Employment: Growth, Informalisation and Other Issues, Class 12

What Employment: Growth, Informalisation and Other Issues is about

Weightage: This chapter is part of Unit 7, Current Challenges facing Indian Economy (Part B Indian Economic Development), which carries 20 of the 80 theory marks together with the chapters Human Capital Formation in India; Rural Development; and Environment and Sustainable Development.Source: CBSE Economics (030) syllabus 2026-27, Unit 7 Current Challenges facing Indian Economy

In real board papers: asked in 2 of the 2 board papers we hold (2026 to 2026), on average 7.5 marks per paper. See the questions

Key concepts

Workers and economic activity

NCERT section 6.1, 6.2

Economic activities are those that contribute to the gross national product. Workers are all those engaged in economic activities, at any level, including those temporarily absent through illness, injury, bad weather or festivals, and those who help the main workers. The self-employed are workers too, not only those paid by an employer.

NCERT figures: workforce of about 545 million (2022-23); rural workers about two-thirds; about 77% men. Women are one-fourth of the rural and one-fifth of the urban workforce. Much of women's work (cooking, fetching water and fuelwood, unpaid farm help) is not counted, so women workers are underestimated.

Worked example

Suppose a woman fetches water, cooks for the family and helps on the family farm without pay. Is she counted as a worker? Should she be? [3 marks]

Try it first, then show the solutionSolution

1. Unpaid household work is not treated as economic activity in official counts.
2. Her farm help contributes to output, and household work maintains the family.
3. Economists argue such women should be counted; the narrow definition underestimates women's work.

Answer: Usually not counted; many economists argue she should be.

Worker-population ratio

NCERT section 6.3

Worker-population ratio (WPR) = total workers ÷ total population × 100. A higher ratio means greater engagement of people in producing goods and services.

Worker-population ratio, 2023-24 (NCERT Table 6.1)

	Rural	Urban	All areas
Men	56.3	56.4	56.4
Women	34.8	20.7	30.7
Persons	45.6	38.9	43.7

Rural WPR is higher because rural people have limited resources, many leave school early to work, and poverty does not let them stay at home; urban people study longer and look for jobs that suit their qualifications. Women's WPR is low, especially in cities: where men earn high incomes, families discourage women from working, and much of women's household work is not counted.

Worked example

Suppose a town has a population of 10,000 and 4,370 workers. Find the worker-population ratio and compare it with India's 2023-24 figure. [1 mark]

Try it first, then show the solutionSolution

1. WPR = 4370 ÷ 10000 × 100 = 43.7.
2. Equal to the national ratio of 43.7 in 2023-24.

Answer: 43.7, the same as India's 2023-24 ratio.

Self-employed, regular and casual workers

NCERT section 6.4

Status of employment shows the quality of jobs:

• Self-employed: own and operate an enterprise (a cement shop owner); about 58% of the workforce.
• Casual wage labourers: casually engaged in others' farms or enterprises and paid for work done (a construction worker); about 20%.
• Regular salaried employees: engaged by someone or an enterprise and paid regularly (a civil engineer in a company); about 22%.

Self-employment is the main source of livelihood for both men and women (over 50%); casual wage work is the second major source for women. Regular salaried jobs are more common for men and in urban areas, since they need skills and literacy.

Worked example

Classify: (i) owner of a tea stall; (ii) a cashier in a public sector bank; (iii) a loading worker in a wholesale market paid daily; (iv) a nurse paid monthly for five years in a private hospital. [2 marks]

Try it first, then show the solutionSolution

1. (i) Self-employed.
2. (ii) Regular salaried.
3. (iii) Casual wage labourer.
4. (iv) Regular salaried.

Answer: (i) self-employed; (ii) regular; (iii) casual; (iv) regular.

Employment by sector and its changing structure

NCERT section 6.5, 6.6

Activities are grouped into eight divisions and three sectors: primary (agriculture; mining and quarrying), secondary (manufacturing; electricity, gas and water; construction) and tertiary/services (trade; transport and storage; services).

In 2023-24 the primary sector employed about 46%, secondary about 24% and services about 30%. Rural India: about 60% primary; urban India: about 61% in services. About 64% of women workers are in the primary sector, against 36% of men.

Over time the workforce has shifted from farm to non-farm work, but the status has changed in a worrying way:

Trends in employment pattern, 1972-73 to 2023-24 (% of workforce, NCERT Table 6.3)

Item	1972-73	1993-94	2011-12	2023-24
Primary sector	74.3	64.0	48.9	46.1
Secondary sector	10.9	16.0	24.3	24.1
Services	14.8	20.0	26.8	29.8
Self-employed	61.4	54.6	52.0	58.4
Regular salaried employees	15.4	13.6	18.0	21.7
Casual wage labourers	23.2	31.8	30.0	19.9

Worked example

Using Table 6.3, describe the change in the sectoral distribution of the workforce between 1972-73 and 2023-24. [3 marks]

Try it first, then show the solutionSolution

1. Primary: 74.3% → 46.1% (a large fall).
2. Secondary: 10.9% → 24.1%; services: 14.8% → 29.8%.
3. A substantial shift from farm to non-farm work, though nearly half still depend on the primary sector.

Answer: Shift from primary to secondary and services, but primary still employs about 46%.

Jobless growth and casualisation

NCERT section 6.6

Jobless growth: between 1951 and 2023, GDP grew faster than employment; employment growth was rarely above 2% (only around 1999-2005 and 2022-23 did it exceed 2%). From the late 1990s employment growth fell back to early-planning levels, widening the gap between GDP and employment growth: the economy produced more goods and services without generating proportionate employment.

Casualisation: the movement of workers from self-employment and regular salaried jobs to casual wage work. Casual work makes workers highly vulnerable (no job security, no social security). Table 6.3 shows the casual share rising from 23.2% (1972-73) to 31.8% (1993-94), then falling to 19.9% by 2023-24 as self-employment and regular work rose moderately again.

Worked example

Suppose GDP grows at 7% a year while employment grows at 1.5%. What is this called, and what does it imply? [3 marks]

Try it first, then show the solutionSolution

1. Output rises much faster than jobs: jobless growth.
2. Growth comes from higher productivity or capital-intensive methods rather than more workers.
3. Many job seekers, especially young people, do not benefit from growth.

Answer: Jobless growth: more output without proportionate jobs.

Formal and informal sectors; informalisation

NCERT section 6.7

Formal (organised) sector: all public sector establishments and private establishments employing 10 or more hired workers. Formal workers enjoy social security (provident fund, gratuity, pension, maternity benefit), higher earnings, protection under labour laws and trade unions.

Informal (unorganised) sector: all other enterprises and workers: farmers, agricultural labourers, owners and workers of small enterprises, self-employed without hired workers, and non-farm casual labourers working for more than one employer (construction and headload workers). They lack regular income, protection and social security; can be dismissed without compensation; use outdated technology and keep no accounts; many live in slums.

NCERT: in 2019-20, about 59 million of 535 million workers (about 11%) were in the formal sector. In 2012, of about 30 million formal workers, 18 million were in the public sector; women were about one-sixth. Planners expected the informal share to shrink as the economy grew; instead the workforce has become more informalised. With ILO support, the government has begun modernising informal enterprises and extending social security.

Worked example

Suppose a garment unit employs 8 hired tailors and another employs 25. Classify both, and state two disadvantages of the workers in the first unit. [3 marks]

Try it first, then show the solutionSolution

1. 8 hired workers (fewer than 10): informal sector; 25: formal sector.
2. Informal workers lack social security such as provident fund and pension.
3. They can be dismissed without compensation and lack trade union protection.

Answer: First informal, second formal; informal workers lack security and protection.

Unemployment and its types

NCERT section 6.8

The National Statistical Office defines unemployment as a situation in which people who are not working owing to lack of work either seek work (through employment exchanges, intermediaries, friends, relatives or applications) or express willingness or availability for work under prevailing conditions and pay. Economists call a person unemployed if he cannot get work for even one hour in half a day.

Data sources: Census reports, NSO reports on employment and unemployment, Periodic Labour Force Survey reports, and DGE&T data on employment exchange registrations.

Types:

• Open unemployment: people actively looking for work but without jobs.
• Disguised unemployment: more people working than needed, so removing some would not reduce output (common on Indian farms; a late-1950s study found about one-third of agricultural workers disguisedly unemployed).
• Seasonal unemployment: no work in the off-season, as farm work is seasonal; workers migrate to cities and return for the rainy season.

In India people seldom stay fully unemployed for long; poverty forces them into unpleasant or dangerous jobs.

Worked example

Suppose a farmer's four-acre farm needs only the farmer and two workers, but five hired workers plus his wife and son all work on it. How many are disguisedly unemployed? [1 mark]

Try it first, then show the solutionSolution

1. Needed: 3 people (farmer + 2).
2. Working: farmer + 5 + 2 family members = 8.
3. Surplus whose removal does not reduce output: 8 − 3 = 5.

Answer: 5 people are disguisedly unemployed.

Government and employment generation

NCERT section 6.9

Governments generate employment in two ways:

• Direct: employing people in departments for administration, and running industries, hotels and transport companies.
• Indirect: when government enterprises raise output, private firms that buy from them also raise output and employment (e.g. a public steel company expanding, and private firms using its steel expanding too).

Employment generation programmes aim at poverty alleviation and also provide services such as primary health, primary education, rural drinking water and nutrition, help to buy income-generating assets, and community assets through wage employment. The Mahatma Gandhi National Rural Employment Guarantee Act, 2005 promises 100 days of guaranteed wage employment to every rural household willing to do unskilled manual work.

Worked example

Suppose the government builds a dam, and a cement firm supplying it hires 200 more workers. Identify the direct and indirect employment effects. [3 marks]

Try it first, then show the solutionSolution

1. Direct: workers employed by the government on the dam project.
2. Indirect: the cement firm's extra 200 workers, due to demand from the government project.
3. Both raise total employment.

Answer: Dam workers: direct; cement firm workers: indirect.

Employment: Growth, Informalisation and Other Issues in real life

Each concept, met in an everyday situation. Read the situation, answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Topics in this chapter

• Jobless Growth, Casualisation and the Formal and Informal Sectors
• Unemployment: Types, Measurement and Government Employment Generation
• Workers, Worker-Population Ratio and Employment Structure

Employment: Growth, Informalisation and Other Issues: key facts

Worker-population ratio

Total workers ÷ total population × 100

Share of formal workers (NCERT, 2019-20)

59 million ÷ 535 million × 100 ≈ 11%

Disguised unemployment

Persons working − persons actually needed (output unchanged)

Status shares (NCERT)

Self-employed about 58%; regular salaried about 22%; casual about 20%

Sector shares, 2023-24 (NCERT)

Primary about 46%; secondary about 24%; services about 30%

Formal sector definition

All public establishments + private establishments with 10 or more hired workers

How the board asks Employment: Growth, Informalisation and Other Issues

The question patterns to expect, and the method that works for each.

Tricks to remember Employment: Growth, Informalisation and Other Issues

Short memory aids. Say each one aloud once, then use it on a question the same day.

• 58-22-20

  Self-employed 58, regular 22, casual 20 (per cent).

  Use it when: Status shares.

• 74 → 46

  Primary sector share of workforce from 1972-73 to 2023-24.

  Use it when: Structural change.

• 10 and public

  Formal = all public + private with 10 or more hired workers.

  Use it when: Formal sector definition.

• O-D-S

  Open, Disguised, Seasonal unemployment.

  Use it when: Types of unemployment.

Employment: Growth, Informalisation and Other Issues: board-level solved questions

Ordered from board level to HOTS. Cover the solution, write your own, then compare step by step.

Case-study practice (Section E style)

Read the situation, then answer every part. In the board paper this is a 4-mark question split into 1 + 1 + 2 marks.

Where the marks are

How a typical answer is split into step marks. Show every step: a right final answer alone rarely earns full marks.

Where students lose marks in Employment: Growth, Informalisation and Other Issues

The slips examiners see most often, and what to write instead.

• ✗Mistake: Excluding the self-employed from workers

  Thinking only paid employees count.

  ✓Do this: All engaged in economic activity are workers.

  Usually costs: 1 mark.

• ✗Mistake: Using the wrong denominator for WPR

  Dividing by the labour force.

  ✓Do this: WPR divides workers by total population.

  Usually costs: 1 mark.

• ✗Mistake: Defining the formal sector by size alone

  Forgetting public establishments.

  ✓Do this: All public establishments + private ones with 10 or more hired workers.

  Usually costs: 1 mark.

• ✗Mistake: Confusing disguised and seasonal unemployment

  Both are rural.

  ✓Do this: Disguised: too many on the job; seasonal: no job in the off-season.

  Usually costs: 1 mark.

• ✗Mistake: Quoting figures without years

  Data changes over time.

  ✓Do this: Give years: WPR 43.7 (2023-24); formal share about 11% (2019-20).

  Usually costs: ½-1 mark.

NCERT exercise guide: Employment: Growth, Informalisation and Other Issues

What each exercise in the NCERT chapter tests, how to approach it, and a question of the same kind solved step by step. Questions here are written in our own words.

Employment: Growth, Informalisation and Other Issues: previous year questions

• Asked in 2 of the 2 board papers we hold (2026 to 2026), on average 7.5 marks per paper; 7 questions in all, counting OR alternatives. In 4 of 4 sample papers.

Counted from the real papers on our previous year papers page, not estimated. Average marks are over every board paper we hold, with an OR pair counted once. Chapter tags are ours.

Solved board questions from Employment: Growth, Informalisation and Other Issues

Real questions from recent papers. Try each one first, then open our step-by-step solution with marks per step.

Every Employment: Growth, Informalisation and Other Issues question, by year

Practice questions on Employment: Growth, Informalisation and Other Issues

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

1. Q1 · 1 mark · MCQBoard level

   India's worker-population ratio in 2023-24 (NCERT Table 6.1) was about:
   (a) 30.7
   (b) 38.9
   (c) 43.7
   (d) 56.4

   Hint

   Total row.

   Answer

   (c) 43.7

2. Q2 · 1 mark · MCQBoard level

   A private establishment is in the formal sector if it employs at least:
   (a) 5 hired workers
   (b) 10 hired workers
   (c) 20 hired workers
   (d) 100 hired workers

   Hint

   NCERT definition.

   Answer

   (b) 10 hired workers

3. Q3 · 3 marks · Short answerBoard level

   Who is a worker? Give two examples of workers who are not paid by an employer.

   Hint

   Self-employed.

   Answer

   Anyone engaged in an economic activity contributing to GNP, including those temporarily absent and helpers. Examples: a pavement vegetable vendor and a self-employed lawyer (also a farmer cultivating own land).

4. Q4 · 3 marks · Short answerBoard level

   Explain disguised and seasonal unemployment with examples.

   Hint

   Farms.

   Answer

   Disguised: more people work than needed, so output does not fall if some leave (eight people on a farm needing three). Seasonal: no work in the off-season (farm labourers after harvest), leading to migration to cities.

5. Q5 · 3 marks · Short answerHarder board level

   Suppose a district has a population of 12,00,000 and 4,80,000 workers. Calculate the worker-population ratio and compare it with India's.

   Hint

   Workers ÷ population × 100.

   Answer

   4,80,000 ÷ 12,00,000 × 100 = 40, below India's 43.7 (2023-24).

6. Q6 · 3 marks · Short answerHarder board level

   State three differences between formal and informal sector workers.

   Hint

   Security, earnings, protection.

   Answer

   Formal workers get social security (PF, gratuity, pension), higher earnings and protection of labour laws and unions; informal workers lack these, can be dismissed without compensation and often work in outdated, unregulated enterprises.

7. Q7 · 3 marks · Short answerHarder board level

   Using NCERT figures, estimate the share of formal sector workers in 2019-20 and comment.

   Hint

   59 of 535 million.

   Answer

   About 59 ÷ 535 × 100 ≈ 11%: nearly nine in ten workers are informal, contrary to planners' hopes that the informal share would shrink.

8. Q8 · 1 mark · Assertion-reasonHOTS / competency

   Assertion (A): Employment in India grew more slowly than GDP over most of 1951-2023.
   Reason (R): Indian growth has been led largely by sectors that create few jobs per unit of output.
   (a) Both true and R explains A (b) Both true, R does not explain A (c) A true, R false (d) A false, R true

   Hint

   Jobless growth.

   Answer

   (a)

9. Q9 · 4 marks · Short answerHOTS / competency

   Suppose a marginal farmer becomes a full-time agricultural labourer and earns slightly more. Is he better off? Discuss using NCERT's idea of the quality of employment.

   Hint

   Status and security.

   Answer

   His income rises, but he moves from self-employment (owning his enterprise) to casual wage work, with less security, control and status. Quality of employment falls even if earnings rise; casualisation makes workers more vulnerable.

10. Q10 · 3 marks · Short answerHarder board level

    Explain direct and indirect employment generation by the government with examples.

    Hint

    Steel company example.

    Answer

    Direct: government employs people in departments and in its own enterprises (a public steel plant). Indirect: when public enterprises raise output, private firms buying from them expand and hire (firms using the steel).

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1. 1.What is an economic activity?Show answer

   An activity that contributes to the gross national product.

2. 2.What was India's workforce in 2022-23 (NCERT)?Show answer

   About 545 million.

3. 3.What is the WPR for urban women in 2023-24?Show answer

   20.7.

4. 4.What is jobless growth?Show answer

   GDP growing without proportionate growth in employment.

5. 5.What is casualisation?Show answer

   Movement from self-employment and regular jobs to casual wage work.

6. 6.What share of workers were formal in 2019-20?Show answer

   About 11% (59 of 535 million).

7. 7.What does MGNREGA guarantee?Show answer

   100 days of wage employment per rural household.

8. 8.Name two sources of unemployment data.Show answer

   NSO/PLFS reports and the Census (also employment exchange data).

Quick revision checklist

The night before the exam: can you do each of these without looking?

• ☐Can you define a worker and economic activity?
• ☐Can you compute and interpret WPR?
• ☐Can you explain rural-urban and gender differences in WPR?
• ☐Can you classify workers by status?
• ☐Can you describe the shift from primary to other sectors?
• ☐Can you explain jobless growth with evidence?
• ☐Can you explain casualisation?
• ☐Can you define formal and informal sectors?
• ☐Can you explain open, disguised and seasonal unemployment?
• ☐Can you explain direct and indirect employment generation?

Employment: Growth, Informalisation and Other Issues: frequently asked questions