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What Is Unemployment?

Unemployment represents the number of people in the work force who want to work but do
not have a job. It is generally stated as a percentage and calculated by dividing the number
of people who are unemployed by the total work force.

Causes of Unemployment
The government defines those who want to work as people who have actively looked for
work within the past four weeks and determines the number of people currently unemployed
through a monthly survey called the Current Population Survey.
People can be unemployed for many reasons:

They quit their position and are looking for a new one.

They were laid off due to lack of work and haven't yet been rehired.

Their company reduced the work force, and they are seeking a new
position. This can be due to a local condition, when the company closes a plant or
division, or a national condition, when the economy slows and many companies
reduce their work force.

They have recently returned to the work force - perhaps from

pregnancy or attending school - and haven't yet located a position.

The need for their skill set has gone down, and there are limited
positions available, which may lead to unemployment until they train for a new

Technology has reduced the need for their type of position.

Causes of Unemployment in India: (i) Caste System

(ii) Slow Economic Growth
(iii) Increase in Population
(iv) Agriculture is a Seasonal Occupation
(v) Joint Family System
(vi) Fall of Cottage and Small industries
(vii) Slow Growth of Industrialization
(viii) Less Savings and Investment

(ix) Causes of Under Employment

(x) Defective Planning
(xi) Expansion of Universities
(xii) Inadequate Irrigation Facilities
(xiii) Immobility of labour

Causes of Unemployment:
i. Rapid changes in technology
ii. Recessions
iii. Inflation
iv. Disability
v. Undulating business cycles
vi. Changes in tastes as well as alterations in the climatic conditions. This may
in turn lead to decline in demand for certain services as well as products.
vii. Attitude towards employers
viii. Willingness to work
ix. Perception of employees
x. Employee values
xi. Discriminating factors in the place of work (may include discrimination on
the basis of age, class, ethnicity, color and race).
xii. Ability to look for employment.

Q. What are the causes and effects of unemployment?

ANS:There are a number of causes of unemployment, but many economists put
most unemployment in three different categories: frictional, cyclical, and
structural unemployment. A number of unemployment reasons fall into these
categories. The effects of unemployment can be both personal and national.

Frictional unemployment is a natural form of unemployment

experienced when workers are between jobs. After losing a job, a person is
considered unemployed until he finds another. Structural unemployment is
caused by changes in industry. If new technology makes a job unnecessary, or a
demand for workers in a field goes down, then workers in that field will lose their
jobs. Another form of this is outsourcing, in which companies move jobs
elsewhere to a place where labor costs are lower. Cyclical unemployment is
caused by natural changes in the economy. If the economy is growing, more
workers are needed. If it shrinks, then workers lose their jobs. During recessions,
unemployment rates tend to grow.
The effects of unemployment are wide-ranging and include high
costs to the government, a reduction in spending power for consumers and
economic recession. The government takes on higher costs since it has to
provide security to the unemployed, so when fewer people have jobs, the
government has to pay more to support them. The spending power of both the
unemployed and those still working goes down, since those without jobs can't
pay for goods while those who are employed face increased taxes and economic
uncertainty. The combination of reduced work forces and reduced spending can
lead to recession.

Effects of Unemployment: i.

Loss of Human Resource

Increase in Poverty
Social Problems
Political Instability
Exploitation of Labour
More Emphasis on Capital Intensive Techniques
Defective Education System
Slow Growth of Tertiary Sector
Decay of Cottage and Small-Scale Industries
Lack of Vocational Guidance and Training Facilities
Less Means for Self-Employment