate (LFPR)

·         Worker Population Ratio (WPR)

·         Proportion Unemployed (PU)

·         Unemployment Rate (UR)

·         Workforce: The number of people actively engaged in various economic activities is termed on Workforce.

·         Labour Force Persons who were either working (or employed) or seeking or available for work (or unemployed) constitutes the Labour Force.

Unemployment

·         According to National Sample Survey Organization (NSSO) persons who owing to lack of work, had not worked but either sought work through employment exchanges, intermediaries, friends or relatives or by making applications to prospective employers or expressed their willingness or availability for work under the prevailing conditions of work and remuneration, were considered as those seeking or available for work (or unemployed).

·         Economists define unemployed person as one who is not able to get employment of even one hour in half a day.

Measures of unemployment in India

·         On the recommendation of the Bhagwati Committee, since 1972-73, National Sample Survey Office (NSSO) comes out with quinquennial survey on employment and unemployment.

·         The persons surveyed are classified into various activity categories on the basis of activities pursued during certain specified reference periods as Usual Principle Status, Current Weekly Status and Current Daily Status.

NSSO conducted 68^th round survey from July 2011 to June 2012

Usual Principle Status (UPS)

·         The status of activity on which a person has spent relatively longer time of the preceding 365 days prior to the date of survey is considered to be the usual principal activity status of the person.

·          The Usual Principal Activity status (UPS), written as Usual Status (PS), is determined using the majority time criterion and refers to the activity status on which h/she spent longer part of the year.

·          Principal usual activity status is further used to classify him in/out the labour force.

·         For instance, if an individual was ‘working’ and/or was ‘seeking or available for work’ for major part of the year preceding the date of survey then h/she is considered as being part of the ‘Labour Force

·         To decide the usual principle activity status of a person – a two staged classification is used to determine the broad activity level –

·   (1) employment /unemployment

·   (2) out of labour force , with in which the detailed activity status is determined , depending upon the relatively longer time spent .

 Usual Principal and Subsidiary Status (UPSS)

·         The concept was introduced to widen the UPS concept to include even those who were outside the labour force on the basis of the majority time criterion but had been employed during some part of the year on a usual basis.

·         A person is considered working or employed, if the person was engaged for a relatively larger period (over 182 days) in any one or more work related (economic) activities during the reference period of 365 days preceding the date of survey under UPS STATUS.

·          The UPS based unemployment is regarded as a measure of chronic unemployment and open unemployment.

·         Similarly if someone is classified as being in the labour force and has worked only for a minor period of time, then he will be classified as ‘unemployed’ based on UPS approach.

·          It’s quite likely that one who is outside the labour force by virtue of his spending longer time on ‘neither seeking/nor being available for work’ might have worked for a minor time period during the year long reference period.

·         To capture such exclusions, the concept of ‘subsidiary status worker’ was devised and thus the approach of UPSS.

·         According to this approach all individuals who are either unemployed or outside the labour force, but have worked for a minor period of not less than 30 days during the reference year are classified as subsidiary status workers.

Current weekly status

·         The Current Weekly Status (CWS) of a person is the activity status pursued during a reference period of seven days preceding the date of survey.

·         According to this criterion, a person is counted as employed if he/she was engaged in economic activity for at least one hour on any day during the reference week.

·         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.

·          A person who is not working even for one hour on any day but found seeking/available for work during the reference week is classified as unemployed.

·         A person who had neither worked nor was available for work anytime during the reference week is considered as engaged in non-economic activity (or not in the labour force).

·          To the extent that employment varies seasonally over the year, the labour force participation rates (LFPR) on the current weekly status would tend to be lower.

·         However, CWS unemployment rates would tend to be higher when we consider unemployment during the current week of those classified as being employed in the UPS (or UPSS) criterion.

·         The difference between unemployment rates on current weekly and that on usual status would provide one measure of seasonal unemployment.

Current daily status

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

·          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.

·         Indeed, the demand for labour in farming and nonfanning households often fluctuates over a small period within a week. Hence the need for the use of daily status approach to measure the magnitude of unemployment and underemployment in India.

·         In the daily status approach current activity status of a person with regard to whether employed or unemployed or outside labour force is recorded for each day in reference week.

·         Further, for estimating employment and unemployment, half day has been adopted as a unit of measurement.

·         A person who works for 4 hours or more up to 8 hours on a day is recorded as employed for the full day and one who works for an hour or more but less than 4 hours on a day is recorded as employed for half day.

·         Accordingly, persons having no gainful work even for one hour on a day are described as unemployed for full day provided that they are either seeking or are available for work.

·         Current Daily Status (CDS) of a person is determined on the basis of his/her activity status on each day of the reference week using a priority-cum-major time criterion (day to day labour time disposition).

·         Thus, the daily status approach would capture not only the unemployed days of those persons who are usually unemployed but also the unemployed days of those who are recorded as employed on weekly status basis.

Unemployment Rate (UR)

·         It is defined as the number of persons unemployed per 1000 persons in the labour force (which includes both the employed and the unemployed). This, in effect, gives the unutilized portion of the labour force.

·         Thus, it is a more refined indicator of the unemployment situation in a population than the Proportion Unemployed (PU), which is merely the number of the unemployed per thousand persons in the population as a whole.

·         It may be noted that the unemployment rate, as estimated from the surveys, happens to be very much lower in the population compared to the worker population ratio (WPR). Therefore, the estimates of unemployment rate obtained from the surveys are subject to higher margin of sampling fluctuations than those of the WPRs.

Types of Unemployment

Generally, unemployment can be classified into two types:

Voluntary Unemployment

·         This type of unemployment is on account of persons not interested to take the employment i.e., jobs are available but the persons are not interested in being employed. It is psychological in nature. Therefore, such types of persons are not included in the category of unemployed.

Involuntary Unemployment

·         It refers to a situation in which the persons are interested to work but the jobs are not available. Such persons are included in the categories of unemployed persons. Under this there are various categories of unemployment. They are:

Cyclical Employment:

·         This type of unemployment is due to the recession in the economy. During recession, there is less requirement of man power on account of the decrease in the level of economic activities and thus causes cyclic unemployment.

·         This type of unemployment is prevalent in the developed countries. This is also known as Keynesian Unemployment.

Frictional Unemployment:

·         This type of unemployment is caused by people taking time out of work, being between jobs or looking for a job.

·         The one cause of its evolution is decline of one industry and rise of the other and labour take some time before moving to the other industry. This type of unemployment is short term in nature.

Seasonal Unemployment:

·         It is on account of the seasonal nature of the productive activities, i.e., some productive activities are carried out only for certain duration of year. Therefore, the persons employed in such activities are unemployed during off-season. This, generally, occurs in agro-based industries.

Disguised Unemployment:

 A situation in which more people are available for work then is shown in the unemployment statistics. It is also known as concealed unemployment and the discouraged worker effect.

Structural Unemployment:

·         It refers to a mismatch of job vacancies with the supply of labour available, caused by shifts in the structure of the economy.

·         Structural joblessness results from things like skills mismatches, and policy to address such mismatches is inherently longer term in scope, involving education and encouraging innovation.

Technological Unemployment:

Technology has always displaced some work and jobs. In 1930, the economist John Maynard Keynes warned of a new disease that he termed Technological Unemployment.

·         Thus, technological unemployment is a term used to describe the lack or loss of jobs due to technological changes or innovations.

·         This type of unemployment typically comes from workers either being replaced by machines or having their jobs made easier and require fewer workers to accomplish the same task. It is one of the reasons of jobless growth.

Employment statistics are produced by three bodies:

·         The National Sample Survey Office (NSSO) releases its survey-based employment results every five years. The data covers both organised and unorganised sector employment and is quite comprehensive.

·         The Central Statistics Office (CSO) releases the ‘Economic Census’ every five years, which also provides survey-based data on employment but only with respect to establishments in the organised and unorganised sectors.

·          The Labour Bureau, ministry of labour and employment, releases the ‘Annual Survey of Industries (ASI)’, covering employment in the organised sector as well as the ‘Quarterly Report on Changes in Employment in Select Sectors’.

Employment status

·   Employment growth in the organized sector, public and private combined, increased by 2.0 per cent in 2012 over 2011, as against a growth of 1.0 per cent in 2011 over 2010.

·    The annual growth rate for the private sector was 4.5 per cent in 2012 against a growth of 5.6 per cent in 2011; whereas the public sector registered a marginal growth of 0.4 per cent in 2012 against a decline of 1.8 per cent in 2011.

·   The share of women in organized sector employment was around 20 per cent over the three years.

·         According to the fourth Annual Employment-Unemployment Survey conducted by the Labour Bureau during the period January 2014 to July 2014, the Labour Force Participation Rate (LFPR) (usual principal status) is 52.5 for all persons.

·          The LFPR for rural areas at 54.7 is greater than that for urban areas at 47.2.

·         The LFPR for women is significantly lower than that for males in both rural and urban areas.

·         The Worker Population Ratio (WPR) reflects a similar pattern, with women having lower participation rate in comparison to men in both rural and urban areas.

·         As per Census 2011 also, the workforce participation rates for females trails behind that for males.

·         The Unemployment Rate (UR) for persons aged 15 years and above according to Usual Principal Status (UPS) is 4.7 per cent in rural areas and 5.5 per cent in urban areas.

·         The total UR reported is 4.9 per cent (Table 9.5).

·         The Labour Bureau survey figures are much higher than the all- India unemployment rates arrived at by the National Sample Survey Office (NSSO, 2011-12), which reported URs of 2.3 per cent for rural areas, 3.8 per cent for urban areas and 2.7 per cent for India as a whole. The URs varied widely across States as can be seen in Figure 9.2.

·         As per the latest Quarterly Quick Employment Survey Report of the Labour Bureau, the overall estimated employment in all the selected sectors has shown a net addition of 37.67 lakh (persons) starting from the first survey (October 2008 to December 2008) till the 26th survey (April 2015 to June2015).

·         Box.9.1 shows employment generated in eight select industries

·         According to the India Labour and Employment Report 2014 [prepared by theInstitute for Human Development (IHD), New Delhi], the low labour force participation in India is largely because the female LFPR, which is amongst the lowest in the world and the second lowest in South Asia after Pakistan. The participation of women in the labour force and employment rates are heavily impacted by economic, social and cultural issues and care work distributions in the home (Human Development Report- HDR, 2015).

12^th Plan-Some Employment Related Ideas

Currently, India is passing through an unprecedented phase of demographic changes. The ongoing demographic changes are likely to contribute to an ever increasing size of labour force in the country. The Census projection report shows that the proportion of Population in the working age group (15-59 years) is likely to increase from approximately 58% in 2011 to more than 64% by 2021. But the overall population is not the issue-the proportion in the working age group of 15-59 years will increase from 57.7% to 64.3%.

Labour force participation rate (LFPR)

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