Unemployment is the biggest problem faced by all the economies of the world, and India is no exception. This is a problem relating to individuals, families, and society as a whole. Handling this challenge requires understanding causes, types, and effects of it, along with measures taken to reduce the level of it. In India, the Rate of it differs based on different economic variables. High rates of it contribute to increased poverty and impact overall growth. To design policies for overcoming it, one needs to understand what it is and how it affects the individual who faces it.
- Due to sluggish economic growth, the rate of it, which is rising for the last couple of years shows no signs of abatement in India.
- Disguised unemployment is quite common in rural areas and more so in agriculture.
- Structural unemployment is a type of unemployment that occurs due to technological changes along with a mismatch of skills.
- Effects of unemployment reduction of income; Increased poverty.
| GS Paper | GS Paper I, GS Paper III |
| Topics for UPSC Prelims | Types of unemployment, Unemployment rate and related indices, Government schemes addressing unemployment, Data interpretation |
| Topics for UPSC Mains | Causes and impacts of unemployment on the economy, Government initiatives and policy measures to tackle unemployment, Unemployment in rural and urban areas |
What is Unemployment?
Unemployment is the state of a working-age person being unable to find employment despite willingness and capability to work. It occurs with the income of an individual and perhaps his self-esteem and well-being. In India, unemployment is serious due to a more dominant population and various economic states.
In simple words, unemployment is when people look to work but cannot find it, this is unemployment. Unemployment Rate includes the percentage of labor forces that are currently unemployed.
Types of Unemployment
Its types vary due to various causes and situations. These types assist in the most appropriate manner to address the problem and work out remedies for specific economic situations. There are different types of unemployment, with causes varying. The types assist in understanding ways of tackling this menace effectively. There are the following types of unemployment that occur due to different reasons:
Disguised Unemployment
This happens when there are more workers than what is actually required to perform a certain task. In agriculture, most workers are not intensely used. The marginal productivity of their work is close to zero. Should some of them leave, it would make no difference in the level of production. It is found in developing economies where labor is abundant.
Structural Unemployment
Caused by mismatches between workers’ skills and job requirements. Because of the advancement in technology, there are jobs that become obsolete. Workers who are not updated in their skills lose their jobs. It requires retraining or education to fit into new roles. This may take time and hence unemployment.
Frictional Unemployment
This is a short-term unemployment whereby workers are between jobs. This happens whenever a person leaves one job in pursuit of another. It is temporary and takes place in all economies. Job seekers may be looking for better opportunities. This usually indicates a very healthy dynamic labour market.
Cyclical Unemployment
It only occurs during economic recessions or downfalls. Once the demand for goods and services decreases, companies cut down on employment. It is directly linked to the economy’s health. It is regained once the economy starts improving. Many times, the government steps in to reduce this sort of unemployment that occurs during recessions.
Seasonal Unemployment
This type arises when there are jobs only during the season. For example, agricultural workers may remain jobless for off-seasons. Tourism-based industries also show seasonal unemployment. Workers depend on the busy season for work and wages. Its predictable but hard to avoid.
What is the difference between disguised and seasonal unemployment?
| Aspect | Disguised Unemployment | Seasonal Unemployment |
|---|---|---|
| Definition | More people are employed than needed, resulting in low productivity. | Occurs when people are jobless during certain seasons or periods. |
| Nature of Work | Workers appear employed but contribute little or no additional output. | Workers are fully employed during peak seasons but jobless in off-seasons. |
| Sector | Common in agriculture and small-scale industries. | Mostly seen in agriculture, tourism, and other seasonal industries. |
| Employment Status | Workers are technically employed but not contributing productively. | Workers are unemployed only during specific times of the year. |
| Duration | Can be continuous over long periods. | Temporary, based on specific seasons or production cycles. |
| Examples | Multiple family members working on a small farm with minimal impact. | Agricultural workers during non-harvest seasons; tourism in off-peak times. |
Causes of Unemployment
The causes of it are many and complex. Prolonged recessionary trends, rapid technological changes, and a rise in the growth rate add to it, thus causing individual and aggregate loss to the economy. It is caused due to a set of complicated factors, differing according to region and industry. Some important causes are as follows:
Economic slowdown
When the economy is in a slowdown cycle, most businesses are faced with a smaller demand for their products. That leads to lower production. Fewer jobs are offered. Many workers are put out of work, contributing to high unemployment. The period of recovery is infrequent; thus, those who have been jobless endure such a period, which impacts total economic output.
Technological changes
Rapid industrialization replaces most of the manual jobs with automation. While industries are getting more efficient, many employees become jobless. Workers who do not have the necessary skills to perform and handle advanced technologies cannot easily find jobs. As a result, structural unemployment will occur among people across multiple industries .
Population growth
Rapid population growth means an increase in the number of job seekers. However, the rate at which jobs are created is not proportional to the rise in population. In other words, more people come into the labour market than the availability of jobs. As such, there is an increase in unemployment, notably among the younger generation who may not find decent employment.
Mismatch between skills
As the industries evolve, so do the need for skills. Laborers may not have the new needed skills of the contemporary job. This mismatch between skills and demand causes structural unemployment. There can still be it even though there are jobs available. The only way this gap can be bridged and thus it is reduced by education and retraining.
Lack of investment
Low investment in strategic industries and infrastructure goes hand in glove with slow job creation. When businesses lack finance, they cannot grow, nor can they hire more people, so there are opportunities for less jobs available. So with lower opportunities, higher unemployment rates will be recorded, especially in developing areas where investments are fewer.
Effects of Unemployment
The effects of it extend beyond the financial constraints of individuals into their mental well-being, societal stability, and total economics generally. This may render individuals poor due to the loss of skills or even spark social unrest; hence, it is an important subject for government concern. The most notable effects involve:
Decreased income
This results in a massive deterioration in the living standards of the family. It is hard for the family to provide for basic needs. The expenditure on elementary services such as education and health falls because the families have no fixed source of income. Increased financial burden elevates stress levels, hence negatively impacts the overall well-being of families and their financial security.
Increased poverty
It is a straightforward result of joblessness. No employment means no ability to purchase basic needs. An increase in the economic gap between various groups in society exists. A continuously increasing number of families in the unemployment’s period also takes them under poverty category. All this further closes the doors towards getting education, good health opportunities, and healthy living. All this creates a snowball effect on poverty.
Social Instability
It tends to increase with the increase in unemployment rates. Frustration and discontent start brewing among the jobless. Crimes increase as people barely survive. Social unrest, protest actions, and dissatisfaction against the government will be the common results. It may ignite political and social movements that disturb peace and order.
Mental health issues
It increases due to unemployment. Continuous unemployment leads to stress, anxiety, and depression. There is a sense of loss of identity and purpose. Familial obligations further increase emotional distress. The lack of a steady income also reduces access to mental health services, that worsens the situation for the affected.
Loss of skills
Prolonged unemployment is the result. In such a scenario, a worker gradually loses relevance in the job market. The longer the period of unemployment, the more bitter is their foray into the work arena. Some skills that were highly sought after become outdated. This makes them more prone to other economic and personal setbacks that will be hard to recover from because of it.
Remedy to Unemployment in India – Steps that the Government has Undertaken
The Government of India has taken several initiatives to bring about a change in the level of it in India. Several crucial steps that the government has taken have been outlined below:
- Skill development programs: Programs such as Skill India generally develop skills in modern technology that industries require.
- Employment generation schemes: For example, the Mahatma Gandhi National Rural Employment Guarantee Act has generated work for rural employees.
- Encouragement to entrepreneurship: The Startup India scheme encourages self-employment and innovation.
- Investment in Infrastructure: Government investments in road, ports, and digital infrastructure create jobs in construction and services.
- Educational Reforms: The government is working towards upgrading the quality of education in order to decrease the skill gap
Conclusion
Unemployment is a problem for which multi-pronged solutions are needed. To understand what it is, the types of unemployment, and the difference between disguised and seasonal unemployment would help tackle the problem much more efficaciously. While the Unemployment Rate in India remains a problem, it is not all darkness as certain policies and plans can prove to be some solution to such problems. The root cause behind it needs to be eliminated, and its evil consequences need to be mitigated if a prosperous and stable society is to be built.
| UnemploymentUPSC Notes |
| 1. Unemployment refers to a situation where individuals willing to work at prevailing wages are unable to find jobs. 2. The primary types of unemployment in India include structural, cyclical, seasonal, and frictional unemployment. 3. Structural unemployment arises due to changes in economic structure and skills mismatch, often caused by technological advancements. 4. Cyclical unemployment occurs due to economic downturns, where demand for goods and services decreases. 5. Seasonal unemployment is common in agriculture, tourism, and other sectors where work depends on seasons. 6. Frictional unemployment refers to short-term joblessness experienced when transitioning between jobs. 7. Unemployment affects economic growth, leading to underutilization of human resources and increased poverty. 8. Government initiatives like MGNREGA, Skill India, and Start-up India aim to reduce unemployment in India. |
