MMS II

The nominal market in which workers find paying work, employers find willing workers, and wage rates are determined. Labor markets may be local or national (even international) in their scope and are made up of smaller, interacting labor markets for different qualifications, skills, and geographical locations. They depend on exchange of information between employers and job seekers about wage rates, conditions of employment, level of competition, and job location.

Some economist believes that labour market is at par with commodity market as the price(wage) is determined by the force of supply and demand. However below mention features separate them from commodity market: Immobility Of Labour:Labour cannot move with the same ease and facility that commodities can move. Labour market is essentially a local market : Because of the lack of mobility ,labour market is essentially a local market.

Relationship between buyer and seller is not impersonal :The relationship between the seller of labour with buyer of labour is not impersonal and temporary. Such relationship is governed by many social and economics considerations and is often permanent rather than casual.

Labour market is an imperfect market : Wage rates for the same work and same category of labour are not uniform across the regions of the same country.

Better Bargaining Strength Of Employers: The labour supply in India is in surplus due to which the bargaining strength of labour is much weaker.

Agricultural workers constitute the most neglected class in Indian rural structure. Their income is low and employment irregular. Since, they possess no skill or training, they have no alternative employment opportunities either. Socially, a large number of agricultural workers belong to scheduled castes and scheduled tribes . Therefore, they are a suppressed class. They are not organised and they cannot fight for their rights . Because of all these reasons their economic lot has failed to improve even after six decades of planning.

Seasonal unemployment is a characteristic feature of Agricultural Industry and under employment of man power is inherent in the system of family farming. According to first A.L.E.C., adult male agricultural labourers were employed on wages for 189 days in agricultural work and for 29 days in non-agricultural work i.e. 218 day in all. They were self-employed for 75 days . Casual male workers found employment for only 200 days, while attached workers were employed for 326 days in a year. Women workers employed for 134 days in a year. Unlike industrial labour, agricultural labour is difficult to define. The reason is that unless capitalism develops fully in agriculture, a separate class of workers depending wholly on wages does not come up.

Difficulties in defining agricultural labour are compounded by the fact that many small and marginal farmers also work partly on the farms of others to supplement their income. To what extent should they (or their family members) be considered agricultural labourers is not easy to answer. However, it will be useful to refer some of the attempts made by experts in this connection. 1. The First Agricultural Labour Enquiry Committee 1950-55 defined Agricultural Labourer as "Those people who are engaged in raising crops on payment of wages" The Second Agricultural Labour Enquiry Committee 1956-57 enlarged the distribution to include - "Those who are engaged in other agricultural occupations like dairy, farming, horticulture, raising of live-stock, bees, poultry etc. "In the context of Indian conditions the definition is not adequate, because it is not possible to completely separate those working on wages from others. There are people who do not work on wages throughout the year but only for a part of it.

Therefore, the first A.L.E.C. used the concept of agricultural labour household. If half or more members of household have wage, employment in agriculture then those households should be termed as agricultural labour household. This concept was based upon the occupation of the worker. According to the National Commission on Labour "an agricultural labourer is one who is basically unskilled and unorganised and has little for its livelihood, other than personal labour.

Agricultural labourers can be divided into four categories Landless Labourers, who are attached to the land lords; Landless labourers, who are personally independent, but who work exclusively for others; Petty farmers with tiny bits of land who devote most of their time working for others and

Farmers who have economic holdings but who have one or more of their sons and dependants working for other prosperous farmers.

Agricultural Labourers are Scattered: Agricultural labour in India is being widely scattered over 5.6 lakh villages, of which half have population of less than 500 each. And therefore, any question of building an effective organization, like that of industrial workers, poses insurmountable difficulties. Thus as the vast number of agricultural labour lies scattered all over India, there has been no successful attempt for long, to build their effective organization even at the state level not to speak of the national level.

Agricultural Labourers are Unskilled and Lack Training: Agricultural labourers, especially in smaller villages away from towns and cities, are generally unskilled workers carrying on agricultural operation in the centuries old traditional wages.Most of them, especially those in small isolated villages with around 500 population, may not have even heard of modernization of agriculture. Majority of them are generally conservative, tradition bound, totalistic and resigned to the insufferable lot to which according to them fate has condemned them. There is hardly any motivation for change or improvement. Since, there is direct supervision by the landlord, there is hardly any escape from hard work and since there is no alternative employment. The agricultural labourer has to do all types of work-farm and domestic at the bidding of the landlord.

Unorganised Sector :

Agricultural labourers are not organized like industrial labourers. They are illiterate and ignorant. They live in scattered villages. Hence they could not organize in unions. In urban areas workers could generally organize themselves in unions and it is convenient for political parties to take interest in trade union activities. This is almost difficult in case of farm labour. Accordingly, it is difficult for them to bargain with the land owners and secure good wages.
Low Social Status : Most agricultural workers belong to the depressed classes, which have been neglected for ages. The low caste and depressed classes have been socially handicapped and they had never the courage to assert themselves. They have been like dump-driven cattle. In some parts of India, agricultural labourers are migratory, moving in search of jobs at the time of harvesting. Government measures to improve their lot by legislation have proved ineffective so far due to powerful hold of the rural elite classes in the rural economy.

Demand and Supply of Labour The number of agricultural labourers being very large and skills they possess being meager ,there are generally more than abundant supply of agricultural labourer in relation to demand for them. It is only during the sowing and harvesting seasons that there appears to be near full employment in the case of agricultural labourers. But,once the harvesting season is over, majority of agricultural workers will be jobless especially in areas, where there is single cropping pattern. Less Bargaining Power Due to all the above mentioned factors, the bargaining power and position of agricultural labourers in India is very weak. In fact, quite a large number of them are in the grip of village money lenders, landlords and commission agents, often the same person functioning in all the three capacities. No wonder, the agricultural labour is the most exploited class of people of India.

Bulk of the employment in India is concentrated in the agriculture sector. In rural areas, agriculture constitutes up to 68% of the total rural employment. Approximately 81% female workers and 66% male workers in rural areas are engaged in agriculture. Obviously, most of the workers engaged in agriculture are highly under-employed with very low levels of return. Diversification of the rural workforce to non-agriculture activities has been very low and the same has been negligible in case of the rural women workforce . Despite slow diversification process from farm to non-farm activities, the agriculture sector has reflected enough dynamism in recent years. Although diversification of the female workforce to non-farm activities in rural areas has been limited up to 2 to 3% since 1993-94, the same in case of male workers has been to the extent of 7 to 8% during the same period. Most of this diversification to the rural non-farm activities has taken place in sectors such as construction, transport and food processing industries. Retail trade has also contributed to rural workforce diversification. However, despite all these positive reflections, diversification of the female workforce has been very limited. This may be because of their low education and skill levels. One of the important policy implications to promote rural non-farm employment is to provide skill and training to women workers in rural areas.

100 80 60 40 20

73.7

84.7 71.2

84.1 66.2

81.4

0
1993-94 1999-2000 Male Source : Based on NSSO survey Female 2004-05

Percentage
Percentage

45

65

China

India

Measures adopted by the Government for ameliorating the economic conditions of Agricultural labourers are: Passing the Minimum wage Act . Abolition Of Bonded Labourers. Providing Land to landless Labourers. Active Labour Policies : MGNREGA(Mahatma Gandhi National Rural Employment Guarantee Act). PMEGP(Prime Ministers Employment Generation Programme). SGSY(Swarnajayanti Gram Swarozgar Yojana). SJSRY(Swarnajayanti Shahari Rozgar Yojana).

Wage Rates : Employment opportunities and wage rates have made a significant impact in rural areas. Wages for rural households under the MGNREGA have increased in Maharashtra from Rs. 47 to Rs. 72, in Uttar Pradesh from Rs. 58 to Rs. 100, in Bihar from Rs. 68 to Rs. 100, in West Bengal from Rs. 64 to Rs. 100, in Madhya Pradesh from Rs. 58 to Rs. 100 in Jammu & Kashmir from Rs. 45 to Rs. 100 and in Chhattisgarh from Rs. 58 to Rs. 100 to name a few states. At the national level, the average wages paid under the MGNREGA have increased from Rs. 75 in 2007-08 to Rs. 93 in 2009-10. Income & Purchasing Power : Increase in wage rate and number of workdays in rural areas has increased the income of rural households. Increase in income has resulted in increase in ability of rural households to purchase food grains, other essential commodities, and to access education and health care. Cont..

Natural Resources : About 46 lakh works have been taken up during 2009-10 and most of these (67%) relate to water conservation. This has resulted in rise in water table in dry and arid regions as large number of water conservation and drought proofing works have been taken up under the MGNREGA. Financial Inclusion: More than 9 crore saving bank accounts in the Banks and Post Offices have been opened for the MGNREGA workers.

Since the 1980s, there has been growing informalization of industrial labor in India. This has taken the form of a rising share of the unorganized sector in total manufacturing employment, and informalization of the organized manufacturing sector itself with greater use of subcontracting and increasing employment of contract and temporary workers. The share of unorganized manufacturing in total manufacturing employment has increased from 80.7% in 1983, to 83.2% in 1993-94, and further to 85.0% in 200405. Workers employed through contractor (hereafter, contract workers) as percentage of total workers employed in organized manufacturing has increased from 14% in 199596 to 29% in 2005-06. Cont...

According to the estimates, the share of informal sector in the manufacturing workforce increased from 78% in 1999-00 to 85% in 2004-05. The implication of these changes is that the bulk of the new jobs created in the formal sector of Indian manufacturing in the period 1995 to 2005 (if not over a longer period) were low quality, informal jobs. Thus, in terms of creation of decent jobs, Indias organized manufacturing has not been doing well. According to the estimates made by NCEUS (2009), employment in the formal sector of Indian industry increased from 20.27 million in 1999-00 to 25.38 million in 2004-05. Bulk of this increase in employment was the increase in informal workers employed in the formal sector of Indian industry from 12.13 million to 16.71 million. The increase in formal workers employed in the formal sector of Indian industry was from 8.14 million to 8.67 million.

Child Labour

Trade Union Strike

Currently, India is passing through an unprecedented phase of demographic changes. The ongoing demographic changes are likely to contribute to an ever increasing size of labour force in the country. The Census projection report shows that the proportion of population in the working age group (15-59 years) is likely to increase from approximately 58% in 2001 to more than 64% by 2021. In absolute numbers, there will be approximately 63.5 million new entrants to the working age group of 15-59 years between 2011 and 2016. Further, it is important to note that the bulk of this increase in the population is likely to take place in relatively younger age group of 20-35 years. Such a trend would make India as one of the youngest nations in the world. In 2020, the average Indian will be only 29 years old, compared to 37 in China and the US, 45 in West Europe and 48 in Japan. This trend is seen significant on the grounds that what matters is not the size of the population, but its age structure.

National Sample Survey Organisation (NSSO) has been conducting quinquennial surveys on a regular basis since 1972-73 to generate national level data on employment and unemployment in India. The NSSO has, over time, developed and standardised measures of employment and unemployment. The NSSO collects data on employment and unemployment using three broad measures or approaches: 1. Usual Status; 2. Current Weekly Status; and 3. Current Daily Status. The Usual Status is further categorised at two levels: 1. Usual Principal Status; and 2. Usual Principal and Subsidiary Status. Usual Status relates to the activity status of a person during the reference period of last 365 days preceding the date of survey. The activity status on which a person spent relatively longer time (major time criterion) is considered the Usual Principal Status (UPS). To decide the usual principal activity status of a person, a two-stage classification is used to determine the broad activity status, viz., employed, unemployed and out of labour force within which, the detailed activity status is determined depending on the relatively longer time spent in the activities. Besides the usual principal activity status, a person could have pursued some economic activity for a smaller period, not less than 30 days. The status in which such economic activity is pursued is the subsidiary economic activity status of that person. If these two are taken together, the measure of Usual Principal and Subsidiary Status (UPSS) i.e. usual status is obtained.

Current Weekly Status (CWS) of a person is the activity status obtained for a person during a reference period of 7 days preceding the date of survey. According to this, a person is considered as a worker if he/she has performed any economic activity at least for one hour on any day of the reference week, and is obtained on the basis of daily activities performed on each day of the reference period. Current Daily Status (CDS) of a person is determined on the basis of his/her activity status on each day of the reference week using a priority-cum-major time criterion (day to day labour time disposition). Broadly, a person is considered working (employed) for the full day if he/she worked or 4 hours or more during the day.

Force (LF): Labour force constitutes all the persons who are either working (or employed) or seeking or available for work (or unemployed). Labour Force Participation Rate (LFPR): Labour Force Participation Rate is a measure of the proportion of the countrys population that is engaged actively in the labour market, either by working or seeking work. It provides an indication of the size of the supply of labour available to engage in the production of goods and services. Work Participation Rate (WPR): Work Participation Rate is a measure of the proportion of the countrys labour force who are engaged in work. It provides information on the ability of the economy to generate employment. Unemployment Rate (UR): Unemployment rate is the proportion of the labour force that does not have employment and is actively looking for work.

LFPR = No Of employed + No of unemployed persons Total Population

WPR

= NO Of Employed persons Total Population

New employment data released by the National Sample Survey Organization (NSSO) shows that the UPA government generated only 2 million jobs between 2004 and 2009, even as the economy grew at the rate of 8.43 percent annually. The employment numbers present a stark contrast to the Planning Commissions target of 58 million jobs in the five years between 2007 and 2012. The new NSSO survey numbers have added on to the pile of problems and corruption charges that the UPA has been embroiled in during its second tenure. Many are now referring to this tenure as the phase of jobless growth. The figure, 2 million new jobs, looks worse when one looks at the number of new jobs the NDA government generated between 1999 and 2004 62 million. According to NSSO data, the employment rate has actually declined in the five year period ended 2009-10 to 39.2 per cent from 42 per cent in 2004-05. This means, if the growth in population is factored out, there has been a decline in employment in absolute terms. When one looks at these statistics along with Census of India projections, it seems that during this 5 year period, only 2 million jobs were added compared with 55 million who joined the workforce aged between 15-59 years.

The report by NSSO also shows an increase in the number of casual workers by 21.9 million, while growth in the number of regular workers nearly halved between 2004-05 and 200910, compared with the previous 5 year period. This means that there has been a substantial shift in the structure of labour force in the Indian economy during the period in question.

Note : Casual workers are employees who do not enjoy the same benefits and security as tenured employees.

%
12

10
8 6 4 2 %

0
2002 2003 2004 2005 2006 2007 2008 2009 2010

Source : CIA World

Rank 1
8 83 96 158

Country Name Zimbabwe

Namibia India US China

Unemployed % 95
51.2 10.8 9.7 4.3

Source : CIA World

In economic terms,inflation means rise in the general level of price of goods and services in an economy over period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also erosion in he purchasing power of money a loss of real value in the internal medium of exchange and unit of account in the economy.

AD curev shifts rightwards due to favorable demand shocks in the economy. Output increase resulting in more of employment in the economy.

AS shift towards left due to adverse supply shock in the economy.

Decrease in the purchasing power of the currency .

In economies, where labor is largely unorganized, single digit inflation will increase profitability and therefore lead to greater investment, employment, output, income, demand and prices. This happens because wages of unorganized laborers is not indexed to inflation, so wages will fall overtime during inflation whether it is anticipated or not. In case of anticipated inflation, the real wages of organized labor will also fall and may be compensated with a time lag. The firms will gain during the intervening period between anticipated price rise and its compensation to labor. Thus, from the point of view of production and economic growth, single digit inflation has positive impact.

SL No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Inflation (WPI) 12.6 9.0 5.6 5.6 7.9 4.6 10.4 5.6 5.5 9.1 11.4 8.2 10.6 9.8 16 8.8

16 2010 Source : tradingeconomies.com

Mini Oil shocks following out break of Gulf War . Galloping Fiscal Deficits Price increase in food articles . Low Industrial Growth .

Attempt to bring about a more fundamental or a paradigm shift in macro economic management . New economic policies Increment in Foreign Exchange

Opening of International Trade Investment . Deregulation Initiation of Privatization

Not only high percentage but consistent . Tight money policy . Crude Oil Price hikes. Increase in price of food grains and oil seeds. Global commodity Price hike

In India ,post reforms there has been inflation mostly because of global scenarios which may be recession or rising crude oil prices that led to tremendous increase in the general price level. With the introduction of reforms like Globalisation in India ,the economy has been affected to a larger extent because of changes happening in the outside world in both the times whether good or bad.

In India ,post reforms there has been inflation mostly because of global scenarios which may be recession or rising crude oil prices that led to tremendous increase in the general price level. With the introduction of reforms like Globalisation in India ,the economy has been affected to a larger extent because of changes happening in the outside world in both the times whether good or bad.