Direct and indirect employment generation

Indian Economy glossary

Also called: Indirect employment, indirect jobs · Topic: Employment, Unemployment and Informalisation · NCERT: Class 7, Ch 7 "Physical Infrastructure"; Class 11, Ch 6 "Employment: Growth, Informalisation and Other Issues"

Meaning

Government creates jobs in two ways. Direct employment generation means the government hires people itself, in its departments or in the industries, hotels and transport companies it runs. Indirect employment generation means government activity raises output in private firms linked to it, and those firms then hire more workers. Together they show that public spending creates more jobs than its own payroll.

Example

Building a dam directly employs engineers and labourers. A government steel company that raises its output gives private firms more steel to buy. Those firms produce more and hire more workers, which is indirect employment.

Don't confuse with

  • Employment generation programmes: these are specific anti-poverty schemes that create jobs while building assets such as roads or water works. Direct and indirect generation describes how jobs appear from any government activity.

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