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Unemployment in India

DEFINATION:
Unemployment is the state in which a person is without work, available to work,
and is currently seeking work. It is a situation where there is non-availability of job for
the persons.
Its a situation in which a person who is physically capable, mentally willing to work at
existing wage rate does not find any job and is forced to remain unemployed.

INTRODUCTION:
It involves a waste of human resource and results in many social evils like theft, pickpocketing, robbery, murder etc. Its a serious economic, social and political problem of
the country. Its a cause as well as effect of poverty. The unemployment rate is used in
economic studies. Rate is determined as the percentage of those in the labor force
without jobs.
There are a variety of different causes of unemployment, and disagreement on which
causes are most important. Different schools of economic thought suggest different
policies to address unemployment. Monetarists for example, believe that controlling
inflation to facilitate growth and investment is more important, and will lead to increased
employment in the long run. Keynesians on the other hand emphasize the smoothing
out of business cycles by manipulating aggregate demand. There is also disagreement
on how exactly to measure unemployment.

CONCEPTS OF UNEMPLOYMENT:
1. Usual Status Unemployment
2. Current Weekly Status Unemployment
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3. Current Daily Status Unemployment


1) Usual Status Unemployment: It is meant to determine the Usual Activity Statusemployed, unemployed or outside the labor force. The activity status is determined with
referance to a longer period, say a year preceding to the time of survey. It is a person
rate and indicates constant unemployment.
2) Current Weekly Status: This concept determines activity status of a person with
reference to a period of preceding seven days. In this period, if a person seeking job
fails to get work for even one hour on any day, he is deemed to be unemployed.
3) Current Daily Status: This concept considers the activity status of a person for each
person for each day of the preceding seven days .If he works for one day but less than
four hours, then he is considered as employed for half a day.
Out of these concepts of unemployment, Current Daily Status concept provides
most appropriate measure of unemployment.

UNEMPLOYMENT IN INDIA:
India as a nation is faced with massive problem of unemployment. Unemployment can
be defined as a state of wordlessness for a man fit and willing to work. It is a condition
of involuntary and not voluntary idleness. Some features of unemployment have been
identified as follows:
1. The incidence of unemployment is much higher in urban areas than in rural
areas.
2. Unemployment rates for women are higher than those for men.
3. The incidence of unemployment among the educated is much higher than the
overall unemployment.
4. There is greater unemployment in agricultural sector than in industrial and other
major sectors.

TYPES OF UNEMPLOYMENT

Economists and social thinkers have classified unemployment into various types.
Generally unemployment can be classified in two types:

VOLUNTARY UNEMPLOYMENT:
In this type of unemployment a person is out of job of his own desire doesn't work on
the prevalent or prescribed wages. Either he wants higher wages or doesn't want to
work at all. It is in fact social problem leading to social disorganization. Social problems
and forces such as a revolution, a social upheaval, a class struggle, a financial or
economic crisis a war between nations, mental illness, political corruption mounting
unemployment and crime etc. threaten the smooth working of society. Social values are
often regarded as the sustaining forces of society. They contribute to the strength and
stability of social order. But due to rapid social change new values come up and some
of the old values decline. At the same time, people are not is a position to reject the old
completely and accept the new altogether. Here, conflict between the old and the new is
the inevitable result which leads to the social disorganization in imposed situation. In
economic terminology this situation is voluntary unemployment.

INVOLUNTARY UNEMPLOYMENT:
In this type of situation the person who is unemployed has no say in the matter. It
means that a person is separated from remunerative work and devoid of wages
although he is capable of earning his wages and is also anxious to earn them. Forms
and types of unemployment according to Hock are.
a. Cyclical unemployment - This is the result of the trade cycle which is a part of the
capitalist system. In such a system, there is greater unemployment and when there
is depression a large number of people are rendered unemployed. Since such an
economic crisis is the result of trade cycle, the unemployment is a part of it.
b. Sudden unemployment - When at the place where workers have been employed
there is some change, a large number of persons are unemployed. It all happens in
the industries, trades and business where people are employed for a job and
suddenly when the job has ended they are asked to go.
c. Unemployment caused by failure of Industries - In many cases, a business a factory
or an industry has to close down. There may be various factors responsible for it
there may be dispute amongst the partners, the business may give huge loss or the
business may not turn out to be useful and so on.
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d. Unemployment caused by deterioration in Industry and business - In various


industries, trades or business, sometimes, there is deterioration. This deterioration
may be due to various factors. In efficiency of the employers, keen competitions less
profit etc. are some of the factors responsible for deterioration in the industry and the
business.
e. Seasonal unemployment - Certain industries and traders engage workers for a
particular season. When the season has ended the workers are rendered
unemployed. Sugar industry is an example of this type of seasonal unemployment.

RURAL UNEMPLOYMENT:
This kind of employment prevails is on rural areas. The nature of problem is also
complicated. There are only two types of unemployment commonly found in agricultural
economy e.g. India
a) Seasonal Unemployment: In an agrarian economy like India, seasonal
unemployment is the most significant type of unemployment in rural sector.
Agriculture labour in India is mostly dependent on monsoon.
b) Disguised Unemployment: In the rural subsistence agrarian sector of the Indian
economy, the problem of disguised unemployment is also typical. Disguised
unemployment refers to that type of unemployment in which laborers appear to
be working and employed but in reality, they are not employed as they do not
add to the total output. In other words they are removed from their jobs, output
would not decrease.

URBAN UNEMPLOYMENT:
This type of unemployment is found in urban areas i.e. towns and cities.
1) Industrial Unemployment:
This refers to unemployment amongst workers in industries and factories in urban
areas. Industrial workers may be skilled or unskilled. Industrial is open unemployment.
2) Educated Unemployment:
It is the problem of educated middle class people of urban society. It means
joblessness amongst the graduates, post graduates, doctors, engineers etc. However
this type of unemployment does not exist in countries worldwide. These are specific
type of unemployment that exist only in few countries especially those in involved in
agricultural activities like India

CAUSES OF UNEMPLOYMENT:
Unemployment levels are increasing dramatically in many parts of the world. There is
considerable debate among economists as to the causes of unemployment. Keynesian
economics emphasizes unemployment resulting from insufficient effective demand for
goods and service in the economy. Others point to structural problems, inefficiencies,
inherent in labour markets. Classical economics tends to reject these explanations, and
focuses more on rigidities imposed on the labor market from the outside, such as
minimum wage laws, taxes, and other regulations that may discourage the hiring of
workers.
In the set up of a modern market economy, there are many factors, which contribute to
unemployment.
Causes of unemployment are varied and it may be due to the following factors:
HIGH POPUALTION GROWTH:
The rapid increase in population of our country during the last decade has further worse
the unemployment problem in the country. Due to rapidly increasing population of the
country, a dangerous situation has arisen in which the magnitude of unemployment
goes on increasing during each plan period.
JOBLESS GROWTH:
Although India is a developing country, the rate of growth is inadequate to absorb the
entire labour force in the country. The opportunities of employment are not sufficient to
absorb the additions in the labour force of the country, which are taking place as result
of the rapidly increasing unemployment in India.
INEFFICIENT AGRICULTURAL AND INDUSTRIAL SECTORS:
Industrialization is not rapid in our country and industrial labor finds few job
opportunities. As enough other employment opportunities are not available, agriculture
is the principal area of employment in our country. Thus, pressure on land is high, as
about 2/3 of the labor force is engaged in agriculture. Land is thus overcrowded and a
large part of the work force is underemployed and suffer from disguised unemployment.
INAPROPRIATE EDUCATION SYSYTEM: After remaining at schools and colleges for a
number of years men and women come out in large numbers, having gained neither
occupational nor vocational training nor functional literacy from which all future skilled,
educated professional, and managerial manpower is drawn.
WEAKNESSES IN PLANNING TECHNIQUES:
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The growth strategy underlying our plans has been found to be faulty. Lack in
infrastructure development and poor labour-intensive techniques planning has made
unemployment a severe issue in our Indian economy.

EFFECTS OF UNEMPLOYMENT:
Unemployment has obvious and well-documented links to economic disadvantage
and has also been connected in some discussion to higher crime rates especially
among the young suicide, and homicide Garry Ottosen and Douglas Thompson (1996)
broaden the consequences of unemployment, relating it to increases in the incidences
of alcoholism, child abuse, family breakdown, psychiatric hospitalization, and a variety
of physical complaints and illnesses. Some researchers have emphasized the
importance of preventing youth from falling into unemployment traps. Robert Gitter
and Markus Scheuer (1997) suggest that unemployment among youth not only
causes current hardship, but may also hinder future economic success. This is
because unemployed youths are not able to gain experience and on-the-job training
and because a history of joblessness signals that the individual may not have the
qualities that are valued in the labour market.
Attempts have, however, been made to estimate the economic cost associated
with unemployment. Ottosen and Thompson (1996, p.5) noted that "the United States
loses a little less than one percentage point of potential gross domestic product (GDP)
or output for each one percentage point of unemployment. This implies that an
unemployment rate of 7 percent costs the United States at least $400 billion annually
in foregone output. This is more than $2,000 for every man, woman, and child over 16
years of age." Similarly, in Australia, Peter Kenyon (1998) calculated that the loss of
GDP associated with an unemployment rate above the full-employment rate is the
equivalent of one year's worth of GDP over the past two decades.
In addition to the loss of GDP, high unemployment increases the burden on social
welfare programs. These include unemployment insurance programs and other types
of welfare, such as food stamps, Medicaid, Medicare, and Supplemental Security
Income (Ottosen and Thompson 1996). There are also intergenerational effects, as
unemployment of parents will limit their capacity to finance the schooling of their
children. As education is the primary means of social mobility, this intergenerational
effect will give rise to an inheritance of inequality.

REMEDIES FOR SOLVING PROBLEMS OF UNEMPLOYMENT


Reducing unemployment is a key target for all Governments. High unemployment has
enormous costs for individuals, businesses, the Government and the economy.The way
of solving unemployment will depend upon its cause

METHODS:

Government support to struggling industries in order to try to save jobs e.g.


airline industry
Provide more training and education to the unemployed. This could help improve
computer skills and communication. These people will become more confident
and employable.
Make more information available in job centres.
Reduce unemployment benefits or cut benefits all together

Try to bring the country out of a recession. The Government needs to try to create
demand in the economy. It could;

projects such as road building

Cut interest rates Give grants to businesses to produce goods

Have to encourage spending

Cut income tax to encourage spending

NEW DEAL: Labours New Deal programme for young unemployed people was
introduced across the UK in April 1998. In June 1998 the Government launched a
separate New Deal for Long-Term Unemployed People aged over 25+.
The main options are:

A subsidised job with an employer


Remaining in full-time education and training
Work within the accredited voluntary sector and
Work experience with an environmental task force.

The programme is designed to provide pathways back into work for the long term
unemployed many of whom have become outsiders in the labour market despite the
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continuing strength of the British economy. Higher levels of employment and economic
activity add to total national output and should help to improve the overall performance
of the labour market in sustaining long run economic growth.

GOVERNMENT POLICY FOR REMOVING UNEMPLOYMENT:

Employment Policy up to the 1980s: Direct measures to eliminate unemployment were


not preferred as the apprehension was that they could slow down the growth process by
raising consumption expenditure on the other hand, and cutting down the economic
surplus on the other. This policy was obviously inadequate to tackle the unemployment
problem and as a result, the number of unemployment rose. Hence government
decided to concentrate on self employment ventures in various fields farm and non-farm
operations.
Such as:

Rural development programme


National rural employment programme
National scheme of training youth for self employment
The operation food II dairy project
Integrated rural development programme
Rural landless employment guarantee programme

Employment Strategies during the 1990s: Defining its employment perspective the
Eighth Plan clearly stated, The employment potential of growth can be raised by
readjusting the sectoral composition of output in favour of sector and sub-sector having
higher employment elasticity. In certain sectors where technologies are to be upgraded
to a higher level of efficiency and international competitiveness, there is little scope for
generating additional employment. However, in respect of certain other sectors some
flexibility may be available in the choice of technologies and thus it may not be difficult
to generate considerable employment.

1. MAJOR EMPLOYMENT PROGRAMS

Swaranjayanti Gram Swarozgar Yojana (SGSY) was launched from April 1, 1999
after restructuring the IRDP and allied schemes. It is the only self-employment
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programme for the rural poor.

Sampoorna Grameen Rozgar Yojana (SGRY) was launched on September 23,


2001 and the scheme of JGSY and Employment Assurance Scheme was fully
integrated with SGRY. It aims at providing additional wage employment in rural
areas.

The National Rural Employed Programme (NREP) was started as a part of the
Sixth plan and was continued under the Seventh Plan. It was meant to help that
segment of rural population which largely depends on wage employment and has
virtually no source of income during the lean agricultural period.

The Scheme of Training Rural Youth for Self-Employment (TRYSEM) was


initiated in 1979. It aimed at training about 2 lakh rural youth every year to enable
them to become self-employed.

Jawahar Gram Samridhi Yojana (JGSY) whose objective was creation of


infrastructure and durable assets at the village level so as to increase opportunities
for sustained employment to the rural policy.

2. IMPLIMENTATION OF EMPLOYMENT PROGRAMS


Till now these programmes have not been launched on a sufficiently large scale
and thus their contribution from the point of view of the reduction in the incidence of
unemployment seems to be only marginally.
The three major problems which prevent pursuit of these programmes on a
considerable scale are the choice of appropriate works are to be done; finding the
resources to finance the programmes; and the lack of clarity with regard to the
organisation of the rural work programmes meant to generate employment.

SOLUTION

Faster economic growth is viewed as a means of generating more jobs.


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Unemployment agencies could tighten their job search and job acceptance
requirements.

Improvements to the education and training provided to young people, with a


greater focus on vocational skills.

Countries need to ensure that their welfare systems do not provide


discouragement to work.

Government support to struggling industries in order to try to save jobs.

Provide more training and education to the unemployed. This could help improve
computer skills and communication. These people will become more confident
and employable.

The Government needs to try to create demand in the economy.

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CONCLUSION
The whole length of discussion concludes that to solve the unemployment problem of
India the development plans and the family planning programmed, both, should be
reformed on the lines suggested herein above whereby the extra employment
opportunities will be generated fast, on one hand, and population growth will be
checked, on the other, in such a way that growth of employment opportunities would
considerably exceed to the population growth.
To solve these massive problem efforts should be made to rectify the mistakes in the
development move on one hand, & to mitigate the high population growth, on the other
reselect its programmers & reconstruct its plans so as to make the development move
rural oriented.
This will bring about fast agricultural development, uplift of village life & revival of village
industries, artisanship & handicraft to check the massive rural- urban migration. As
regards to the check on high population growth the prevailing family planning
programmed has been proved insufficient & incomplete.
.

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WEBLOGRAPHY

1. www.economywatch.com
2. www.scribedoc.com
3. www.isid.ac.in
4. ideas.repec.org
5. www.legco.gov.hk/
6. www.jstor.org/stable/1818137
7. www.informaworld.com
8. www.cdedse.org/pdf/work174.pdf
9. www.icai.org/resource_file/16789ppui.pdf

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