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UNEMPLOYMENT

PRESENTATION BY MOOLA RAM ROLL NO.- 72 NUSRL, Ranchi


unemployment is a condition in which a person able and willing to work normally, dependent upon his earning to provide the necessities of life for himself and family in unable to obtain gainful employment

By; - Gillin and Gillin

DEFINITION OF UNEMPLOYMENT
Unemployment refers to a situation in which the workers who are capable of working and willing to work do not get employment.

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 nonavailability of job for the persons. Its is an situation in which a person who is physically capable,

mentally willing to work at existing wage rate does

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 labour force without jobs. There are a variety of different causes of unemployment, and disagreement on which causes are most important. Different schools of

Conti
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. For example, the conservative government, when in power in the United Kingdom, changed the way in which employment was measured several times. Each time, the figure reduced (Social Trends). Different countries experience different levels of unemployment; the USA currently

Features of unemployment
The incidence of unemployment is much higher in urban areas than in rural areas. Unemployment rates for women are higher than those for men. The incidence of unemployment among the educated is much higher than the overall unemployment. There is greater unemployment in agricultural sector than in industrial and other major sectors.

Types of unemployment
Voluntary unemployment Involuntary unemployment Rural unemployment Urban unemployment Cyclical or Keynesian unemployment Frictional unemployment Structural unemployment Classical unemployment Hidden unemployment

Conti.
Voluntary unemployment: There are some persons in a society who for various reasons prefer to remain jobless even though there

are possibilities of getting job; some have the


desire to have jobs only of their liking or

giving better remuneration than that in the


earlier jobs and therefore they prefer to remain unemployed. Such a kind of

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Involuntary unemployment:
Involuntary unemployment is a situation where a person is physically and mentally fit to work and also willing to work at existing wage rate, but does not get a job. He is forced to remain idle even if he is willing to work. RURAL UNEMPLOYMENT: This kind of employment prevails 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. It is divided into two parts. i.e. Seasonal

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(a) SEASONAL UNEMPLOYMENT: in an agrarian economy

like India, seasonal unemployment is the most significant type of unemployment in rural sector. Agricultural labour in India is mostly dependent on monsoon. Seasonal unemployment occurs when an occupation is not in demand at certain seasons
(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 labourers appears 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 their

Urban unemployment
This the type of unemployment is found in urban areas i.e. town and cities.

(a) industrial unemployment: this is refers to unemployment


amongst workers in industries and factories in urban areas. Industrial workers may be skilled or unskilled. Industrial is open unemployment.

(b) educated unemployment: it is the problems of educated


middle, class people of urban society. It means joblessness amongst the graduates, post graduates, doctors and engineer etc. However, this type of unemployment does not exist in countries world wide. This are specific type of unemployment that exist only few countries especially those in involved in agriculture activities like, India. Economic distinguish between four major types of unemployment, i.e. cyclical,

CYCLICAL UNEMPLOYMENT:
Cyclical or demand deficient unemployment occurs when the economy is in need of low workforce. The demand for labour increases with the economy in the growth phase. Again, when the economy passes through depression, demand for labour decreases and the extra workers are released as the unemployed labour force. This type of unemployment exists due to inadequate effective aggregate demand. It gets its name because it varies with the business cycle, though it can also be persistent, as during the Great Depression of the 1930s. Gross domestic product is not as high as potential output because of demand failure, due to (say) pessimistic business expectations which discourages private fixed investment spending.

Conti
Some consider this type of unemployment one type of frictional unemployment in which factors causing the friction are partially caused by some cyclical variables. For example, a surprise decrease in the money supply may shock participants in society. Then, we may see recession and cyclical unemployment until expectations adjust to the new conditions. In this case, the number of unemployed workers exceeds the number of job vacancies, so that if even all open jobs were filled, some workers would remain unemployed. This kind of unemployment coincides with unused industrial capacity (unemployed capital goods).

Classical economics rejects the conception cyclical unemployment, seeing the attainment

of of

FRICTIONAL UNEMPLOYMENT:
Frictional unemployment occurs when a worker moves from one job to another. It is a result of imperfect information in the labour market, because if job seekers knew that they would be employed for a particular job vacancy, almost no time would be lost in getting a new job, eliminating this form of unemployment. This unemployment involves people in the midst of transiting between jobs, searching for new ones; it is compatible with full employment. It is sometimes called search unemployment and can be voluntary. New entrants (such as graduating students) and re-entrants (such as former homemakers) can also suffer a spell of frictional unemployment. Frictional unemployment exists because both jobs and workers are heterogeneous, and a mismatch can result

Conti.
Such a mismatch can be related to skills, payment, work time, location, attitude, taste, and a multitude of other factors. Workers as well as employers accept a certain level of imperfection, risk or compromise, but usually not right away; they will invest some time and effort to find a better match.
This is in fact beneficial to the economy since it results in a better allocation of resources. However, if the search takes too long and mismatches are too frequent, the economy suffers, since some work will not get done. Therefore, governments will seek ways to reduce unnecessary frictional unemployment. Frictional unemployment coincides with an equal number of vacancies. Numerically, it is therefore maximal when the labour market is in equilibrium. When

STRUCTURAL UNEMPLOYMENT
Structural unemployment arises when the qualification of a person is not enough to meet his job responsibilities. Conversely, structural unemployment arises when the salary offered to a person falls short of the minimum wage that can be paid for the concerned job.
Unemployment which occurs due to fundamental changes in the structure of economy, is called structural unemployment. Mainly these are the changes

CLASSICAL UNEMPLOYMENT:
In this case, like that of cyclical unemployment, the number of job-seekers exceeds the number of vacancies. However, the problem here is not aggregate demand failure. In this situation, real wages are higher than the market-equilibrium wage. In simple terms, institutions such as "the minimum wage" deter employers from hiring all of the available workers, because the cost would exceed the technologically-determined benefit of hiring them (the marginal product of labour). Some economists theorize that this type of unemployment can be reduced by increasing the flexibility of wages (e.g., abolishing minimum wages or employee protection), to make the labour market

HIDDEN UNEMPLOYMENT:
Hidden, or covered unemployment is the unemployment of potential workers that is not reflected in official unemployment statistics, due to the way the statistics are collected. In many countries only those who have no work but are actively looking for work (and/or qualifying for social security benefits) are counted as unemployed. Those who have given up looking for work (and sometimes those who are on Government "retraining" programmes) are not officially counted among the unemployed, even though they are not employed. The same applies to those who have taken early retirement to avoid being laid off, but would prefer to be working. The statistic also does not count the "underemployed" - those with part time or seasonal jobs who would rather have full time jobs. Because of

Causes of unemployment
High Population growth. Absence of employment opportunities. Seasonal Employment. Joint Family System. Increasing turnout of students from Indian Universities. Slow Developing of Industries. Insufficient Rate of Economic Progress.

Conti.
Unemployment levels are increasing dramatically in many parts of the world. There is considerable debate among economists as to the causes of unemployment. Keynesian economic emphasizes unemployment resulting from insufficient effective demand for goods and service in the economy. Others point to structural problem, insufficiencies inherent in labor markets. Classical economics tends to reject these explanations, and focuses on more rigidities imposed on the labor markets 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 markets, economy, there are many factors, which contribute to unemployment. Causes of unemployment are varied and it may be due to the following factors: Rapid changes in technology Recessions Inflations Disability

Measurement of unemployment
The National Sample Survey Organization (NSSO), which provides estimates of the rates of unemployment based on its quinquennial surveys, uses three different concepts. Usual Principal Status (UPS). (a) Estimates the number of persons who may be said to be chronically unemployed. Current Weekly Status Basis (CWS). (b) According to this, a person is said to be unemployed for the week even if he is employed only for a day during that week. Current Daily Status Basis (CDS). (C) Any person who works for one hour or more during the day is considered to be employed for a half day. As such, CDS is aggregate of all unemployment days of all

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Economists typically focus on the unemployment rate. The unemployment rate is expressed as a percentage, and is calculated as follows:

Unemployment rate=unemployed worker/total labor force*1oo


As defined by the International labour organization, "unemployed workers" are those who are currently not working but are willing and are able to work for pay,

currently

available

to

work,

and

actively

Solutions of unemployment
A Change in the pattern of investment Encouragement to small enterprises as against big enterprises Problem of Choice of technique Encouragement of New Growth Centres in Small Towns and Rural Areas Subsidies on the Basis of Employment Reorientation of Educational Policy

THANK YOU !!