Employment: Growth, Informalisation and Other Issues

Why this chapter matters for UPSC: "Employment: Growth, Informalisation and Other Issues" is Chapter 6 of NCERT's Indian Economic Development (Reprint 2026-27); it was Chapter 7 until the 2023-24 rationalisation. The current reprint rebuilt the chapter's numbers on the Periodic Labour Force Survey (PLFS) for 2023-24: the worker-population ratio table, the status and sector charts, the 1972-2024 trend table and the formal-informal chart all changed, though some sentences of the old prose were left beside the new tables. The chapter defines workers and work, measures how many people work and in what capacity, follows the shift from farm to non-farm work, explains jobless growth, casualisation and informalisation, classifies unemployment, and describes how governments create jobs. GS3 asks it directly: whether growth has been "jobless" (Mains 2015), globalisation and informalisation (2016), how unemployment is measured (2023), the four Labour Codes (2024), labour productivity and job creation (2022), the demographic dividend and employability (2014), Skill India (2015), labour-intensive exports (2017), and the care economy (2023); GS1 asks about the gig economy (2021). This page prints NCERT's tables, flags where its prose and tables disagree, and adds the survey's later results and the 2025-26 changes in labour law and employment schemes.

🧠 First Principles — Read This First

A worker is anyone in economic activity, paid or not. NCERT: "Those activities which contribute to the gross national product are called economic activities. All those who are engaged in economic activities, in whatever capacity, high or low, are workers." Temporary absentees and helpers count; "those who are self-employed are also workers". What does not count is unpaid household work: women who cook, fetch water and fuel and help on family farms "are not categorised as workers", which NCERT calls "the underestimation of the number of women workers in the country".

Rates, not just numbers. The worker-population ratio is the share of the population that works; the survey also measures the labour force participation rate (those working or seeking work) and the unemployment rate (those seeking work as a share of the labour force). Each depends on the reference period: "usual status" (the main and subsidiary activity over a year) gives a low unemployment rate; "current weekly status" (activity in the last seven days), used in the new monthly survey, gives a higher one. Never compare figures across the two.

Quality of work matters as much as quantity. Status (self-employed, regular salaried, casual) and sector (formal or informal) tell whether work is secure. NCERT's story is that India's workers moved out of farming more slowly than output did, and that much of the new work was casual and informal, without "maternity benefit, provident fund, gratuity and pension".

PART 1 — Quick Reference

The Chapter at a Glance

Table 6.1, Worker-Population Ratio in India, 2023-24 (NCERT)

NCERT's prose on the same page still says "about 41 (by rounding off 41.1)" workers per 100 persons, "about 38" in urban and "about 42" in rural areas, which are not the figures in its table: write the table's 43.7, 45.6 and 38.9. The table covers all ages; the survey's headline figures (below) are for persons aged 15 and above.

Table 6.2, Distribution of Workforce by Industry, 2023-24 (NCERT, per cent)

Table 6.3, Trends in Employment Pattern, 1972-2024 (NCERT, per cent)

The column NCERT labels 2017-18 does not match the PLFS report for 2017-18, which gives self-employed 52.2, regular salaried 22.8 and casual labour 24.9 per cent (MoSPI, Annual Report PLFS 2017-18). Quote NCERT's table for NCERT and the survey report for the year.

Dates and Numbers (NCERT's figures first; the record named in each row)

PART 2 — Concepts & Narrative

6.1-6.2 Workers and Employment

People work for a living, but also because work "gives us a sense of self-worth and enables us to relate ourselves meaningfully with others"; NCERT recalls that Gandhi "insisted upon education and training through a variety of works including craft". The Covid-19 years (2020-21) showed "millions of workers delivered their products and services through work-from-home".

NCERT links work to national income: GDP is "the total money value of all such final goods and services produced in a country in a year"; adding net earnings from foreign transactions gives "the country's gross national product". Activities contributing to GNP are economic activities, and their participants are workers, whether paid by an employer or self-employed. "During 2022-23, India had a workforce of about 545 million." Rural workers "constitute about two-thirds"; "about 77 per cent of the workers are men"; women "account for one-fourth of the rural workforce whereas in urban areas, they are just one-fifth". (These last proportions are carried over unchanged from the 2021-22 text; Table 6.1's ratios imply a larger female share. The survey's own count for calendar 2025 is 61.6 crore workers aged 15 and above, 41.6 crore men and 20.0 crore women.) Unpaid work by women ("cooking, fetching water and fuelwood and participate in farm labour") is not counted, and "economists argue that these women should also be called workers".

6.3 Participation of People in Employment

Table 6.1 (PART 1) gives the worker-population ratio for 2023-24: 43.7 overall, 45.6 in rural and 38.9 in urban areas; 56.4 for men and 30.7 for women. NCERT explains the gaps. Rural people "have limited resources to earn a higher income", many leave school to work, and "cannot stay at home as their economic condition may not allow them to do so"; urban people study longer and look for jobs that suit their qualifications. Women's participation is lower, and lowest in towns: "for every 100 urban females, only about 21 are engaged in some economic activities", against about 35 in rural areas. Where men earn high incomes, "families discourage female members from taking up jobs", and much of women's work at home and on family farms "is not recognised as productive work".

6.4 Self-Employed and Hired Workers

Status in employment shows "one dimension: quality of employment" and the worker's "attachment ... with his or her job and the authority she or he has over the enterprise". NCERT's construction example: the cement-shop owner is self-employed ("about 58 per cent workforce in India belongs to this category"); construction workers are casual wage labourers ("about 20 per cent"), engaged and paid for work done; the civil engineer is a regular salaried employee (22 per cent), paid on a regular basis.

Chart 6.1 shows self-employment as the main livelihood for both sexes (54 per cent of male and 67 per cent of female workers); regular salaried work is 21 per cent for men and 16 per cent for women, and casual work 25 and 17 per cent. Chart 6.2 shows that self-employment dominates in rural areas (65 per cent; regular 13, casual 22) while regular salaried work is the largest category in urban areas (48 per cent; self-employed 40, casual 12): "enterprises in urban areas require workers on a regular basis", while most rural households cultivate their own land. (PLFS 2025 shows the shift continuing: regular wage/salaried 23.6 per cent of workers, against 22.4 in 2024; self-employed 56.2 per cent.)

6.5 Employment in Firms, Factories and Offices

With development, labour moves from agriculture to industry and services, and "at a much later stage, the industrial sector begins to lose its share of total employment as the service sector enters a period of rapid expansion". NCERT groups eight divisions into three sectors: primary (agriculture; mining and quarrying), secondary (manufacturing; electricity, gas and water supply; construction) and tertiary or services (trade; transport and storage; services). Table 6.2 (PART 1) gives the 2023-24 distribution: primary 46.1, secondary 24.1, services 29.8 per cent. About 60 per cent of rural workers depend on agriculture, forestry and fishing; about 61 per cent of urban workers are in services; "about 64 per cent of the female workforce is employed in the primary sector whereas 36 per cent of males work in that sector".

6.6 Growth and Changing Structure of Employment

Chart 6.3 sets employment growth beside GDP growth from 1951 to 2023. GDP grew faster than employment, with fluctuations; "employment grew at the rate of not more than 2 per cent most of the times. Only during two points of time (2022-2023 and 1999-2005), over the period of seven decades employment growth went beyond 2 per cent." In the late 1990s employment growth fell back towards the levels of early planning and the gap with GDP growth widened: "without generating employment, we have been able to produce more goods and services. Scholars refer to this phenomenon as jobless growth."

Table 6.3 (PART 1) shows the structural change: the primary sector's share fell from about 74 per cent (1972-73) to about 46 per cent (2023-24), the secondary sector's rose from 11 to 24 per cent and services from 15 to 30. By status, "over the last five decades (1972-2024), people have moved from self-employment and regular salaried employment to casual wage work" (casual work rose from 23.2 to 31.8 per cent by 1993-94), "yet self-employment continues to be the major employment provider", and NCERT notes "a moderate rise in the share of regular salaried employees" since 2017. That shift towards casual work is casualisation (key-term box).

6.7 Informalisation of Indian Workforce

Planning expected industrialisation to move surplus workers from farms to industry with better living standards; yet "even after 70 years of planned development, more than half of the Indian workforce depends on farming". The quality of jobs is the issue: why do some workers get no maternity benefit, provident fund, gratuity or pension after 10-20 years? A small section of the workforce has regular income, labour-law protection, unions and bargaining power; NCERT uses the formal-informal division to find it (key-term box).

Box 6.1, formal sector employment. Data on the formal sector come from the Ministry of Labour's employment exchanges. "In 2012, out of about 30 million formal sector workers, about 18 million workers were employed by the public sector", and women were "only about one-sixth" of the formal workforce. Economists say the reforms of the early 1990s "resulted in a decline in the number of workers employed in the formal sector".

Formal workers get social security and earn more. Planning envisaged the formal sector growing, but Chart 6.4 shows otherwise: "In 2019-2020 there were about 535 million workers in India. There were about 59 million workers in the formal sector ... About only 11 per cent (59/535x100)! Thus, the rest 89 per cent are in the informal sector." In 2011-12 the figures were 30 million formal and 443 million informal, and women were "about 20 per cent of formal sector and 30 per cent of informal sector workers". Informal workers and enterprises "do not get regular income", have no protection, use outdated technology, keep no accounts, and live in slums; owing to the ILO's efforts, the government has begun modernising informal enterprises and extending social security.

Box 6.2, informalisation in Ahmedabad. A prosperous city of "more than 60 textile mills with a labour force of 1,50,000 workers", with secure jobs, social security and a strong union. From the early 1980s mills closed across the country; in Ahmedabad the closures stretched over ten years, and "approximately over 80,000 permanent workers and over 50,000 non-permanent workers lost their jobs and were driven to the informal sector". The city saw recession, communal riots, alcoholism and suicides, and children withdrawn from school to work: "a whole class of workers was thrown back from the middle class into the informal sector, into poverty".

6.8 Unemployment

People look for work through newspapers, friends and relatives, roadside labour markets, applications to firms, and employment exchanges; many rural people "do not go out and ask for a job but stay home when there is no work". The National Statistical Office "defines unemployment as a situation in which all those who, owing to lack of work, are not working but either seek work through employment exchanges, intermediaries, friends or relatives or by making applications to prospective employers or express their willingness or availability for work under the prevailing condition of work and remunerations"; economists define an unemployed person as "one who is not able to get employment of even one hour in half a day". NCERT names the data sources: the Census, the NSO's employment-unemployment reports and the annual PLFS reports, and the Directorate General of Employment and Training's employment-exchange registrations.

NCERT's three types:

• Open unemployment: people actively looking for work and not finding it.
• Disguised unemployment: more people working on a farm than it needs, so that some add nothing to output; NCERT's example is a four-acre farm that needs two workers and the farmer but employs five and the family. "One study conducted in the late 1950s showed about one-third of agriculture workers in India as disguisedly unemployed."
• Seasonal unemployment: "work in agriculture is seasonal; there are no employment opportunities in the village for all months in the year", so people migrate to towns in the slack season and return "as soon as the rainy season begins".

In India, scholars say, people "cannot remain completely unemployed for very long because their desperate economic condition would not allow them to be so"; they take unpleasant or dangerous jobs instead. GS3 2023 asked candidates to "examine the methodology adopted to compute unemployment in the country", which is this section plus the usual-status and weekly-status distinction above.

6.9 Government and Employment Generation

NCERT still describes the "Mahatma Gandhi National Rural Employment Guarantee Act 2005", which "promises 100 days of guaranteed wage employment to all rural households who volunteer to do unskilled manual work". (That Act was repealed from 1 July 2026: the Viksit Bharat - Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 now guarantees 125 days of unskilled wage employment per rural household per financial year, with works in four priority areas: water security, rural infrastructure, livelihoods, and works against extreme weather. NCERT's rural chapter, site page 6, already says MGNREGA is "now known as" VB-G RAM G.)

Governments create jobs directly (employing people in administration and running industries, hotels and transport companies) and indirectly (a government steel company's higher output raises output and employment in private firms that buy its steel). Many anti-poverty programmes are employment-generation programmes, providing work along with primary health, education, drinking water, nutrition, assets, community works, housing, sanitation, rural roads and wasteland development.

6.10 NCERT's Conclusion

"Newly emerging jobs are found mostly in the service sector." High technology and outsourcing let small enterprises and individual specialists work beside multinationals, and big firms hand "small piecemeal jobs to very small enterprises or specialist individuals, sometimes situated even in other countries", so that "for many the home is becoming the workplace". But "the nature of employment has become more informal with only limited availability of social security measures". Rapid GDP growth "without simultaneous increase in employment opportunities ... has forced the government to take up initiatives in generating employment opportunities particularly in the rural areas".

PART 3 — UPSC Integration

Three Frameworks

1. Count, status, sector. How many work (WPR, LFPR, UR, with the reference period stated), in what status (self-employed, regular, casual) and in which sector (primary, secondary, services; formal, informal). Every employment answer starts with one figure from each.

2. Jobless growth in three phases. The long gap (employment growth at or under 2 per cent against much faster GDP growth; casualisation to the 1990s), the recent survey rounds (falling casual share, rising regular share and WPR), and the quality caveat (informality, unpaid self-employment, agriculture's 43 per cent).

3. Informality and its remedies. The definition (10 hired workers), the size (89 per cent in 2019-20 by NCERT's chart), the costs (no social security, low pay, outdated technology), and the policy responses (the Labour Codes in force from 21 November 2025, the gig-worker provisions, e-Shram, employment-linked incentives).

Confused Pairs

• Usual status (ps+ss, a year) vs current weekly status (last seven days): 3.1 per cent unemployment (PLFS, calendar year 2025) against 5.0 per cent (monthly CWS, August 2026).
• Worker-population ratio (workers/population) vs labour force participation rate (workers and job-seekers/population).
• Disguised unemployment (more workers than needed) vs seasonal unemployment (no work in the slack season) vs open unemployment.
• Casualisation (shift to casual wage work) vs informalisation (growth of the informal sector).
• Formal sector (public sector, private units with 10+ hired workers) vs informal sector (everything else).
• NCERT Table 6.1 (all ages: WPR 43.7) vs PLFS headline (15+: WPR 58.2 in 2023-24).

Exam Strategy

• Prelims: the worker definition (self-employed and helpers included); Table 6.1's figures; the status shares; the sector groups; Table 6.3's 1972-73 and 2023-24 columns; the formal-sector threshold (10 hired workers); 59 of 535 million; the NSO definition and the "one hour in half a day" test; the late-1950s one-third estimate; the Labour Codes' date and the number of laws they replaced; e-Shram's launch date and count.
• Mains: jobless growth with NCERT's chart and the recent survey rounds; informality's costs and remedies; women's participation and uncounted work; one dated PLFS figure with its basis.
• Avoid: quoting NCERT's prose figure of 41.1 as the 2023-24 worker-population ratio (its table says 43.7); comparing a usual-status rate with a weekly-status rate; "MGNREGA guarantees 100 days" in the present tense; inventing a "PLFS 2024-25 (July-June)" report (the annual series moved to the calendar year in 2025).
• Cross-reading: chapter 3 (site page 3) for the reforms behind informalisation; chapter 4 (site page 5) for educated unemployment; chapter 5 (site page 6) for rural non-farm work; the dropped poverty chapter (site page 4) for employment-generation programmes.

Practice Questions

NCERT's exercises, worked

1. A worker is anyone engaged in an economic activity (one that contributes to GNP), whether paid, self-employed or helping, including those temporarily absent through illness or other reasons.
2. The worker-population ratio is the number of workers divided by the population, multiplied by 100.
3. No: begging, theft, smuggling and gambling are not economic activities contributing to the national product.
4. The cashier in Mother Dairy or a milk cooperative is the odd one out: a regular salaried employee among self-employed persons (saloon owner, cobbler, tuition master, transport operator) and a casual worker (construction).
5. Service.
6. Informal.
7. Yes: work on his family farm when not in school is an economic activity, so he is a worker (a helper).
8. Rural women work more because household incomes are lower and family farms need their labour; urban families discourage women's work where men earn more, and urban women study longer.
9. Yes: working in her husband's shop is an economic activity, so she is a worker (helper in a household enterprise).
10. The shoeshine boy is self-employed; the others (rickshaw puller under an owner, mason, mechanic-shop worker) work for others.
11. In 1972-73 rural men (125 million) dominated the workforce; women were 69 million in rural and only 7 million in urban areas, reflecting farm-based livelihoods and low urban female participation.
12. Urban: 28.52 crore x 33.7 / 100 = 9.61 crore workers; total: 100.40 crore x 39.5 / 100 = 39.66 crore (rural 30.12 + urban 9.61 = 39.73, the difference being rounding in the ratios).
13. Urban enterprises (factories, offices, shops) need workers on a regular basis; rural households mostly cultivate their own land.
14. Because of lower education and skills, family responsibilities, social norms and discrimination; Chart 6.1 shows 16 per cent of women in regular work against 21 per cent of men.
15. A shift from the primary sector (74.3 per cent in 1972-73, 46.1 in 2023-24) to secondary (24.1) and services (29.8), with self-employment still dominant and casual work falling since the 1990s.
16. Disagree: the primary sector's share fell from 74 to 46 per cent, though more than two-fifths of workers still farm.
17. No: GDP grew faster than employment, which grew at or under 2 per cent for most of the period (jobless growth).
18. Yes: formal jobs carry social security, regular income and legal protection, so they are better for workers and for the economy's productivity.
19. Yes: he works only two hours and seeks more (underemployment; in the survey's terms partly unemployed). Such persons do casual or seasonal work.
20. Water harvesting and check dams, rural roads, horticulture and dairying, food processing, crafts and services; works under VB-G RAM G.
21. A casual wage labourer is hired and paid by the day or by the task, without a regular contract.
22. If the enterprise is not in the public sector and employs fewer than 10 hired workers, or the worker is self-employed without hired workers or a casual worker for several employers.

Practice (UPSC-pattern, not past papers)

23. "Self-employment remains India's largest source of work, but it is not always employment by choice." Examine with reference to NCERT's tables and the latest PLFS. (GS3, 15 marks)
24. Why do the annual and monthly PLFS give different unemployment rates for the same year? Which is more useful for policy? (GS3, 10 marks)
25. The formal sector employed about 11 per cent of workers in 2019-20. How far can the Labour Codes and e-Shram change the condition of the other 89 per cent? (GS3, 15 marks)
26. Women's labour force participation is low and their work undercounted. Discuss the reasons and the measures needed. (GS1/GS3, 10 marks)

📦 Revision Capsule

Sources

• NCERT, Indian Economic Development (Class XI), ch. 6 "Employment: Growth, Informalisation and Other Issues", Reprint 2026-27: ncert.nic.in PDF.
• MoSPI, Press Note on the PLFS Annual Report 2023-24 (July 2023-June 2024), 22 September 2024: mospi.gov.in PDF.
• MoSPI, Press Note on the PLFS Annual Report 2025 (January-December 2025), 27 March 2026.
• MoSPI, PLFS monthly bulletin and press note for August 2026, 15 September 2026: mospi.gov.in PDF.
• MoSPI, Annual Report, Periodic Labour Force Survey 2017-18, May 2019: mospi.gov.in PDF.
• PIB, Ministry of Labour and Employment, the four Labour Codes made effective from 21 November 2025 (Release 2192463).
• PIB backgrounder on five years of e-Shram, August 2026.
• Ministry of Labour and Employment, Annual Report 2025-26 (Pradhan Mantri Viksit Bharat Rozgar Yojana).
• PIB backgrounder on the VB-G RAM G Act, 11 May 2026; Economic Survey 2025-26, ch. 13, Box XIII.1.