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Unemployment and its Types

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Unemployment is one of the most important problems that can be found in any country in the world, regardless of its economic condition. Unemployment is defined as a condition wherein people are able and willing to work at the current wage rate but cannot find work. Some skilled workers struggle to find employment for extended periods, thus, unemployment is not just confined to low-skilled employees. There are various methods for identifying an unemployed person. Some economists believe that a person is considered unemployed if they cannot find a job for even one hour during a half-day.

According to the National Statistical Office (Previously known as National Sample Survey Organisation), 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 expressing their willingness or availability for work under the prevailing conditions of work and remunerations.

Types of Unemployment in India

India’s current unemployment issue is primarily structural. Some of the main types of unemployment in our nation are as follows:

1. Disguised Unemployment (Hidden Unemployment):

Disguised Unemployment is a situation where the number of workers engaged in work is more than actually required. Another name for Disguised Unemployment is Hidden Unemployment. For instance, if five people are working on the same task but only two workers are required for the job, then three people are said to be in disguised unemployment. It is the most common type of unemployment in the agricultural sector of developing nations like India. About one-third of India’s agricultural labourers were disguisedly unemployed in the late 1950s. The primary cause of hidden unemployment is that everyone appears to be working, but the marginal productivity of the excess labour is zero, which implies that the additional workforce’s contribution is zero.

Causes of Disguised Unemployment:

  • People are forced to work on family farms because there are no alternatives to agriculture, which results in hidden unemployment.
  • The probability of hidden unemployment is further increased by small land holdings and family size growth.
  • People who live in joint families continue to work on the family farm, which contributes to disguised unemployment.

2. Seasonal Unemployment:

Seasonal Unemployment is the type of unemployment that occurs at certain seasons of the year. In India, seasonal unemployment is predominately related to agriculture. In agriculture, work is seasonal, and the farmers do not have work to do on the farms for all months of the year. Therefore, when there is no work for men to do on farms, they go to urban areas and look for jobs. The moment the rainy season starts, they return to their villages. Depending on farming practices, soil quality, crop types, yields, etc., the period of seasonal unemployment differs from state to state.

3. Open Unemployment:

The economic phenomenon in which people are able and willing to work at the existing wage rate but fail to get work is known as Open Unemployment. Open unemployment is so-called because it is seen and counted in terms of the number of unemployed persons.

Other Types of Unemployment in India

1. Industrial Unemployment:

The type of unemployment which is present among the illiterates who want to work in industrial establishments is known as Industrial Unemployment. As the size of the urban population and migrating population from rural to urban industrial areas is increasing, industrial unemployment is becoming acute. Also, the pace of industrialisation is slow, which makes the industrial sector unable to generate sufficient employment opportunities, because of which industrial unemployment in India is found at a huge rate.

2. Educated Unemployment:

The type of unemployment which is present among educated people is known as Educated Unemployment. As general education in India is expanding at a fast rate, educated people in the country have also increased. However, because of the slow growth of technical and vocational educational facilities, a large proportion of the country’s manpower is being unnecessarily diverted towards general education. Also, it has also resulted in a peculiar educated unemployment problem in India.

3. Frictional Unemployment:

Frictional unemployment means temporary unemployment, which exists during the time period when a worker leaves one job and joins another job. Such type of unemployment arises because of the labour market imperfections like lack of perfect mobility from the side of workers and lack of market information among the workers regarding job availability. Besides these, frictional unemployment may exist because of the introduction of new machines, breakdown of plants, or nationalisation in the production process.

4. Structural Unemployment:

Structural Unemployment is the type of unemployment in which people remain unemployed because of a mismatch between the unemployed people and the demand for workers of a particular type. In simple terms, structural unemployment is associated with the structural changes in an economy. For example, because of advancements in technology, workers who do not have enough knowledge to work on advanced technological machines or equipment will be unemployed until they take some training course.

5. Cyclical Unemployment:

Cyclical Unemployment is the most common type of unemployment in developed capitalist economies and is related to the down-swing and depression phases of a business cycle. A business cycle includes alternating periods of prosperity and depression. During prosperity, the level of income, output, economic activity, and employment increase; however, during depression period, the level of income and output falls which gives rise to widespread unemployment.


Last Updated : 06 Apr, 2023
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