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Employment: Meaning, Importance, Basic Terms of Employment and Participation of people in Employment

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  • Last Updated : 19 Nov, 2022
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What is Employment?

People do a wide range of jobs to earn a living. Work significantly impacts our lives as individuals and as members of society. Some people work on farms, in factories, banks, shops, and a variety of other workplaces, while some work from home. Work at home includes not only traditional work like weaving, lace making, or a variety of handicrafts but also current jobs like programming work in the IT industry. Earlier factory work meant working in factories located in cities, whereas now technology has enabled people to produce those factory-based goods at home in villages.

Why do people work?

People work to “earn” a living. “Employment is an activity from which a person earns means of livelihood”. 

  • Some people get wealth through inheritance rather than hard effort. No one is fully satisfied by this. 
  • Working provides us with a sense of worth and makes it possible to relate to others in a meaningful way.
  • Every working person actively contributes to the national income and subsequently to the nation’s development by working in different economic activities (which is the true meaning of “earning a living”).
  • A person works to meet the requirements of those who are dependent on them like family. It gives a sense of accomplishment when a person works for his/her family.

Despite the recognition of the value of employment, Mahatma Gandhi insisted on education and training through a range of works, including craft.

Benefits of Studying working people:

  • Studying the working life of employees provides the perspective quality and structure of a country’s employment.
  • It facilitates the understanding and planning of human resource needs.
  • It analyses how various industries and sectors affect the level of national income.
  • It also helps to solve a variety of social problems, including child labour and the exploitation of socially excluded groups.

Definition of Employment

In economics, employment refers to the state of having a job or being employed. If one has to employ someone, they must pay them. The person who hires people is known as employer, and the person who is getting paid for providing the services is known as employee. Employers may include individuals, business, etc. People can work for themselves and run their own businesses as self-employed individuals.

Importance of Employment

1. Employment is Crucial for Economic Development:

When a person is employed, their living standards increase because they have access to money. It is because the employed individual puts a lot of effort into achieving their objectives that help to improve the business of the employer or enhances the efficiency of the company. Then it accelerates commercial transactions and attracts additional investment to the market.

2. Social Development is the Result of Employment:

People receive compensation for their work. The primary causes of societal disturbance are lack of food and money. When people get money for their hard work and efforts they feel happy. They start spending time with family and relatives and begin taking part in initiatives for the advancement of society.

3. Employment Reduces the Level of Corruption in the System:

When people lack the necessary funds or when they do not receive what they deserve, they feel cheated and petty by the private or public systems. Thus they begin engaging in corruption. However, if an individual is employed, he/she will not think of getting engaged in corruptive activities. Therefore, employment plays an important role in reducing the level of corruption.

4. Employment is the Key to Reducing Poverty:

Employment serves as both a direct and indirect measure of poverty reduction. People who live below the poverty line get benefits immediately from employment in terms of security and finances. When someone is employed, they indirectly learn how to live and survive.  However, people living above the poverty line, learn from others in the workplace, which they can later educate their kids to make them successful and respectable members of society, and thus become role models for their children. 

5. Fuller Utilization of the Country’s Manpower:

In the process of development and for maintaining law and order in society, employment has its place for fuller utilization of resources.

Basic Terms of Employment

Economic Activity:

Those activities which contribute to Gross National Product are called economic activity. Gross National Product refers to the total value of goods and services produced by the residents and businesses of a country, regardless of where the production takes place. 

A Worker:

Workers are all individuals who engage in economic activity, in whatever capacity: high or low.

Usually, when one thinks of “workers,” individuals who receive compensation from an employer come into mind, but that is untrue. 

  • Self-employed people are also workers. It includes people like shopkeepers, barbers, cobblers, etc.
  • Even if some of them are temporarily absent from work due to illness, accident, or any other physical impairment, bad weather, social events, or religious functions, they are still workers.
  • Additionally, workers also include all those who help primary workers in these operations. It means all those who are involved in some economic activities, in whatever capacity, are workers.

So, the term workers include all those, who are engaged in work, whether for others (i.e. paid workers) or for themselves (self-employed workers).

Nature of Employment in India:

  • There are different types of jobs in India. Some people find work all year long, while others find work for a few months.
  • Many workers do not receive just compensation for their labour.
  • When calculating the number of workers, all persons involved in economic activity are counted as employed.

Number of Workers:

  • India had a workforce of around 473 million people in 2011-2012. Since the majority of our population, lives in rural areas, the share of the workforce living there is higher (From 473 million, nearly three-fourths were rural workers).
  • Around 70% of the workers are men, and the rest are women (men and women include child labourers in their respective gender).
  • Women workers account for one-third of the workforce in rural areas, but just one-fifth of the workforce in metropolitan areas.
  • Women perform tasks including cooking, getting water and firewood, and working on farms. They are not paid wages in cash and are paid in the form of grains. For this reason, these women are not categorized as workers.

Labour Force:

All persons, who are working (have a job) and though not working, are seeking and are available for work, are deemed to be in labour force. 

Labour Force = Persons working + Persons seeking and/or available for work

In simple words, the Labour Force includes the total of employed and unemployed persons.

How to calculate the Labour force?

Subtract the following from the total population:

  • Unfit People like old or handicapped persons;
  • People who are willing to work;
  • People who are not willing to work.

It must be noted that children below the age of 15 years and the old person above the age of 60 years are not included in the labour force.

Labour Force Participation Rate/Work Force Participation Rate:

The ratio of the labour force to the total population is known as the Labour Force Participation Rate

Work Force: 

The number of workers who are employed at a particular time is known as the Workforce. It includes all those workers who are engaged in productive activities. 

Work Force = Labour Force – Unemployed People

Unemployed people are those who are willing to work but do not get work.

Calculation of Number of Unemployed People

With the help of the labour force and workforce, the number of unemployed people is calculated. To get the number of unemployed people, the workforce is subtracted from the labour force.

Unemployed People = Labour force – Workforce


Participation of people in employment

“Worker-Population ratio” is an indicator that is used to analyze the employment situation in the country. It can be calculated by dividing the total number of workers in India by the population in India and multiplying it by 100. The population includes the total number of people who reside in a particular locality at a particular point in time.


Important Points about Worker-Population Ratio:

1. This ratio can be used to determine the percentage of the population that is actively contributing to the production of products and services of the country.

  • If the ratio is higher, it indicates the people that are more actively engaged;
  • If it is medium or low, it indicates that a very high section of the population is not directly engaged in economic activity.

2. It indicates the status of the workers in society and their working conditions.

3. It may be possible to determine the quality of employment in the country by knowing the status with which a worker is placed in an enterprise.

4. It also helps to know the employee’s relationship with the employment and the authority possessed over the enterprise and other co-workers. 

Here are some of the facts and figures about the Worker-Population Ratio:

Table 1: Worker-Population Ratio in India (2017-2018)

GenderWorker Population Ratio












With the help of data given in Table 1, the following conclusion was drawn:

  • Participation Rate: In India, there are around 34.7% workers for every 100 people.
  • Higher Proportion of Rural People: The ratio is approximately 33.9% in urban areas and 35% in rural areas.
  • Employment Opportunities: Rural residents have few options for increasing their incomes and their participation in the labour market. Numerous work options are available to urban residents. They look for employment that matches their qualifications and skills.
  • Education Level: In rural areas, many do not go to schools or colleges and even if some go, they discontinue their education in middle to join the workforce. In urban areas, a significant portion is able to study in various educational institutions.
  • Higher Proportion of Male Workers: Men (52.1%) are observed to be employed which is greater than the females’ proportion (16.5%). It is common to find that families discourage their female members from getting jobs whereas men can earn significant salaries.
  • More Women Workers in Rural Areas: The ratio of women workers in rural areas is around 17.5% which is more than the ratio of women workers in urban areas; i.e., 14.2%. The reason behind more women workers in rural areas is their financial condition, which does not allow them to stay at home.
  • Underestimation of Women Workers: The number of women workers in our country is generally underestimated as many of the tasks they perform are not regarded as productive work. For example, many women are actively engaged in activities within the house and at the farms for which they neither receive compensation nor are regarded as workers.  

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