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 What is Unemployment?

Unemployment is the situation of actively looking for employment but not being currently
employed.In other words, The state of being without any work for an educated person, for earning
one's livelihood is meant by unemployment. The main types of unemployment include structural
unemployment which focuses on structural problems in the economy and inefficiencies inherent in
labour markets, including a mismatch between the supply and demand of laborers with necessary
skill sets. Structural arguments emphasize causes and solutions related to disruptive
technologies and globalization. Discussions of frictional unemployment focus on voluntary decisions
to work based on each individuals' valuation of their own work and how that compares to current
wage rates plus the time and effort required to find a job. Causes and solutions for frictional
unemployment often address job entry threshold and wage rates. Behavioral economists highlight
individual biases in decision making, and often involve problems and solutions concerning sticky
wages and efficiency wages.

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.[30] Individuals who are actively seeking job placement must make the
effort to: be in contact with an employer, have job interviews, contact job placement agencies, send
out resumes, submit applications, respond to advertisements, or some other means of active job
searching within the prior four weeks.

 Unemployment in India –

Unemployment in India is a social issue and unemployment records in India are kept by the Ministry
of Labour and Employment of India.Union Ministry for Labour and Employment claimed national
unemployment hovers around 3.7 percent in 2015-16. However, the data is based on usual
principal subsidiary status (UPSS) approach that requires only 30 days of work in a year to call the
person employed. Seventy-seven percent of the families reportedly have no regular wage earner and
more than 67 percent have income less than ₹10,000 per month. Around 58 percent of unemployed
graduates and 62 percent of unemployed post graduates cited non-availability of jobs matching with
education/skill and experience as the main reason for unemployment. As per the National Skill
Development Mission Document, as much as 97 percent of the workforce in India has not undergone
formal skill training. About 76 percent of the households did not benefit from employment
generating schemes like MGNREGA, PMEGP, SGSY, SJSRY, etc.
In September 2015, the unemployment reached a mark that 23 lakh people applied for 368 posts of
peon in the state secretariat in Uttar Pradesh. Among the applicants, 255 candidates with a PhD
degree and more than two lakh hold BTech, BSc, Mcom and MSc degrees.

 How is Unemployment calculated?

The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a

percentage by dividing the number of unemployed individuals by all individuals currently in
the labor force.

Unemployment Rate = Unemployed workers / Total labour force * 100

 Methods of Calculating Unemployment –

 Labour Force Sample Surveys are the most preferred method of unemployment rate calculation
since they give the most comprehensive results and enables calculation of unemployment by
different group categories such as race and gender. This method is the most internationally
 Official Estimates are determined by a combination of information from one or more of the other
three methods. The use of this method has been declining in favor of Labour Surveys.
 Social Insurance Statistics such as unemployment benefits, are computed base on the number of
persons insured representing the total labour force and the number of persons who are insured
that are collecting benefits. This method has been heavily criticized due to the expiration of
benefits before the person finds work.

 Employment Office Statistics are the least effective being that they only include a monthly tally
of unemployed persons who enter employment offices. This method also includes unemployed
who are not unemployed per the ILO definition.

 Causes of Unemployment in India –

(i) Caste System:

In India caste system is prevalent. The work is prohibited for specific castes in some areas.
In many cases, the work is not given to the deserving candidates but given to the person belonging to
a particular community. So this gives rise to unemployment.

(ii) Slow Economic Growth:

Indian economy is underdeveloped and role of economic growth is very slow. This slow growth fails
to provide enough unemployment opportunities to the increasing population.

(iii) Increase in Population:

Constant increase in population has been a big problem in India. It is one of the main causes of
unemployment. The rate of unemployment is 11.1% in 10th Plan.

(iv) Agriculture is a Seasonal Occupation:

Agriculture is underdeveloped in India. It provides seasonal employment. Large part of population is
dependent on agriculture. But agriculture being seasonal provides work for a few months. So this
gives rise to unemployment.

(v) Joint Family System:

In big families having big business, many such persons will be available who do not do any work
and depend on the joint income of the family.Many of them seem to be working but they do not add
anything to production. So they encourage disguised unemployment.

(vi) Fall of Cottage and Small industries:

The industrial development had adverse effect on cottage and small industries. The production of
cottage industries began to fall and many artisans became unemployed.

(vii) Slow Growth of Industrialisation:
The rate of industrial growth is slow. Though emphasis is laid on industrialisation yet the avenues of
employment created by industrialisation are very few.
(viii) Less Savings and Investment:
There is inadequate capital in India. Above all, this capital has been judiciously invested. Investment
depends on savings. Savings are inadequate. Due to shortage of savings and investment,
opportunities of employment have not been created.
(ix) Causes of Under Employment:
Inadequate availability of means of production is the main cause of under employment. People do
not get employment for the whole year due to shortage of electricity, coal and raw materials.
(x) Defective Planning:
Defective planning is the one of the cause of unemployment. There is wide gap between supply and
demand for labour. No Plan had formulated any long term scheme for removal of unemployment.
(xi) Expansion of Universities:
The number of universities has increased manifold. There are 385 universities. As a result of this
educated unemployment or white collar unemployment has increased.
(xii) Inadequate Irrigation Facilities:
Even after the completion of 9th five plans, 39% of total cultivable area could get irrigation
facilities.Due to lack of irrigation, large area of land can grow only one crop in a year. Farmers
remain unemployed for most time of the year.
(xiii) Immobility of labour:
Mobility of labour in India is low. Due to attachment to the family, people do not go to far off areas
for jobs. Factors like language, religion, and climate are also responsible for low mobility.
Immobility of labour adds to unemployment.

 Solutions to the unemployment in India

1. The very first solution for the unemployment is to control the rising population of our country.
Government should motivate people to have small families. Indian government has started initiatives
to control the population but still the population is rising.

2. The quality of Indian education should be improved. The current education system is not upto the
level. Government should keep a strict watch on the education system and try to implement new
ways to generate skilled labour force. Government should select a committee to look after the

schools and universities. The syllabus taught is of no use to the industries so the education should be
as per the current requirements of the industries. Before completing the education a practical
knowledge should be given.

3. Also today’s youth should join the institute or select the course where proper training is given and
the course is as per the current industries requirements. Take the course as per your interest and
which will bright your future.

4. Government should encourage and develop the agriculture based industries in rural areas so that
the rural candidates don’t migrate to the urban areas. More employment should be generated in rural
areas for the seasonal unemployment people.

5. Rapid Industrialization should be created.

6. Development of the rural areas will stop the migration of the rural people to the urban cities and
this will not put more pressure on the urban city jobs.

7. Government should allow more foreign companies to open their unit in India, so that more
employment opportunities will be available.

 Analysis of Indian Unemployment Rate –

 Unemployment Rate in India decreased to 3.46 percent in 2016 from 3.49 percent in 2015.
 Unemployment Rate in India averaged 4.08 percent from 1983 until 2016, reaching an all
time high of 8.30 percent in 1983 and a record low of 3.46 percent in 2016.

 According to NSS (National Sample Survey Office, last year there was a dip in India’s
employment rate that went down to 38.6% in 2011-12 (July-June) from 39.2% in 2009-10.
With this the unemployment rate had gone up from 2.5% to 2.7%.
 In the year 2004-05, the unemployment rate was 42%. In the 5 years later, 2.7 million jobs
were created.
 In the previous 5 years, 60 million new jobs were created.
 Number of men employed between 2009 and 2012 was almost the same but for women, it
dropped from 18% to 16%.
 In rural areas, 90 lakh women lost their jobs where as 35 lakh women were added to the
workforce in urban areas.
 Overall unemployment rate, in females was 7.2% whereas for males it was 4%.

 Following are some of the salient features of the trend of unemployment

rates in India:
i. The unemployment rate went up between 1993-94 to 2004. On the basis of the current daily status
(Unemployed on an average in the reference week) during the reference period unemployment rate
for males increased from 5.6 per cent to 9.0 per cent in rural areas and from 6.7 per cent to 8.1 per
cent in urban areas.

ii. The unemployment rate for female increased from 5.6 per cent in 1993-94 to 9.4 per cent in 2004
in rural areas and from 10.5 per cent to 11.7 per cent in urban areas.

iii. Furthermore, it is found that unemployment rates on the basis of current daily status were much
higher than those on the basis of usual status (unemployed on an average in the reference year)
implying a high degree of intermittent unemployment. This could be mainly because of the absence
of regular employment for many workers.

iv. Urban unemployment rates (current daily status) were higher than rural unemployment rates for
both males and females in 1993-94. However, in 2004, rural unemployment rates for males were
higher than that of urban males.

v. Unemployment rates varied sharply across states. States, where wages are higher than in higher
growing ones because of strong bargain or social security provisions; such as high minimum wage,
had high incidence of unemployment in general.

 Impact of Unemployment
Apart from financial impact, unemployment has many social impacts like theft, violence, drug
taking, crime, health as well as it leads to psychological issues. Next comes the poverty that is
directly linked with unemployment as well as inequality. Long term unemployment can actually ruin
the family and the society.

 References :