Meaning of Unemployment

  • According to NSSO, Unemployment is a situation in which all those who, owing to lack of work, are not working but either seek work through employment exchanges, intermediaries, friends, or relatives or by making applications to prospective employers or express their willingness or availability for work under the prevailing condition of work and remunerations.
  • In short, Unemployment refers to a situation in which people are willing and able to work at the existing wage rate, but do not get work. Unemployment is confined not only to unskilled workers, rather a sizeable number of skilled workers fail to get jobs for long periods.

Unemployment is Temporary even in India

  • In India, people cannot remain completely unemployed for very long because of their desperate economic condition. As a result, they are forced to accept unpleasant, dangerous jobs in unclean or unhealthy surroundings.

Sources of Unemployment Data

  • Reports of Census of India: The population census collects information on the economic activity of people.
  • National Sample Survey Organisation (NSSO): The NSSO collects data through sample surveys and gives annual estimates of employment and unemployment.
  • Directorate General of Employment and Training (DGET) has been implementing the Employment Market Information (EMI) scheme over the last 30 years. EMI provides information about the structure of employment, occupational compositions and educational profile of employees.
  • All three sources of data give different estimates of unemployment. However, they provide us with the attributes of the unemployed and the variety of unemployment prevailing in our country.

Types of Unemployment in India

  1. Disguised Unemployment (Hidden Unemployment).

Meaning: Disguised Unemployment refers to a state in which more people are engaged in work than are really needed.

  • For example, if two workers are needed on a piece of land and five workers are engaged in the same job, then three workers are disguised as unemployed.
  • It is the most predominant form of unemployment in the agricultural sector of developing countries like India.
  • In the late 1950s, about one-third of agriculture workers in India were disguisedly unemployed.
  • The main problem of disguised unemployment is that apparently, all seem to be employed, but marginal productivity of the surplus labor is zero, i.e. contribution of the extra workforce is zero. Disguised Unemployment is common in the case of sugarcane cutters.
  1. Seasonal Unemployment

Meaning: Unemployment that occurs at certain seasons of the year is known as seasonal unemployment.

  • In India, seasonal unemployment is predominantly associated with agriculture.
  • In agriculture, work is seasonal and there are no employment opportunities in the village for all months of the year. Therefore, when there is no work to do on farms, men go to urban areas and look for jobs. They come back to their home villages as soon as the rainy season begins.
  • The period of seasonal unemployment varies from state to state, depending upon the methods of farming, the condition of soil, the type and number of crops grown, etc.
  1. Open Unemployment

Meaning: Open Unemployment refers to that economic phenomenon in which persons are able and to work at the prevailing wage rate, but fail to get work.

  •  It is called open unemployment such unemployment can be seen and counted in terms of the number of unemployed people.
  • Open Unemployment is different from Disguised Unemployment. In the case of open Unemployment, workers are very idle. However, in the case of disguised unemployment, workers appear to be working and do not seem to be idling away their time.

Causes of Unemployment

  1. Slow Rate of Economic Growth: The actual growth rate always Population Explosion lies far below the rate targeted in the five decades of planning. Employment opportunities created under the plans could not keep pace with the additions to the labor force.
  2. Population Explosion: The rapid rate of population growth has been another cause of increasing unemployment in the country. It has not been possible to generate so many employment opportunities to absorb the large growing labor force.
  3. Underdeveloped Agriculture: Heavy pressure of population on land and the primitive methods of agricultural operations are responsible for massive rural unemployment and underemployment in the country.
  4. Defective Educational System: The prevailing education system in India is full of defects as it fails to make any provision for imparting technical and vocational education. As a result, educated people are unable to meet the requirements of the firm.
  5. Slow Growth of Industry: Due to a shortage of capital and lack of modern and advanced technology, the industrial sector could not gain momentum and could not generate sufficient employment opportunities in the country.
  6. The decline of Cottage and Small-scale Industries: The number of traditional villages and cottage industries has declined over the years due to changes in the demand preferences is the emergence of more efficient modern industries. As a result, a large number of people become unemployed.
  7. Faulty Planning: The plans could not stop the migration of the rural population to urban areas. The plans were unable to encourage the use of labor-intensive technic agricultural and industrial production. The plans have failed to put due emphasis on employment-generating programs like the development of dairies, fisheries and poultry farming. Insufficient infrastructure facilities (power, transportation, communication, etc.) have greatly hampered the expansion of work opportunities.
  8. Inadequate Employment Planning: Low priority has been given to employment objective plans. There has been a complete absence of any legal provision to implement employment-generating schemes.
  9. Low Capital Formation: Low rate of capital formation has hampered the growth potential in the agricultural and industrial sectors. Consequently, the job-creation capabilities of both sectors have been affected adversely.

Remedial Measures for Unemployment

  1. Accelerating growth rate of GDP: The aggregate employment problem can be solved through the process of accelerated growth. Growth rates of GDP between 8% and 9% are needed over the next ten years, to achieve a significant improvement in the employment situation.
  2. Control of population growth: The rapid growth rate of the population should be slowed down so that the additional jobs created do not fall short of new entrants to the labor market. Therefore, it is necessary to adopt an effective and meaningful population control policy, like family planning programs.
  3. Development of agricultural sector: Acceleration of agricultural growth is important to increase labor productivity and quality of employment for large numbers of the existing force. There is a need for an agricultural revolution through improved techniques, an extension of irrigation facilities, reform of land laws, an increase in public investment, etc.
  4. Encouragement to small-scale enterprises: The small-scale sector needs to be encouraged by multiple initiatives like liberal finance, technical training, and supply of raw materials, infrastructural facilities and marketing of their products.
  5. Improvements in Infrastructure: The infrastructural facilities like health, education, electricity, roads, etc. are critical for the overall development of the economy. Better cultural facilities enable the agriculture and industry sectors to produce to their full capacity. This will generate more employment.
  6. Special Employment Programs: Special employment programs, which aim at providing employment or self-employment opportunities, should be implemented.
  7. Improvement of Employment Exchanges: The employment exchanges spread all over the country are of great assistance in directing the job seekers to the possible areas of employment. The functioning of such employment exchanges should be improved
  8. Creation of self-employment opportunities: Government should provide various facilities like financial assistance, training of skills, supply of inputs, marketing of products, etc. to generate more self-employment opportunities.
  9. Reform of Educational System: The present system of the educational system should be ma vocational and work-oriented. Educational facilities should be more diversified and a sustained program of training is necessary, to develop skills among the educated unemployed through special training or apprenticeship courses.
  10. Labour Planning: The future requirements of educated labor should be forecasted and accordingly, intake into different professional courses should be determined. As a result, excess manpower in market of educated labor will be eliminated.