Important Questions for Class 11 Economics

(Indian Economic Development)

Chapter 6 – Employment: Growth, Informalisation and other issues

Multiple choice and very Short Answer Questions (1 Mark)

1. Female worker participation rate in rural areas is –
a. Lower in rural areas
b. Higher in rural areas
c. Lower in both the areas
d. Higher in urban areas
Ans: (b) Higher in rural areas
2. Who is a worker?
Ans: A worker is someone who works for a living by doing something productive.
3. Workers enjoy job security in
a. Unorganised Sector
b. Agriculture Sector
c. Organised Sector
d. Private Sector
Ans: (c) organized sector
4. Which of the following economic activities is not in the tertiary sector?
a. Bee-keeping
b. Teaching
c. Banking
d. Working in a call centre

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Ans: (a) Bee-keeping
5. What is meant by participation ratio?
Ans: The participation ratio is defined as the percentage of the whole population that
engages in productive activity. It is also known as the worker population ratio.
6. Give three sources that collect data on unemployment in India.
Ans: The three sources are:
• Census reports from India.
• National sample survey organization reports on employment and unemployment
conditions.
• Employment and training directorate general date of registration with employment
exchange.
7. Unemployment in rural areas is:
a. Disguised unemployment
b. Industrial unemployment
c. Seasonal unemployment
d. (a) & (c)
e. (a) & (b)
Ans: Option (d)
8. Inflation means
a. Rise in prices of only selected goods
b. Continuous rise in general price level
c. Rise in general price level
d. Continuous rise in general price level over a long period
Ans: (b) Rise in general price level
9. Long run solution of inflation lies in
a. Controlling demand
b. Enhancing supply

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 c. Both
d. None
Ans: (b) Enhancing supply.
10. Underemployment occurs when people
a. Do not want to work
b. Are not skilled
c. Are not paid for their work
d. Are working less than they are capable of
Ans: (d) are working less than they are capable of
11. Urban areas of most suffer most from
a. Open unemployment
b. Disguised unemployment
c. Seasonal unemployment
d. None of the above
Ans: (a) Open unemployment
12. Which one of the following sectors is the largest employer in India?
a. Secondary
b. IT sector
c. Tertiary
d. Primary
Ans: (d) Primary
13. Potential labour force of India consists of
a. Those who are fit to work
b. Those who are willing to work
c. People in particular age group
d. All of these

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Ans: (d) all of the these
14. Which of the following is false regarding disguised unemployment
a. Mounting pressure of population in rural areas with no alternative
employment
b. Marginal productivity of worker is high
c. Feature of agrarian economy
d. More people are engaged than required
Ans: (b) Marginal productivity of worker is high
15. An establishment with four hired workers is known as ____ sector establishment
a. Informal
b. Formal
c. Both
d. None
Ans: (a) Informal sector.
Short answer Questions (3 or 4 Marks)
16. What is the current percentage of regular salaried employees, self-employed and
casual wage labourers in India?
Ans: Since April 2016, the Labour Bureau has been conducting the Quarterly Employment
Survey (New Series) with the goal of measuring relative change in employment situation
over successive quarters in a sizable segment of the Non-farm Industrial economy covering 8
major sector namely,
• Manufacturing,
• Construction,
• Trade,
• Transport,
• Education,
• Health,
• Accommodation & Restaurants, and

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 • IT/BPO.
Percentage:
• This poll applies to businesses with ten or more employees.
• In the Sixth Economic Census, these eight sectors account for around 81 percent of
total employment of units with 10 or more workers (Organized sector) (6th EC).
• According to a recent official poll, approximately 52 percent of Indian employees are
self-employed, while 25 percent are casual laborers and only 23 percent have salaried
employment.
• However, self -employed employees in rural areas account for 58% as against 38% in
urban areas, casual labourers 29% in rural areas, as against 15% in urban areas,
whereas the ratio of salaried employees is only 13% in rural areas as against 47% in
urban areas.
17. What is formal sector employment?
Ans: The formal sector of employment includes all jobs with regular hours and earnings that
are recognized as income sources for which income taxes must be paid. In India, the term
"organized sector" or "formal sector" refers to licensed organizations, that is, those that are
registered and pay GST.
Public sector organizations, as well as private sector organizations, where the hiring is for 10
or more than 10 hired workers are referred to as formal sector employment. Those who work
in such establishments are referred to as formal sector workers.
A job offer is provided to people working under the formal sector, which is a formal written
document delivered by a company to a job candidate who has been chosen for the position.
When a company makes a verbal job offer, the recruiting manager usually calls the chosen
candidate to inform them that they have been offered the position.
18. Why are less women found in regular salaried employment?
Ans: As we all know, men outnumber women in conventional salaried jobs. They account
for roughly 23% of the population, whereas women account for about 21%. The difference
has been reduced overtime, but it still exists.
• Regular compensated employment necessitates specialized knowledge and a high
level of literacy, and Indian women have a long way to go to attain this.

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 • Female education is not prioritized in India, and as a result, the majority of women in
India lack the educational qualifications and professional skills essential for a regular
compensated job.
• Family Discouragement is another reason. In India, families still do not want female
members to leave the house for work, especially if the hours are long, as in
conventional waged jobs.
• The major belief that a child’s responsibility is of a woman primarily, also leads to
high female turnover as and when a child is born.
• The rise in crime against women has also resulted in women withdrawing from
regular employment due to security concerns such as late working hours in private
sector enterprises and MNCs are not considered desirable by the majority of women.
19. Explain casual wage labourers.
Ans: Casual labor, often known as irregular employment or part-time labor, refers to workers
whose regular employment consists of a series of short-term occupations. The dock worker
was a common casual laborer in the late nineteenth and early twentieth century.
Casual labor is typically employed by the hour, day, or for specific activities, generally to
fulfill a fluctuating need for work. They are typically unskilled employees. Workers on a
building site are an example. Their pay can range from Rs 200/- to Rs. 2000/- depending on
their work capacity and hours.
20. Why are regular salaried employees more in urban areas than in rural areas?
Ans: This disparity can be attributed to a variety of factors, such as.
• Opportunities to learn and improve such talents are more prevalent in metropolitan
locations. And these abilities are obtained through a process of training and education
that is not available in rural areas due to a lack of investment, infrastructure, and rural
people's poor literacy level.
• The majority of occupations for regular salaried employees are centered in
metropolitan regions, resulting in a growth in the number of regular salaried
employees.
• Large enterprises, particularly multinational corporations (MNCs), are concentrated in
metropolitan regions due to the presence of economic infrastructure and the
availability of contemporary amenities such as banks, transportation, and
communication, among other things.

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 • The rural population is mostly involved in agriculture and is unwilling to risk leaving
their farms for regular compensated employment.
Long Answer Questions (6 Marks)
21. Economists point out that casual wage labourers are the most vulnerable among the
three categories. Could you locate who these workers are and where they are found and
why?
Ans: The nature of work is changing. Over the last several decades, the traditional
employment relationship based on full-time, stable work with decent compensation and
benefits has ceased to be the dominant employment arrangement.
• Part-time, temporary, and casual employment have risen in popularity in its place.
Economic causes, technology, global competition, and changes in corporate structure
have all contributed to these shifts.
• Workers at the lower end of the pay and skill continuum struggle to make ends meet,
with few or no benefits, no job security, and little control over their working
conditions. They have low earnings and at least two of the following characteristics,
no pension, no union, and/or a small corporate size.
• It comprises temporary foreign labor, service industry positions, food service and
lodging occupations, temporary agency work, and self-employment on one's own
account.
• Women, colored people, immigrants, people with disabilities, older people, and youth
are disproportionately represented in society.
• Part-time, temporary work is more likely for single parents (typically women),
racialized employees, and recent immigrants. Women are more likely than men to be
low-paid part-time workers.
• The dock worker was a common casual laborer in the late nineteenth and early
twentieth century. Construction, logging, sawmilling, agriculture, and the service
trades are other important industries that have relied largely on casual labor.
Because of job uncertainty, the strain of holding many jobs, irregular or lengthy hours,
unstable visa status, and a lack of legal protections, casual labor can create severe stress.
22. Can we say that the self-employed earn more than the casual wage labourers or
regular salaried employees? Identify a few other indicators of quality of employment.

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Ans: Meaning: Self Employment and Salaried Employees:
The term "self-employed" refers to a situation in which an individual works for himself
rather than for an employer who pays a salary or wage. A self-employed person earns money
by conducting profitable operations from a trade or business that he owns and operates.
Private research firms, independent contractors, sole proprietors of businesses, and those
with partnerships are other examples.
The primary distinction between wage employment and self-employment is that in wage
employment, one works for someone else and receives a salary for doing so, whereas in self-
employment, an individual earns his or her money by carrying out profitable operations in a
trade or business that they directly control.
Who earns more?
However, it does not always mean that any one of the two, self-employed or salaried
employment will always earn more than the other. It depends on various factors, such as size
of business, the market situations, type of jobs (skilled/unskilled), the extent of skills and
competencies a person possesses, the efficiency with which a person works, brand value of
the person etc.
A freelance-makeup artist might earn much more than that of a person working in a salon.
While in the other case, a manager in a firm earns higher than that of a businessman.
Indicators of Quality of employment
• The culture of the company.
• Work-Life balance.
• Job security.
• Work Environment.
• Role of labour and trade unions.
• Chances of career growth progress.
• Opportunities for skill development.
• Extent of employee participation and initiative in the decision making process, etc.
23. What will happen if there is no additional employment generated in the economy
even though we are able to produce goods and services in the economy? How could
jobless growth happen?

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Ans: In many scenarios, Growth and the production of goods and services without additional
employment is not possible. As people need to be engaged in the primary sector, and tertiary
sector for the production of goods and services, as all the three sectors,and their demand are
interdependent on one another. Even if an economy grows, without employment, such a
situation is not likely to persist for a long period of time.
Jobless growth refers to the situation when the economy is growing even when the situation
of high unemployment persists.
Economists are still unsure of what is causing this, but some of the scenarios in which
jobless growth is possible include:
• Large Firms Eclipsing Small Firms: While small businesses create the majority of
jobs in most economies, large corporations are more productive and can take
advantage of economies of scale. When these large corporations consume the market
share of small businesses, any additional employment may be taken away, thus
leading to growth of the economy without adding to the employment levels.
• Shift to the Service Sector: When the economy shifts towards the service sector,
with the service sector taking up the shares of the industrial sector, in such situations
the economy may grow, even when no new employment is generated, as service
sector highly involves automation.
• Technological Developments: Productivity can rise dramatically as a result of
technological change such as the onset of ecommerce had caused thousands of people
to lose their jobs. Hence, in such cases, the economy boosts, but with a high rate of
unemployment persisting in the economy.
• Labour Productivity: For jobless growth to occur, labor productivity must increase
at a rate greater than or equal to the GDP. This will ensure that no new jobs are
created, and the economy experiencing growth.
• Mechanisation: Traditionally labor-intensive industries are beginning to mechanize
their operations. While it increases their productivity and profitability, it also reduces
job opportunities. Thus job less growth occurs when unemployment persists
24. What is informalisation of Indian workforce?
Ans: The term "informalisation of workforce" refers to a situation in which the percentage of
labor in the formal sector is steadily declining while the percentage of workforce in the
informal sector is increasing.

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Millions of farmers, farm labour, small business owners, and others work in the informal
sector.It also encompasses all non-farm casual wage workers who work under more than one
employer.
In the case of India, progress and development often result in an increase in the number of
people working in the formal sector and a decrease in the number of people employed in the
informal sector, hence informalisation denotes the decreased progress and growth of a
country like India.
Issues faced by Informal Sector:
• No regular income.
• No or less protection from the government.
• Dismissal of workers without giving them their deserved compensation
• The use of outdated, obsolete technology in the informal sector..
• The residence of the informal sector workers are mainly in slums or very low
maintenance areas.
Reasons for the informalization of the workforce:
• Uncertainties in the labor market
• Illiteracy and low skill levels
• Increasing import competition
• Reduced formal employment prospects
• Increased job flexibility
• Unbundling of manufacturing employment – outsourcing
• Other outsourcings
• Contractual services
• Increased demand for telecommunications and information technology services
• Indirect economic reforms that have opened up the market
Current state of informalization in the Indian labor force:
• Currently, just 10% of the 470 million workforce is employed in the formal sector. In
other words, 90 percent of India's workers do not have the same privileges as their
nominally employed counterparts, such as social security and employment perks.

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 • Informal laborers also face harsher working circumstances, with no job security, no
benefits or safeguards, and low earnings. The safeguards given to workers under
various laws are not followed by the informal sector, and they are also outside the
jurisdiction of the government.
• Informal sector also has an impact on the government in terms of income foregone
because units operating in the informal sector are not included in the government's
fiscal revenue net.
• According to the NSSO, 84.7 percent of jobs in the Indian economy are in the
informal or unorganized sector. Manufacturing, construction, and trade are the largest
contributors of informal employment, excluding agriculture.
• However, the International Labour Organisation(ILO) has initiated the efforts for the
development and betterment of the informal sector of the country by providing social
security measures.

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