CONTENTS

1) INTRODUCTION
2) CLASSIFICATION OF EMPLOYMENT
• FORMAL SECTOR & INFORMAL SECTOR
• FULL TIME & PART TIME EMPLOYMENT
• TYPES OF EMPLOYEES
3) KEYNES’ THEORY
• TERMINOLOGY
• SUMMARY
• CHART
4) LITERATURE REVIEW
• CASE STUDY OF ISSUES ON LIVELIHOOD IN UNORGANISED
SECTOR IN GUJARAT
• CASE STUDY ABOUT THE NEED FOR THE AGENDA OF
ECONOMIC REFORMS IN URBAN INFORMAL SECTOR
• CASE STUDY ABOUT POVERTY ALLEVIATION AND
EMPLOYMENT GENERATION IN STATE OF MADHYA
PRADESH.
5) EMPLOYMENT SCENARIO IN INDIA
6) FINDINGS

REFERENCES

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1) INTRODUCTION

Different societies place differing levels of importance on the

concept of "going to work". In some societies, work is less important to
perceptions of individual social connection or value, while in other
societies an individual's sense of worth and social standing is connected
strongly to what a person "does for a living". But, whatever may be the
case, work is important. So, prediction and analysis of employment
opportunities in the areas is necessary for all round development of the
society.

2) CLASSIFICATION OF EMPLOYMENT

A) Employments are classified in two major types.

1. Formal Sector Employment (Organised)

2. Informal Sector Employment (Unorganised)
FORMAL SECTOR EMPLOYMENT

Any job where the employee has a contract of employment, certain

assured rights, pay taxes, and may be provided with a pension scheme.

INFORMAL SECTOR EMPLOYMENT

“Unorganized / Informal employment consists of causal and contributing

family workers; self employed persons in un-organized sector and private
households; and other employed in organized and unorganized enterprises
not eligible either for paid sick or annual leave or for any social security
benefits given by the employer”

B) Employments may also be classified into two types.

1. Full Time Employment

2. Part Time Employment

FULL TIME EMPLOYMENT

Generally full time work ranges between 35 and 40 hours per week
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and full weekly wages are given and conditions for working the hours
identified in the contract. One should receive all wages and conditions
under the contract which includes annual leave and long service leave.

PART TIME EMPLOYMENT

In part time employment, an employee is not obliged to have only one

employment. eg. Working students, drivers working for two places,
doctors working for two hospitals or two organisations.

C) Now employees are classified into different categories.

1. Temporary
2.Probationer
3.Confirmed or permanent
4.Casual

We can have all these categories of employees in Full Time employment

or part Time employment.

1. TEMPORARY

An employee engaged on a temporary basis for a fixed period of time. He

may not be eligible for all the benefits, eg. Employees taken against leave
vacancies, employees taken to complete a project and specified so.

2. PROBATIONER

He is taken on a permanent basis against a permanent vacancy but is

under observation. The period of probation is fixed from 6 months to one
year.

3. PERMANENT/CONFIRMED

Permanent employee is confirmed in the rolls of the company and is

eligible for all benefits specified. The organisation is obliged to allot him
work on a continuous basis. Even if no work is provided, the organisation

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has to make regular payments.

4. CASUAL

Casual employees are engaged to work on an hourly or daily basis. They

receive an extra loading on top of the normal rate of pay to compensate
for not receiving benefits such as paid sick leave and paid public
holidays. This work load is generally between 15% and 33.3% above the
normal full-time hourly rate. Casual workers also usually receive an extra
amount equal to a further 1/12th of the casual hourly rate to cover pro-
rate annual holiday pay.

3) KEYNES’ THEORY

Keynes’ theory of income and employment is based on the

principle Effective Demand. For this it is necessary first to know the
concept of Aggregate Supply Price and Aggregate Demand Price.

Aggregate Supply price means the total cost of producing the

output by that number of man. Aggregate Demand Price means the
expected receipts of entrepreneurs by the sale of total output when a
given volume of employment is offered to workers.

Effective Demand is that aggregate demand at which the economy

in equilibrium.
• Effective Demand = National Income =
Value of National Output = Expenditure on consumption
Goods + Expenditure on Investment Goods.

Keynes therefore preceded to analysis in detail the factors on

which consumption and investment demands depended and in doing so
developed certain other new concepts like propensity to consume,
investment multiplier, marginal efficiency of capital and liquidity
preference. We shall therefore content ourselves with presenting the
Keynesian theory of income and employment in a summary form in terms
of the following propositions:
1. In an economy, in the short run, its total income depends on the
volume of employment.
2. Total employment depends on total effective demand and, in
equilibrium; aggregate demand is equal to aggregate supply.
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 3. Aggregate supply depends on physical and technical condition of
production and, in the short run, these do not often change.
4. Effective demand is made up of (a) consumption demand, and (b)
investment demand.
5. Consumption demand depends on propensity to consume. In the
short run, propensity to consume is relatively stable.
6. Propensity to consume being relatively stable, investment demand
or investment expenditure has a crucial role in determining the
level of employment.
7. Investment demand depends on (a) the marginal efficiency of
capital, and (b) the rate of interest. Since the rate of interest is
relatively stable, marginal efficiency of capital is of crucial
importance.
8. The marginal efficiency of capital depends on (a) the
businessman’s expectations of profit yields, and (b) the
replacement cost of capital assets.
9. The rate of interest depends on (a) the quantity of money, and (b)
the state of liquidity preference.
10.In the short run, the rate of interest is relatively stable, therefore the
marginal efficiency of capital is by far the more important
determinant of investment, as pointed out above, plays a strategic
role in determining the level of income and employment in an
economy.

The Keynesian theory outlined above can also presented in the form of
a chart as under:

4) LITERATURE REVIEW

1) The report shown here includes part of the case study carried out by
Prof. Jeemol Unni, who is Professor at GIDR, Ahmedabad, about the
issues of livelihood in the unorganised sector shows the impact of

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changing urban policies on the conditions and status of workers in
Gujarat. It begins with the analysis of urban policies, profile of urban
workers, their education and skill levels and problems faced by informal
sector. It is pointed out that the current model of urbanisation has less
space and resources for the urban poor. It is resource and capital intensive
and facilitates amenities to urban upper and elite classes in terms of large
apartment complexes, shopping malls, multiplexes and parking lots.
Capital intensity of urban growth creates divide between the rich and the
poor raising prices of basic amenities and making these inaccessible to
poor. Urban casual informal workers have been left behind in grabbing
the growing urban employment opportunities as they don’t have adequate
education and skills. The self-employed workers face specific problems
of access to credit, markets and space and also incur various ‘hidden
costs’. The self-employed among the urban workers in the 15-64 years
group has shown higher poverty rates than the salaried but much lower
than the casual workers. Urban policy of sealing drive has affected
economic condition of a large number of poor families. The social
security and working conditions of the workers are important aspects and
the report of the National Commission for enterprises in unorganised
sector has suggested addressing these issues which is a welcome step.
Skill is a form of security and it improves employability of the workers. A
system of skill training for urban areas will be a useful way forward in
promoting employment opportunities amongst the urban workers.

2) The report presented here was prepared by studying the case study
done by Madhu Purnima Kishwar, who is a Sr. Fellow at Centre for the
Study of Developing Societies(CSDS), about the need for the agenda of
economic reforms in urban informal sector, particularly, the cycle
rickshaws and street vendors of Delhi.

The case of Cycle Rickshaws:

They are a popular mode of transport in most towns and cities of

India. There is a growing demand for them as they are versatile and
multipurpose and they are seen plying virtually in all colonies across the
city. They are most eco-friendly and its removal from the roads would
lead to dramatic increase in demand for fuel for an alternate transport
system. They as a means of transport are being introduced in Paris and
Oxford which are very pollution conscious cities. Instant means of
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livelihoods and earning potential: For many rural poor migrants it acts as
a means of livelihood. These rickshaws have been banned where they are
needed most mainly the arterial roads of Delhi by a High Court Order in
the case of Hemraj vs. CP Delhi on the ground that rickshaws as they ply
slow lead to traffic to slow down thus leading to congestion. There are a
host of other restrictions as imposed by the license quota raid raj (quotas
on number of licenses) and there are many other absurd restrictions. For
instance no person can ply a rickshaw unless he is the owner. Meaning a
person cannot own more than one rickshaw. This has become a tool of
exploitation for the police and MCD officials.

The case of Street Vendors:

Street vendors provide a vital link between the producer and the
consumer. As per the National Policy for Street Vendors 2.5% of urban
population is involved in street vending and hawking, meaning it
provides livelihood to almost a crore urban people. Restrictions and
absurd quotas have been imposed on hawking activities by the Municipal
Corporations in various cities. The challan system introduced by the
municipal authorities has become a tool for corruption through bogus
challans which are available for a price. Total mismatch with ground
reality: Though the Supreme Court has declared that street vending is
covered under right to livelihood clause of the Constitution municipal
agencies all over India have managed to keep the vast majority of vendors
illegal and insecure. The entire process of clearance outlined is a farce.
Though the government is planning to introduce model legislation for
street vendors, without the implementing agency in place the new law
will suffer the same fate as the National policy for Street Vendors.

3) This is the summary prepared on the report by Planning Commission

about the poverty alleviation and employment generation in the state of
Madhya Pradesh. There has been an honest attempt at earmarking of the
budget to provide basic services to the urban poor. Generally, 10–15 per
cent of the budgets of the Urban Local Bodies (ULBs) are allocated for
the urban poor. Major activities covered under the budget allocation for
urban poor are water supply, sanitation, paving of lanes, construction of
drains, roads, street lighting, and slum rehabilitation. The share of the
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budget for the urban poor will be increased in the next few years. The
government is focusing on providing/facilitating creation of livelihoods
through the Swarn Jayanti Shahri Rozgar Yojana (SJSRY) in the urban
areas. The programme is funded on a 75:25 basis between the centre and
the states. The programme is targeted at the urban poor and has two
components, namely, Urban Self Employment Programme (USEP) and
Urban Wage Employment Programme (UWEP). Every year, more than
7000 beneficiaries are given credit through USEP. In addition, more than
11,000 beneficiaries are given training under the USEP-Training
component. Another livelihood related initiative of significant import is
the Urban Street Vendors Policy and Programme. The programme is
aimed at providing and promoting a supportive environment for earning
livelihoods to the street vendors, as well as easing congestion and
maintaining hygiene in public spaces and streets. The programme
envisages the creation of ‘hawking zones’ in the urban development/
zoning plans, giving legal status to the vendors, promoting self-
compliance among the vendors, promoting organizations of street
vendors to affect their empowerment, rehabilitating child vendors,
facilitating social security (pension, insurance etc.) and access to credit
through the promotion of SHGs/cooperatives/federations/Micro Finance
Institutions (MFIs) etc. and capacity building to improve entrepreneurial
skills.

5) EMPLOYMENT SCENARIO IN INDIA

In India, due to the agrarian sector with seasonal operations time
disposition and availability for work have been the criteria for measuring
employment. The accepted method of measuring employment is the usual
status. Reliable estimates of employment/unemployment are generated
through National Sample Surveys conducted once in five years by
National Sample Survey Organization (NSSO). The concept recognizes
time utilization only. Quality of work or income does not get reflected
in the approach.

As per the results of the National Sample Survey conducted in

1999-2000, total work force as on 1.1.2000, as per Usual Status
approach (considering both principal and subsidiary activities) was of
the order of 406 million. About 7 % of the total work force is employed
in the formal or organized sector (all public sector establishments and all
non-agricultural establishments in private sector with 10 or more
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workers) while remaining 93% work in the informal or unorganized
sector. The size of the Organized Sector employment is estimated through
the Employment Market Information Programme of DGE&T, Ministry of
Labour. The capacity of the organized sector to absorb additional
accretion to the labour force, taking into account the current accent on
modernization and automation, is limited. In other words, an
overwhelming proportion of the increase in the labour force will have to
be adjusted in the unorganized sector. About 369 million workers are
placed today in unorganized/informal sector in India; agriculture workers
account for the majority of this work force.

The employment and unemployment scenario as per this approach

depict the following picture.

Year 1983 1988 1994 1999-2000

Estimated population 718.21 790.00 895.05 1004.10
Labour Force 308.64 333.49 391.94 406.05
Employed 302.75 324.29 374.45 397.00
Unemployed 5.89 9.20 7.49 9.05
Unemployment rate
(as percentage of 1.91 2.76 1.96 2.23
labour force)
Employment in
24.01 25.71 27.37 28.11
organized sector
Employment in
278.74 298.58 347.08 368.89
unorganized sector
GDP growth 7.70 3.80 5.90 6.40

Note:

1. Employment, Unemployment, Unemployment rate and Labour force

are on Usual Status basis and are based on estimates given in various
rounds of NSSO (National Sample Survey Organization).
2. Population estimates are as per projection made by Expert Committee
on Population projection, Census of India.
3. Organized sector employment are on the basis of data collected by
DGE&T(Directorate General of Employment & Training).

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4. GDP growth rates are from Central Statistical Organization.
Estimates of population, labour force, employment and unemployment
(in million).
5. All figures are in million.

7) FINDINGS

• Employment is the phenomenon that is directly affected by

economic activity of the region.
• Increase in economic activity results in increase in employment.
• It can be seen that unorganised sector is the major source
responsible for growth of the economy.
• Therefore, the unorganised sector should be monitored in well
organised manner, which further increases overall GDP.
• There is an initiative by planning commission in which they have
addressed social issues and working conditions of these workers.

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REFERENCES

1. Indicative Outlines of Subjects selected for discussion at the 69th

Annual Conference of the Indian Society of Agricultural
Economics, Ministry of India (2007).
2. Reena Bhasin (2001), “Urban Poverty & Urbanization”, Deep &
Deep Publications Pvt. Ltd., New Delhi.
3. Huriot, Jean Marie & Thisse, Jacqueous-Francois (2000),
“Economics of Cities: Theoretical Perspectives”, Cambridge
University Press, Cambridge,UK.
4. Angus McIntosh (1997), “Towns & Cities: Competing for
survivals”, E & FN Spon, London, UK.
5. Le Van Thanh (2007), Economic Development, Urbanization and
Environmental changes in Ho Chi Minh city, Vietnam: Relations
and Policies, Institute for Economic Research, Ho Chi Minh City,
Viet Nam.
6. Herrmann, Michael and Khan, Haider (2008),”Rapid urbanization,
employment crisis and poverty in African LDCs: A new
development strategy and aid policy”, Graduate School of
International Studies, University of Denver, USA.
7. Simple Keynesian Model, Rai University, Delaware, USA
8. www.planningcommission.com
9. www.industrialrelations.nsw.gov.au
10.www.dget.nic.in
11. Reena Bhasin (2001), “Urban Poverty & Urbanization”, Deep &
Deep Publications Pvt. Ltd., New Delhi.
12. Huriot, Jean Marie & Thisse, Jacqueous-Francois (2000),
“Economics of Cities: Theoretical Perspectives”, Cambridge
University Press, Cambridge,UK.
13. Angus McIntosh (1997), “Towns & Cities: Competing for
survivals”, E & FN Spon, London, UK.

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14. Le Van Thanh (2007), Economic Development, Urbanization and
Environmental changes in Ho Chi Minh city, Vietnam: Relations
and Policies, Institute for Economic Research, Ho Chi Minh City,
Viet Nam.
15. Herrmann, Michael and Khan, Haider (2008),”Rapid urbanization,
employment crisis and poverty in African LDCs: A new
development strategy and aid policy”, Graduate School of
International Studies, University of Denver, USA.
16. Simple Keynesian Model, Rai University, Delaware, USA
17.www.planningcommission.com
18.www.industrialrelations.nsw.gov.au
19.www.dget.nic.in

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