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Demand-Deficient or Cyclical Unemployment


Demand-deficient unemployment occurs when there is not enough
demand to employ all those who want to work. It is also often known as
cyclical unemployment because it will vary with the trade cycle.

Seasonal unemployment
Seasonal unemployment is fairly self explanatory. In India agricultural
employment is linked to monsoon and its behaviour. If there is a
monsoon failure, unemployment results. The effects of seasonal
unemployment are often highly regionalised.

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Frictional or Search Unemployment

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When a person loses his job or chooses to leave it, he/she will have to
look for another one. On average it will take everybody a reasonable
period of time as they search for the right job. This creates
unemployment while they search. The more efficiently the job market is
matching people to jobs, the lower this form of unemployment will be.
However, if there is imperfect information frictional unemployment will
be higher.

Structural Unemployment
Structural unemployment occurs when the structure of industry
changes.
Structural unemployment occurs when a labour market is unable to
provide jobs for everyone who wants one because there is a mismatch
between the skills of the unemployed workers and the skills needed for
the available jobs.

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The NSSO collects data through sample surveys based on scientific


technique of random sampling through household enquiry both in rural
and urban areas.
National Sample Survey Organisation Concept of work
The NSSO has defined work or gainful activity as the activity pursued
for-pay, profit or family gain or in other words, the activity which adds
value to the national product. Normally, it is an activity, which results
in production of goods and services for exchange. However, all activities
in agricultural sector in which a part or whole of the agricultural
production is used for own consumption and does not go for sale are
also considered as gainful.

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A description of what happens to unemployment when the rate of


growth of GDP changes, based on empirical research by Arthur Okun
(1928-80). It predicts that if GDP grows at around 3% a year, the jobless
rate will be unchanged. If it grows faster, the unemployment rate will
fall.

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Labour sector reforms are a part of the second generation reforms aimed
at making Indian industry competitive in the age of globalization. The
Indian labour scenario today is marked by rigid labour laws. 120 labour
related laws made by Union and State Governments to protect labour
which makes up 8% of the total labour force.
1.
2.
3.
4.

Labour reforms are necessary for the industries for the following reasons:
competition from imports in the post-QR regime where the foreign
countries have-flexible labour laws
reduced import duties create greater competition for the domestic industry
to cut costs and be productive
to make the economy export-intensive.

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In response to globalisation, the following developments on the


labour market front are visible in Indian economy today

1. other input costs being not amenable to cutting, labour has borne the
brunt of restructuring process in the search of the employers to cut costs
and improve profitability
2. wage cuts are being offered to workers to retain jobs
3. permanent jobs are becoming scarce as companies are relying on
contract labour for reasons of flexibility and wage gains
4. VRSs
5. some PSUs signed collective agreements for a 20% job cut.

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In response to the demands and challenges of the process of


globalization, the Government found it necessary to rationalise the
TU laws for better labour relations and productivity. The changes
relate to
1. 10% of the total strength of the employees or at least 100 members
must form a trade union unlike earlier when 7 members sufficed
2. curbs on the participation of outsiders in the leadership of the TUs
3. restriction in the number of TUs
4. promotion of accountability in their functioning- main proper financial
accounts and conduct elections

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The National Sample Survey Organisations (NSSO) latest survey data


(66th round) for 2010 on employment and unemployment shows a
significant slowdown in job creation between 2004-05 and 2009- 10a period of jobless growth. Although the countrys real GDP growth
averaged a robust 8.6 per cent per annum, the total employment
growth was only 0.8 per cent per annum over this period compared
to an annual 2.7 per cent in the previous five year period. The Labour
Force Participation rate, which is a part of labour force that is ready
for employment- seeking work (excludes students etc) witnessed a
decline to 39.2 per cent in 2009-10 from 42 per cent in 2004-05 It is
seen that the labour-

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participation rate for women dropped much more over this period
from 29.4 per cent to 23.3 per. cent. This appears to be one of the
reasons for the lower employment growth between 2004- 05 and
2009-10 than between 1999-2000 and 2004-05.
The sample size of this 66th round was 1,00,957 households - 59,129
from rural areas and 41,828 from urban areas.

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In spite of rising incomes, it is a matter of continuing concern that


inequalities have also been widening which is a major, challenge
relating to inclusive growth. The income disparities between the
poorest and the richest in both rural and urban areas and between
urban and rural population are on the rise. The current survey reveals
that the spending of top 10 per cent of rural Indians was 5.76 times
more than that of the bottom 10 per cent. This gap was slightly lower
at 5.63 times during the previous survey period (2004-05).
In urban India, this inequality has widened much faster. In 2009-10,
the top 10 per cent city-dwellers spent 10.11 times more than what
the bottom 10 per cent could. In 2004-05, this ratio was 9.14.

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Currently, India is passing through an unpre-cedented phase of


demographic changes. The ongoing demographic changes are likely
to contribute to an ever increasing size of labour force in the country.
The Census projection report shows that the proportion of
population in the working age group (15-59 years) is likely to increase
from approximately 58% in2001 to more than 64% by 2021. But the
overall population is not the issue the proportion of population in the
working age group of 15-59 years will increase-from 57.7% to 64.3%.
To put it another way, those in the 15-59 age-group would have
increased by about 308 million during the period. The-

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large numbers of the 15-59 year olds would also reflect in the
workforce. It is estimated that by about 2025 India will have 25% of the
worlds total workforce. But beyond 2025 the numbers of the aged will
begin to increase even more dramatically, and consequently the window
of opportunity is between now and 2025.

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National Rural Livelihoods Mission (NRLM), one of the major new


initiatives under the Ministry of Rural Development to bring the poorest
of the poor above the poverty line by ensuring viable livelihood
opportunities to them was launched in Banswara, Rajasthan in mid-2011.
The Mission aims to ensure that at least one member from each
identified rural poor household, preferably a woman, is brought under
the Self Help Group (SHG) network in a time bound manner. NRLM would
reach out, mobilize and support 7 Crore BPL households across 600
districts, 6000 blocks, 2.5 lakh Gram Panchayats, in 6 lakh villages across
the country into their self-managed Self Help Groups (SHGs) and their
federal institutions and livelihoods collectives. It would support them
financially and institutionally.

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2008
Q. What is the name of the scheme which provides training and skills to women
in traditional and non-traditional trades?
(a)
(b)
(c)
(d)

Kishori Shakti Yojna


Rashtriya Mahila Kosh
Swayamsiddha
Swawlamban

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2010
Q. Two of the schemes launched by the Government of India for Womens
development are Swadhar and Swayam Siddha. As regards the difference between
them, consider the following statements:
1. Swayam Siddha is meant for those in difficult circumstances such as women
survivors of natural disasters or terrorism, women prisoners released from jails,
mentally challenged women etc. whereas Swadhar is meant for holistic
empowerment of women through Self Help Groups.
2. Swayam Siddha is implemented through Local Self Government bodies or reputed
Voluntary Organizations whereas Swadhar is implemented through the ICDS units
set up in the states.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

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2011

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Q. 292. Among the following who are eligible to benefit from the Mahatma
Gandhi National Rural Employment Guarantee Act?
(a) Adult members of only the scheduled caste and scheduled
tribe
households
(b) Adult members of below poverty line (BPL) households
(c) Adult members of households of all backward
communities
(d) Adult members of any household

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