UNEMPLOYMENT

Definition
Unemployment- as per the International Labour Organization, unemployment is when people are without jobs, and they have actively looked for work within the past four weeks.

Types of Unemployment

Classical/Real-Wage Unemployment- when real wages for a job are set above the market-clearing level, causing the number of job-seekers to exceed the number of vacancies. Structural Unemployment- when a labour market is unable to provide jobs for everyone who wants one because there is a mismatch between the skills of the unemployed workers and the skills required for the jobs.

Frictional Unemployment- is the time period between jobs when a worker is searching for, or transitioning from one job to another, and the skills needed for the available jobs.
Disguised Unemployment- when more people are engaged in some activity than the number of people required for that , this is called disguised unemployment . Voluntary Unemployment- that part of the population which prefers not to work, even when suitable work is available for them.

Types of Unemployment

Cyclical/Keynesian Unemployment- occurs when the economy is in need of low workforce. The demand for labour increases with the economy in the boom phase. Again, when the economy passes though recession, the aggregate demand for goods and services is low. Consumer expenditure is also less. Production is lowered to match with the low aggregate demand. Lowering production entails downsizing the work force.

Cyclical Unemployment

Measurement of Unemployment
Claimant Count- This method of calculating unemployment was

widely used in the 1980s and 1990s. This method took account of the number of heads unemployed and receiving unemployment benefits. It was free from any sampling error and obtaining regularly available data was also very cost effective. However, different computational rules across different countries and time periods, negated comparisons. Also, the individuals who had not registered in employment exchanges, and not claimed benefits, but were unemployed were left out of the unemployment count of the administrative records, which, therefore, gave a lower estimate.

Measurement of Unemployment
Labour Force Survey- The Labour Force Survey is done by taking

household samples. A standard questionnaire is prepared. All individuals in the workable age are asked about their employment status and the relevant data is taken. Individuals are next classified into employed and unemployed. The sample data is then utilized to estimate the number of individuals employed, unemployed or underemployed. However, the respondents may provide subjective and misleading answers. The sampling method has many statistical errors, which get magnified with smaller sized-samples. The greatest advantage is that they meet international standards. Unemployment statistics obtained can be used to compare data across countries and across different time periods.

Chief Causes of Unemployment in India

UNEMPLOYMENT

SEASONAL AGRICULTURE

DECLINE OF COTTAGE INDUSTRIES

RAPID POPULATION GROWTH

Chief Causes of Unemployment in India

Rapid Population Growth- It is the leading cause of unemployment

in rural India. It is because the rate of job expansion could never have kept up with the rapid growth of the labour force, and to thus, reduce the back log of unemployment. The rapid population growth also reduced the resources for capital formation, due to private consumption such as food, clothing, shelter and public consumption like drinking water, electricity, medical facilities. This has reduced the opportunities of diverting a larger proportion of incomes to saving and investment, thus promoting unemployment.

Chief Causes of Unemployment in India

Decline of Cottage Industries- In rural India, village or cottage

industries are one of the important avenues of employment, particularly for the landless people. But, nowadays, these are adversely affected by the industrialization process. They cannot compete with modern factories in matters of production and technology. As a result, the village industries suffer a serious losses of income to urban areas, and gradually close down. Therefore, many people remain unemployed and are unable to maintain their livelihood.
Seasonal Agriculture- In rural Indian society, agriculture is the most

common mode of employment. But, it provides employment facilities to the rural people only in particular seasons of the year. For example, during the sowing and harvesting period, people are fully employed and the period between the post-harvest and before the next sowing, most remain unemployed.

Unemployment Rate-

The percentage of the total labour force that is unemployed.

Unemployment Rate Progression 2002 2003 2004 2005 2006 2007 2008 2009 2010 8.8 9.5 9.2 8.9 7.8 7.2 6.8 10.7 10.8

Unemployment Rates Around The World- A Comparison

Country Unemployment Rate (%)

Zimbabwe
Nauru Vanuatu Turkmenistan Cocos Islands South Africa Spain Pakistan

95
90 77 70 60 25.3 21 15

U.S.A Italy Russia United Kingdom Canada Germany Sri Lanka Republic of China

9.2 8.1 7.6 7.6 7.2 6 5.9

India France
Egypt

10.8
9.5 9.4

5.14
4.3 0.5 0

Australia Qatar Monaco

Indian Government Programmes

Mahatma Gandhi National Rural Employment Guarantee Act

Government Programmes
Swarnjayanti Gram Swarojgar Yojana Prime Ministers Employment Generation Programme

Indian Government Programmes

Mahatma Gandhi National Rural Employment Guarantee Act,

2005- is a job guarantee scheme providing a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work. Employment is given within 15 days of application for work, if it is not then daily unemployment allowance as per the Act, is paid to beneficiaries. At least one-third beneficiaries are women. The Central government outlay for the scheme was Rs. 40,000 crore (US$8.92 billion) in F.Y. 2010-11.

Indian Government Programmes

Prime Ministers Employment Generation Programme, 2008- is a

credit-linked subsidy programme being implemented by Ministry of Micro, Small and Medium Enterprises. It aims at generating selfemployment opportunities through establishment of micro enterprises by organizing traditional artisans and unemployed youth. The Government subsidy under the scheme is distributed to the beneficiaries through identified banks by Khadi and Village Industries Commission (KVIC) at the national level and by KVIC directorates, Khadi and Village Industries Board and Districts Industries Centres at the state level.

Indian Government Programmes

Swarnjayanti Gram Swarojgar Yojana, 1999- the basic objective is

to bring the assisted poor families above the poverty line by providing them income-generating assets through a mix of bank credit and governmental subsidy. It is implemented by the District Rural Development Agencies (DRDAs) with the active involvement of Panchayati Raj Institutions,and the various Non-Government Organisations. The SGSY aims to cover all aspects of rural employment, chiefly, Social Mobilisation i.e. organisation of the poor into Self Help Groups (SHGs), Infrastructure Development, Marketing and Technology Support, etc.

More Solutions to Unemployment in India

The Government must continue its policy towards the encouragement of agriculture and development of agriculture-based industries. This will arrest the problem of migration from the rural areas to urban areas. The Government has to take up massive irrigation development programmes in the rural areas which will not only make the land capable of cultivation but would also create jobs, especially for the landless labourers.

Due to the economys liberalization, one can see a new lot of foreign companies investing in our country. Government must be smooth in its liberalization policy and encourage foreign companies to start their manufacturing units in the country, which in turn, would increase the employment opportunities, especially for daily-wage workers in the urban areas.
Enforcement of equitable wealth distribution is possible through development of cottage industries in every village of the country based on locally available raw materials and markets. With this, dependence of rural people on urban centres comes down, preventing flow of wealth from rural to urban areas.

The End

Presentation ByPriyank Misra BFIA 1B