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Different Sectors in Economy Notes of SSC CGL Tier 1

Different Sectors in Economy Notes of SSC CGL Tier 1

Economic activities are activities that result in the production of goods and services.

Sectors are group of economic activities classified on the basis of some criteria.

Three types of classification are:

  1. Classification of economics activities on the basis of nature of activity-
  • Primary Sector
  • Secondary sector
  • Tertiary sector
  1. Classification of economics activities on the basis of employment-
  • Organised sector
  • Unorganized sector
  1. Classification of economic activities on the basis of ownership of assets-
  • Public sector (government’s control)
  • Private sector (controlled by individual or group of individuals)

Classification of economics activities on the basis of nature of activity-

Primary Sector

The primary sector involves the extraction of raw materials from the Earth. This extraction results in raw materials and basic foods, such as coal, wood, iron and corn. The types of workers in this sector include farmers, coal miners and hunters.

In the U.S. and similarly in most other modern world countries, there is a decline in the proportion of the population that works in the primary sector. Currently, only 3% of our nation’s labor force is engaged in primary sector activity. This is a big change from the mid-19th century in which two-thirds of the labor force was engaged in this sector.

Different Sectors in Economy Notes of SSC CGL Tier 1
Secondary Sector

The secondary sector involves the transformation of raw materials into goods. This transformation results in wood being made into furniture, steel being made into cars or textiles being made into clothes, as examples. The types of workers in this sector include a seamstress, factory worker or craftsmen.

The development into this sector can be attributed to demand for more goods and food, which leads to industrialization. Only so much can be done in the primary sector before there is a natural limit on how much can be extracted. When an economy moves into the second sector, new farm techniques are used, and industrialization changed how goods can be transformed, distributed and sold. Currently, 20% of the U.S. labor force is involved in the secondary sector.

Tertiary Sector

The tertiary sector involves the supplying of services to consumers and businesses. This sector provides services to the general population and business, including retail, sales, transportation and restaurants. The types of workers in this sector include restaurant bartenders, accountants and pilots.

 

                Differences between Primary Secondary and Tertiary sectors-

Primary Sector Secondary Sector Tertiary Sector
1. It includes those
activities which lead to the
production of goods by
exploitation of natural
resources.
1. It includes those

activities which result in

transformation of natural

products into other forms by

manufacturing.

1. it includes those activities
that in the development of
the primary & secondary
sectors by supporting the
production process.
2. It produces natural

products like cotton, milk,

fruits, wheat, fish, subber

etc.

2. It produces

manufactured goods like

cloth, sugar, bricks etc.

2. It does not produce
goods but generates
services like transportation,
communication, basting etc.
3.It also called agriculture

and related sector because

most of the natural products

obtained are from

agriculture, diary, fishing,

forestry etc.

3. It is also called the

industrial sector as this

sector has come to be

associated with different

kinds of industries.

3. It is also called the

service sector as this sector

generates services rather

than goods.

4.Examples of primary

sector activities are

agriculture, fishing, mining,

animal husbandry etc.

4. Examples of secondary

sector activities are

manufacturing and

construction.

Examples of tertiary sector

activities are banking,

insurance, finance etc.

Classification of economics activities on the basis of employment-

Organised Sector-

The sector, which is registered with the government, is called an organised sector. In this sector, people get assured work, and the employment terms are fixed and regular. A number of acts apply to the enterprises, schools and hospitals covered under the organised sector. Entry into the organised sector is very difficult as proper registration of the entity is required. The sector is regulated and taxed by the government.

There are some benefits provided to the employees working under organised sector like they get the advantage of job security, add on benefits are provided like various allowances and perquisites. They get a fixed monthly payment, working hours and hike on salary at regular intervals.

Unorganized Sector-

The sector which is not registered with the government and whose terms of employment are not fixed and regular is considered as unorganized sector. In this sector, no government rules and regulations are followed. Entry to such sector is quite easy as it does not require any affiliation or registration. The government does not regulate the unorganized sector, and hence taxes are not levied. This sector includes those small size enterprises, workshops where there are low skill and unproductive employment.

The working hours of workers are not fixed. Moreover, sometimes they have to work on Sundays and holidays. They get daily wages for their work, which is comparatively less than the pay prescribed by the government.

Key Differences between Organised and Unorganized Sector-

The difference between organised and unorganized sector can be drawn clearly on the following grounds:Organised Sector is a sector where the employment terms are fixed and regular, and the employees get assured work. Unorganized sector is one where the employment terms are not fixed and regular, as well as the enterprises, are not registered with the government.

A number of acts apply to an organised sector like Factories Act, Bonus Act, PF Act, Minimum Wages Act, etc. whereas unorganized sector is not governed by any such act.

The government rules are strictly followed in the organised sector, which is not in the case of unorganized sector.

In organised sector, the employees draw regular monthly salaries. On the other hand, in the unorganized sector, the workers are paid on a daily basis.

Job security exists in the organised sector, but not in the unorganized sector.

The organised sector, provide additional remuneration to employees for overtime. Conversely, there is no such provision for overtime in case of the unorganized sector.

In organised sector, the salaries of employees are as per government norms. In contrast to an unorganized sector where wages are below, what is prescribed by the government.

In organised sectors, workers get a hike on salary, once in a while. As opposed to an unorganized sector where the salaries or workers are rarely hiked.

Employees get add-on benefits like medical facilities, pension, leave travel compensation, etc. in the organised sector, which are not provided to the employees working in unorganized sector.

Classification of economic activities on the basis of ownership of assets-

Public Sector –

The sector, which is engaged in the activities of providing government goods and services to the general public, is Public Sector. The enterprises, agencies, and bodies are fully owned, controlled and run by the Government whether it is central government, statement government or a local government.

There are two types of public sector organizations, i.e. either the Government fully finances them through the revenues they raise by collecting taxes, duties, fees, etc. or the government holds more than 51% of the total share capital of the company which comes under various ministries. The enterprises are established with service motive. It is the largest sector, which works for the upliftment of the people by providing the following services to the people:

  • Generation of employment opportunities
  • Postal services
  • Providing education and health facilities at low cost
  • Providing security
  • Railway service

Private Sector –

The segment of a national economy that is owned, controlled and managed by private individuals or enterprises is known as Private Sector. The private sector companies are divided on the basis of sizes like small & medium enterprises and large enterprises which are either privately or publicly traded organizations. They can be created in two ways, i.e. either by the formation of a new enterprise or by the privatization of any Public Sector Enterprise.

Business entities of the private sector are generally established with the sole objective of making profit and building brand reputation. They provide quality services to the community to win the trust and goodwill from people to survive in the long run and compete with the enemies. These enterprises also have to follow the government law and order. It is the largest sector in terms of employees.

Although in private sector performance is the basic criterion for job stability, i.e. if you perform well you will get promoted and if you won’t, you will be perished. The major services provided by the Private sector are as under:

  • Quality education
  • Telecommunication services
  • IT services
  • Courier Services
  • Infrastructure development

Different Sectors in Economy Notes of SSC CGL Tier 1
Key Differences between Public Sector and Private Sector-

The following are the major differences between public sector and private sector:

  1. Public Sector is a part of the country’s economy where the control and maintenance are in the hands of Government. If we talk about Private Sector, it is owned and managed by the private individuals and corporations.
  2. The aim of the public sector is to serve people, but private sector enterprises are established with the profit motive.
  3. In the public sector, the government has full control over the organizations. Conversely, Private Sector companies enjoy less government interference.
  4. The employees of the public sector have the security of the job along with that they are given the benefits of allowances, perquisites, and retirement like gratuity, pension, superannuation fund, etc. which are absent in the case of the private sector.
  5. In the private sector working environment is quite competitive which is missing in the public sector because they are not established to meet commercial objectives.
  6. In general Public Sector uses Seniority for promoting employees; however, merit cum seniority is also taken as a base for promoting employees. Unlike Private Sector, where performance is everything, and so merit is considered as a parameter to promote them.

 

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