Indian Labour Force

In this post, we will learn about the Indian Labour Force.

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Indian Labour Force

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Concept of Labour Force

The labor force refers to the total number of people who are available for work and are either employed or seeking employment. It includes individuals who are currently employed in the formal or informal sector, as well as those who are unemployed but actively seeking employment. The labor force does not include people who are not actively seeking employment, such as those who have given up looking for work or are not able to work due to disability or other reasons.

The concept of the labor force is important for analyzing and understanding employment and unemployment trends, as well as for developing policies and programs to promote employment and economic growth. Labor force data is typically collected through surveys and other methods, and is used to calculate key labor market indicators such as the unemployment rate, labor force participation rate, and employment-to-population ratio.

Governments, policymakers, and businesses use labor force data to make decisions about labor market policies, such as minimum wage laws, training and education programs, and other measures to promote employment and economic growth. Labor force data is also used to analyze changes in the labor market over time, including trends in employment by industry, occupation, and demographic group. Overall, the labor force concept is essential for understanding the dynamics of the economy and the role of work and employment in society.

According to the Ministry of Labour and Employment of India, there are two broad categories of employment: Paid Employment and Self-Employment.

1. Paid Employment:

Paid employment refers to work that is done in exchange for wages, salary, or other forms of compensation. This category includes workers who are employed by others, such as companies, organizations, or the government. Paid employment can be further classified into:

  • Regular wage/salaried employee: Those who work for a specified number of hours or days in a week or month and receive a fixed wage or salary.
  • Contract employee: Those who are employed on a contractual basis for a specified period of time and receive a fixed salary or wage.
  • Piece-rate worker: Those who are paid based on the number of units produced or tasks completed.
  • Daily wage worker: Those who are paid a fixed amount for each day of work.

2. Self-Employment:

Self-employment refers to work that is done by an individual on their own account or with the help of family members without any hiring or employment relationship. This category includes workers who are engaged in agriculture, manufacturing, trade, services, and other activities. Self-employment can be further classified into:

  • Own Account Workers: Those who work independently without hiring any employees.
  • Employers: Those who own a business and hire other people to work for them.
  • Unpaid Family Workers: Those who work for their family businesses without receiving any wage or salary.

workers in India can be broadly classified into three categories as per the Ministry of Labour and Employment in 2010. These categories are self-employed, casual wage labor, and regular salaried/wage employees.

1. Self-Employed: Self-employed workers are those who work for themselves or run their own businesses. They are not employed by anyone and do not receive a regular salary or wage. Examples of self-employed workers in India include small business owners, farmers, artisans, and street vendors.

2. Casual Wage Labor: Casual wage labor refers to work that is done on a short-term or temporary basis, usually for a fixed period of time or a specific task. These workers do not have a fixed employer and do not receive regular salaries or wages. Examples of casual wage labor in India include construction workers, agricultural laborers, and domestic workers.

3. Regular Salaried/Wage Employees: Regular salaried/wage employees are those who work for a fixed employer and receive regular salaries or wages. They are typically employed on a long-term basis and may have job security and access to benefits such as health insurance and retirement plans. Examples of regular salaried/wage employees in India include office workers, factory workers, and government employees.

These categories of workers are used by the Ministry of Labour and Employment to track employment trends in the country and develop policies and programs to promote employment and economic growth. Understanding the different categories of workers is important for ensuring that workers are protected and have access to social security and other benefits, and for promoting fair and equitable working conditions for all.

Measures used by the National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation to collect data on employment, and include: Usual Status, Current Weekly Status and Current Daily Status, which may be understood as follows:

Usual Status (US)

Usual Status reflects the status of a person as belonging to the labour force, if he/she had been either working or looking for work during the major part of the 365 days preceding a survey by the NSSO. Usual Status is divided into 2 categories: Principal Status and Subsidiary Status.

  • Principal Status (PS), also called Usual Principal Status (UPS), is the activity accounting for majority of a person’s time over the year, and such workers are called principal status workers.
  • Subsidiary Status (SS) refers to any activity other than the principal activity undertaken on a short-term basis, and such workers are called subsidiary status workers. These categories taken together constitute total employment on the basis of Usual Principal and Subsidiary Status (UPSS), or Usual Status.

Organised and Unorganised Sectors

The organized sector refers to those industries or businesses that are registered with the government and follow labor laws, while the unorganized sector refers to those that are not registered and do not follow labor laws. The organized sector typically includes larger companies and corporations, while the unorganized sector includes small businesses, informal workers, and self-employed individuals.

Difference Between Organised and Unorganised Sectors

Organised SectorsUnorganised Sectors
Regulated by governmentNot regulated by government
Employees have assured workDon’t have assured work
Terms/ tenures are fixed and regularNeither fixed nor regular
Follow government rules and regulationDoesn’t follow government rules and regulation

Examples of the organized sector in India include large companies in industries such as IT, banking, and manufacturing. These companies are registered with the government and follow labor laws.

Examples of the unorganized sector in India include small businesses such as street vendors, small-scale manufacturing units, and self-employed workers such as domestic helpers and street food vendors. These businesses are typically not registered with the government and do not follow labor laws.

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FAQs on Indian Labour Force

What is the size of the Indian labour force?

As of 2021, the size of the Indian labour force is estimated to be around 500 million people, making it one of the largest labour forces in the world. However, the majority of the workforce is engaged in the informal sector, which lacks the protections and benefits offered to formal sector workers. According to the Annual Report on Employment and Unemployment Survey conducted by the Ministry of Statistics and Programme Implementation, the unemployment rate in India was 6.1% in 2018-19.

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