Important Notes on Unemployment in INDIA || Unemployment TYPES, CAUSES, WAYS - Information That We Want

Sunday, 3 May 2020

Important Notes on Unemployment in INDIA || Unemployment TYPES, CAUSES, WAYS

Notes on Unemployment in India, Unemployment, Causes of Unemployment in India, Types of Unemployment in India, seasonal Unemployment of India

Notes on  

Important notes on Unemployment in India

                 Now a days Unemployment is a major challenge for the world. This is effecting a lot to the Economy of various countries. Here we are providing some information about the Unemployment - What is Unemployment, Types of Unemployment, Causes of Unemployment and what are the Steps taken for removal of Unemployment which are given below -


Different definition of Unemployment are given below-
  • Unemployment occurs when a person who is actively searching for employment is unable to find work.
  • Unemployment means only involuntary unemployment wherein a person who is willing to work at the existing wage rate does not get a job.
  • As defined by the International Labour Organization, "unemployed workers" are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work.

The unemployment rate is expressed as a percentage and calculated as follows:
Unemployment Formula

Types of Unemployment

There are several types of unemployment those are given below -

       1. Open Unemployment:
              Open unemployment is a situation where in a large section of the labour force (Selected people of a geographical region) does not get a job for a major part of the year that may yield them regular income. This type of unemployment can be seen and counted in terms of the number of unemployed persons. The labour force expands at a faster rate than the growth rate of economy. Therefore all people do not get jobs.

              * workforce or labour force is generally used to describe those working for a single company or industry, but can also apply to a geographic region like a city, state, or country. Within a company, its value can be labelled as its "Workforce in Place". The workforce of a country includes both the employed and the unemployed (labour force). The LABOUR FORCE PARTICIPATION RATE, (LFPR) (or economic activity rate, EAR), is the ratio between the labour force and the overall size of their cohort (national population of the same age range). The term generally excludes the employers or management, and can imply those involved in manual labour. It may also mean all those who are available for work.

       2. Disguised Unemployment:
                  It is a situation in which more people are doing work than actually required. Even if some are withdrawn, production does not suffer. In other words it refers to a situation of employment with surplus manpower in which some workers have zero marginal productivity.
              So their removal will not affect the volume of total production. Overcrowding in agriculture due to rapid growth of population and lack of alternative job opportunities may be cited as the main reasons for disguised unemployment.

       3. Seasonal Unemployment:
Seasonal unemployment occurs when people are unemployed at particular times of the year when demand for labour is lower than usual. In some industries and occupations like agriculture, holiday resorts, ice factories etc., production activities take place only in some seasons. So they offer employment for only a certain period of time in a year. People engaged in such type of activities may remain unemployed during the off-season also.

       4. Cyclical Unemployment
It is caused by trade cycles at regular intervals. Generally capitalist economies are subject to trade cycles. The down swing in business activities results in unemployment. Cyclical unemployment is normally a shot-run phenomenon.

              Unemployment rises during recessionary periods and declines during periods of economic growth. Preventing and alleviating cyclical unemployment during recessions is one of the key reasons for the study of economics and the purpose of the various policy tools that governments employ on the downside of business cycles to stimulate the economy.

       5. Educated Unemployment
                Among the educated people, apart from open unemployment, many are underemployed because their qualification does not match the job. Faulty education system, mass output, preference for white collar jobs, lack of employable skills and dwindling formal salaried jobs are mainly responsible for unemployment among educated youths in India. Educated unemployment may be either open or underemployment.
          In order to avoid and overcome such situations, it is essential for the youngsters to be aware of what career path they have to choose to fetch a suitable job for themselves. Therefore, it is necessary to provide excellent education and regarding job prospects and career opportunities. This will help them in choosing a profession that is suitable for their capability and aptitude. Raising constant awareness about this will gradually reduce the impact of the issue.

       6. Technological Unemployment:
               It is the result of certain changes in the techniques of production which may not warrant much labour. Modern technology being capital intensive requires less labourers and contributes to this kind of unemployment.
               Technological change typically includes the introduction of labour-saving "mechanical-muscle" machines or more efficient "mechanical-mind" processes (automation). Just as horses employed as prime movers were gradually made obsolete by the automobile, humans' jobs have also been affected throughout modern history.

       7. Structural Unemployment
                This type of unemployment arises due to drastic changes in the economic structure of a country. These changes may affect either the supply of a factor or demand for a factor of production. Structural employment is a natural outcome of economic development and technological advancement and innovation that are taking place rapidly all over the world.
                It comes about through technological change in the structure of the economy in which labor markets operate. Technological changes—such as the replacement of horse-drawn transport by automobiles or the automation of manufacturing—lead to unemployment among workers displaced from jobs that are no longer needed. Retraining these workers can be difficult, costly, and time consuming, and displaced workers often end up either unemployed for extended periods or leaving the labor force entirely.

Seasonal unemployment may be seen as a kind of structural unemployment since it is linked to certain kinds of jobs (construction and migratory farm work). The most-cited official unemployment measures erase this kind of unemployment from the statistics using "seasonal adjustment" techniques. That results in substantial and permanent structural unemployment.

       8. Underemployment
                It is a situation in which people employed contribute less than their capacity to production. In this type of unemployment people are not gainfully employed. They may be employed either on part-time basis, or undertake a job for which lesser qualification is required. For example a Post Graduate / M. Phill students may work as a clerk for which only Intermediate and Graduation is enough.

Measurement of Unemployment in INDIA:

                There are three measures or estimates of unemployment. These are developed by National Sample Survey Organisation (NSSO) (This is a governmental agency in India at the national and state levels to study employment, unemployment and unemployment rates through sample surveys. It does not report employment or unemployment results every quarter nor every year, but generally only once every 5 years.) They are:

  1. Weekly Status Unemployment: :
                    The estimate measures unemployment with respect to one week. A person is said to be unemployed if he is not able to work even for an hour during the survey period. In other words according to this estimate a person is said to be employed for the week even if he/she is employed only for a day during that week.

  2. Current Daily Status Unemployment:

  3.                 It considers the activity status of a person for each day of the preceding seven days. The reference period here is a day. If a person did not find work on a day or some days during the survey week, he/she is regarded as unemployed.

                    Normally if a person works for four hours or more during a day, he or she is considered as employed for the whole day. The daily status unemployment is considered to be a comprehensive measure of unemployment.

    9. Casual Unemployment
                    When a person is employed on a day-to-day basis, casual unemployment may occur due to short-term contracts, shortage of raw materials, fall in demand, change of ownership etc.

    10. Chronic Unemployment
                   If unemployment continues to be a long term feature of a country, it is called chronic unemployment. Rapid growth of population and inadequate level of economic development on account of vicious circle of poverty are the main causes for chronic unemployment.

    11. Frictional Unemployment
                   Frictional unemployment is caused due to improper adjustment between supply of labour and demand for labour. This type of unemployment is due to immobility of labour, lack of correct and timely information, seasonal nature of work. etc.

                   It may occurs as a result of people voluntarily changing jobs within an economy. After a person leaves a company, it naturally takes time to find another job. Similarly, graduates just entering the workforce add to frictional unemployment. Usually, this type of unemployment is short-lived. It is also the least problematic from an economic standpoint. Frictional unemployment is a natural result of the fact that market processes take time and information can be costly. Searching for a new job, recruiting new workers, and matching the right workers to the right jobs all take time and effort, resulting in frictional unemployment.

                   It is a time period between jobs in which a worker searches for or transitions from one job to another. It is sometimes called search unemployment and can be voluntary, based on the circumstances of the unemployed individual. Frictional unemployment exists because both jobs and workers are heterogeneous, and a mismatch can result between the characteristics of supply and demand. Such a mismatch can be related to skills, payment, work-time, location, seasonal industries, attitude, taste, and a multitude of other factors. New entrants (such as graduating students) and re-entrants (such as former homemakers) can also suffer a spell of frictional unemployment.

    12. Institutional unemployment

                   I Institutional unemployment is unemployment that results from long-term or permanent institutional factors and incentives in the economy. Government policies, such as high minimum wage floors, generous social benefits programs, and restrictive occupational licensing laws; labor market phenomena, such as efficiency wages and discriminatory hiring; and labor market institutions, such as high rates of unionization, can all contribute to institutional unemployment.

    Causes of Unemployment in India

    The important causes of Unemployment in India are as follows:

    1. Rapid growth of population and increase in labour force.

    2. Underdevelopment of the economy.

    3. Slow growth in the agricultural sector.

    4. The syllabus taught in schools and colleges, being not as per the current requirements of the industries. This is the main cause of structural unemployment.

    5. Absence of manpower planning.

    6. Degeneration of village industries.

    7. Inappropriate technology.

    8. Slow growth of industrial sector.

    9. Immobility of labour.

    10. Jobless growth.

    11. New Technologies and inventions

    12. The status of the economy, which can be influenced by a recession

    13. Competition caused by globalization and international trade

    14. Policies of the government

    15. regulation and market

    16. Unemployment occurs when workers who want to work are unable to find jobs, which lowers economic output; however, they still require subsistence.

    17. High rates of unemployment are a signal of economic distress, but extremely low rates of unemployment may signal an overheated economy.

    18. Unemployment can be classified as frictional, cyclical, structural, or institutional.

    19. Unemployment data are collected and published by government agencies in a variety of ways.

    20. Unemployment and the status of the economy can be influenced by a country through, for example, fiscal policy. Furthermore, the monetary authority of a country, such as the central bank, can influence the availability and cost for money through its monetary policy.

    21. Also, the situation has become so drastic that highly educated people are ready to do the job of a sweeper. Besides, the government is not doing his work seriously.

    22. A large portion of the population is engaged in the agricultural sector and the sector only provides employment in harvest or plantation time.

    23. In addition, the biggest reason of unemployment in India is its vast population which demands a large number of jobs every year which the government and authorities are unable to provide.

    24. Low or no educational levels and vocational skills of working population.

    25. Inadequate state support, legal complexities and low infrastructural, financial and market linkages to small/ cottage industries or small businesses, making such enterprises unviable with cost and compliance overruns.

    26. Huge workforce associated with informal sector due to lack of required education/ skills, which is not captured in any employment data. For ex: domestic helpers, construction workers etc.

    27. Inadequate growth of infrastructure and low investments in manufacturing sector, hence restricting employment potential of secondary sector.

    28. Low productivity in agriculture sector combined with lack of alternative opportunities for agricultural worker which makes transition from primary to secondary and tertiary sectors difficult.

    29. Regressive social norms that deter women from taking/continuing employment.

    Consequences of Unemployment

                    If Unemployment will go on like the current scenario then unemployment will become a major issue. Apart from this, the following things happen -

    1. The problem of unemployment gives rise to the problem of poverty.

    2. Young people after a long time of unemployment indulge in illegal and wrong activities for earning money. This also leads to increase in crime in the country.

    3. Unemployed persons can easily be enticed by antisocial elements. This makes them lose faith in democratic values of the country.

    4. It is often seen that unemployed people end up getting addicted to drugs and alcohol or attempts suicide, leading losses to the human resources of the country.

    5. It also affects Economy of the country as the workforce that could have been gainfully employed to generate resources actually gets dependent on the remaining working population, thus escalating socioeconomic costs for the State. For instance, 1 percent increase in unemployment reduces the GDP by 2 percent.

    Steps Taken by Government against Unemployment

    • Integrated Rural Development Programme (IRDP) was launched in 1980 to create full employment opportunities in rural areas.

    • Training of Rural Youth for Self-Employment (TRYSEM): This scheme was started in 1979 with objective to help unemployed rural youth between the age of 18 and 35 years to acquire skills for self-employment. Priority was given to SC/ST Youth and Women..

    • By merging the two erstwhile wage employment programme – National Rural Employment programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) the Jawahar Rozgar Yojana (JRY) was started with effect from April, 1, 1989 on 80:20 cost sharing basis between the centre and the States.

    • Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA):
                It is an employment scheme that was launched in 2005 to provide social security by guaranteeing a minimum of 100 days paid work per year to all the families whose adult members opt for unskilled labour-intensive work.
                This act provides Right to Work to people.

    • Pradhan Mantri Kaushal Vikas Yojana (PMKVY), launched in 2015 has an objective of enabling a large number of Indian youth to take up industry-relevant skill training that will help them in securing a better livelihood.

    • Start Up India Scheme, launched in 2016 aims at developing an ecosystem that promotes and nurtures entrepreneurship across the country.

    • Stand Up India Scheme, launched in 2016 aims to facilitate bank loans between Rs 10 lakh and Rs. 1 crore to at least one SC or ST borrower and at least one women borrower per bank branch for setting up a greenfield enterprise.

    Different Steps may be taken for removal of Unemployment

    1. Decentralisation of Industrial activities is necessary so that people of every region get employment.

    2. Development of the rural areas will help mitigate the migration of the rural people to the urban areas thus decreasing the pressure on the urban area jobs.

    3. Entrepreneurs generate employments to many in a country; therefore government needs to encourage entrepreneurship among the youth.

    4. Concrete measures aimed at removing the social barriers for women’s entry and their continuous participation in the job market is needed.

    5. Government needs to keep a strict watch on the education system and should try to implement new ways to generate skilled labour force.

    6. Effective implementation of present programs like Make in India, Skill India, Start up and Stand-Up India.

    7. There is a need for National Employment Policy (NEP) that would encompass a set of multidimensional interventions covering a whole range of social and economic issues affecting many policy spheres and not just the areas of labour and employment. The policy would be a critical tool to contribute significantly to achieve the goals of the 2030 Agenda for Sustainable Development.

    8. The underlying principles for the National Employment Policy may include.

    9. enhancing human capital through skill development;

    10. creating sufficient number of decent quality jobs for all citizens in the formal and informal sectors to absorb those who are available and willing to work

    11. strengthening social cohesion and equity in the labour market

    12. coherence and convergence in various initiatives taken by the government

    13. supporting the private sector to become the major investor in productive enterprises

    14. supporting self-employed persons by strengthening their capabilities to improve their earnings

    15. ensuring employees’ basic rights and developing an education training and skill development system aligned with the changing requirements of the labour market.

    Reports on Unemployment in India

                    This is a list of States and union territories of India ranked according to unemployment rate. The list is compiled from the Report on Periodic Labour Force Survey (2017–18) released by Ministry of Statistics and Programme, Implementation, Government of India.

    Meghalaya has the least unemployment rate among the Indian states, while Tripura has the highest unemployment rate. (Higher rank represents higher unemployment among the population). National average stands at 6.1 percent.

    Graph of Unemployment rate in INDIA

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