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Mainstream, Vol XLVIII, No 30, July 17, 2010

A New Dimension of Employment

Thursday 22 July 2010, by Vinod K Anand

Employment has many connotations. This write-up focuses on one new connotation. Before we do that let us briefly see what employment means and how it is measured.

Employment cannot simply be defined as the number of people with jobs. Such a wide definition would also include children are who are too young to work and all those who choose to take up paid employment. In fact, employment refers to all those people who are willing and able to work, and are in a position to find work. Employment, therefore, is used in the sense of voluntary employment rather than involuntary decision on the part of someone who chooses to work rather than go for leisure.

It is not easy to measure employment. On the other hand, it is easier to measure unemployment. Once we measure unemployment it has to be subtracted from the total work force, and we come to know the total number of employed people. Unemployment is measured differently in different countries. For example, in the UK ‘the number of people unemployed is measured for official purposes as the number of people claiming unemployment benefits, income support or national insurance credits at Unemployment Benefit Offices on the day of the monthly count, who on that day were unemployed and willing and able to do any suitable work. This official definition of the unemployment rate in the UK is given by the number of the unemployed claimants expressed as a percentage of the estimated total work force (which composes all employees in employment, the self-employed, HM Forces, participants in work-related government training programmes, and the unemployed claimants).’ There is another measure of unemployment in the UK which is provided by the Annual Labour Force Survey. This measure is as per the internationally agreed definition recommended by the International Labour Organisation: ‘This refers to the people without jobs in the Annual Labour Force Survey who were available to start work within the next two weeks, and who had either looked for work in the four weeks before the survey or were waiting to start a job.’ However, such a measure is subject to sampling errors. Such measurement is also used in other developing countries. In developing countries the measure-ments are different. For example, in India we have normally three estimates of unemployment. These are:

• The Usual Status: This determines the usual activity status- employed, or unemployed or outside the labour force- of those covered by the survey.

• The Weekly Status: This determines the activity status of a person with reference to a period of preceding seven days.

• The Daily Status: This determines the activity status of a person for each day of the preceding seven days.

Out of these three concepts of unemployment, the daily status concept provides the most appropriate measure of unemployment.
Employment is linked with income, output and recognition. It generates income; it adds to production, and it offers social recognition. If it is not so, then it is regarded as illegitimate or immoral employment. There are two interesting offshoots of this:

1. Legitimate employment may lead to illegitimate activities (like rent-seeking and directly unproductive profit seeking activities);

2. Illegitimate employment may lead to legitimate activities (like charity, and helping the poor). There is no end to this discussion.

Let us now talk of the new connotation which is of crucial importance for most of the countries, but despite this it is fully ignored. This relates to the cause of employment and nothing else. This connotation is briefly described below.
When we talk of employment in economics, it implies “positive” employment in the sense that it emerges from positive reasons like spread of quality education, effective health and other social services, various goods and services as demanded by the people, and so on. On the other hand, there is a large segment of employment that arises to provide safeguards against, terrorism, anarchy, riots, thefts, robbery, mugging, nefarious activities, low quality education in recognised institutions, and overall lack of public responsibility and poor governance on the part of the government and administrators, which has five basic elements: free market, the rule of law, political accountability, social justice, and education.

Besides all these political instability is also responsible for creating “negative” employment. The degree of political instability cannot be measured directly. It depends on a number of factors like, political upheavals; riots, strikes and lockouts; crime and (political) assassinations; coups and change of power; infighting amongst political parties; scams including rent-seeking and directly unproductive profit seeking activities; lack of people’s faith in the government; poverty and income disparities.

When governance fails in various ways as described above, it forces the government to create “negative” employment to ensure necessary safeguards to provide peace and tranquility in the country. This is well exemplified by looking at the excessive police force, traffic personnel, security guards, and also a large number of coaching institutes all over. People who are employed in these services do contribute to the society in various ways, but they are employed because of negative reasons. Such employment is, therefore, termed as “negative” employment. In economics we always talk of positive things. For example, income connotes the idea of legally and morally earned income, and not all other kinds of income like “unearned” income. Likewise, employment connotes just “positive” employment. It does not in any way imply “negative” employment. A large number of employed people in India, and may be in other countries as well, are employed because of various reasons as mentioned above, and hence they add to what we have termed as “negative” employment.

The lesson to be learnt from this write-up is that the government should focus on good governance, optimal political stability, peace and security (both internal and external) to reduce the quantum of “negative” employment in the country. Once, we have only “positive” employment, we will be termed as a shining country. Let us pray that all this happens.

The author, a well-known economist, was formerly placed at the Indian Institute of Advanced Study (IIAS), Shimla.

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