Unemployment constitutes one of the most plaguing concerns of a country’s economy. According to the Centre for Monitoring Indian Economy (CMIE), India is seeing one of the lowest Unemployment rates of almost 7% as of October 2020, since the lockdown from March 2020.
In this section, you will get a brief overview of topics related to Employment and Unemployment, their calculation, what is urban Unemployment, types of rural Unemployment, and how they are different from each other.
Employment in the Organised Sector
The organised sector is defined as one that is registered with the relevant body or government and adheres to its rules and regulations. The organised sector in India consists of employees of the national and state governments, banks, railways, insurance, industry, and so on. This industry follows a set of legal guidelines. Systematic processes and procedures exist in the organised sector. Personnel in this industry have more Employment rights and earn more money than those in unstructured industries.
Good pay, defined working hours, paid holidays, and medical allowance and insurance are all provided by the organised sector.
Employment in the Unorganised Sector
Domestic production and small-scale industries make up the unorganised sector of the economy. Jobs are generally low-paying and irregular, with little benefits such as paid vacations, holidays, or sick leave. It is difficult to find work. People are asked to leave their jobs if there is no work. A considerable number of people work in this sector on their own, doing minor things like selling on the street, making repairs, and so on.
What is Unemployment?
In economics, Unemployment refers to the state of those people who belong to the working-age group and are looking for jobs but are unable to find one. It also includes working individuals with no suitable job.
There are three types of activity statuses of a person, based on which the National Sample Survey Organization (NSSO) determines Employment and Unemployment. These are:
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Working or contributing to economic activity, that is, employed.
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Looking for and willing to work, that is, involuntarily unemployed.
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Neither working nor seeking a job, that is, voluntarily unemployed.
The first two types of individuals make up for the total labour force, and the Unemployment rate is the percentage of this population that is presently lacking a job.
Calculation of Unemployment Rate
The most common way of gauging Unemployment is by calculating the Unemployment rate. It is calculated by taking a percentage of the number of unemployed individuals divided by the total employed population or individuals constituting the labour force. Mathematically, it can be represented as:
Unemployment rate =[ frac{text{(Number of Unemployed Individuals}}{text{Total labour force)}} times 100]
Types of Unemployment
The Indian subcontinent faces Unemployment, both involuntary and voluntary, which can be examined under two broad categories, in relation to one another.
Rural Unemployment
A majority of the Indian population resides in rural areas and thrive on agriculture as a primary means of livelihood. But this agrarian industry does not make up for adequate Employment for the entire population living in these areas. This leads to rural Unemployment which can be categorised into three major types, as have been discussed below.
In India, the downturn is systemic. To put it another way, economic output is insufficient to provide enough jobs. This has been going on for a while.
Open Unemployment
One of the most basic Unemployment situations is when an unemployed individual, seeking and available for work, is unable to get a job with a regular payment. This is termed open Unemployment. A major reason for this type of Unemployment is a rapidly expanding labour force in an economy with a slower growth rate. When it comes to open redundancy, identifying those who are unemployed is a simple task. Agriculture is a short-term occupation in India, and there is usually a high need for labour during sowing, weddings, and harvesting, but demand for labour drops significantly during the slack season.
The duration of periodic Unemployment in India varies by state, based on farming practices, soil type, and the potential of multiple cropping. Farmers in rainy agriculture are unemployed for four to six months per year. They are unable to find an alternative job at this time due to their illiteracy, poverty, and bad health.
Disguised Unemployment
This type of Unemployment is particularly rampant in the agricultural industry, contributing as the most common form of rural Unemployment in India. It presents a circumstance in which more individuals are engaged in a work than what is required due to lack of alternative job opportunities. This indicates that the removal of some of the workforce would not make a major difference in the production of a farm; that is, this surplus manpower has negligible to zero marginal productivity. The disguisedly impoverished are individuals who work for themselves and are overly numerous in relation to the resources with which they work, such that if a number of them were to be reassigned to other sectors of the country, the total output of the sector from which they were reassigned would not be affected, even if no significant reorganization took place. Another important cause of uncertainty is the high rate of Unemployment among educated rural youth. The growth of education has resulted in a large number of unemployed young people looking for work. However, they are unable to find work in the labour market. Unemployment of this nature has devastating implications. It causes some people to be frustrated and others to be dissatisfied.
Seasonal Unemployment
This type of Unemployment is seen with people working in industries with seasonal production. Industries like agriculture only need additional laborers for particular times of the year, for instance, harvest season. In such cases, these specific workers remain unemployed during the rest of the year, giving rise to Unemployment in rural areas.
Urban Unemployment
With rapid immigration and a population boom, India has seen remarkable growth in urban Unemployment in recent years. These can be further categorised into three types.
Industrial Unemployment
This is the most commonly observed type of urban Employment due to an increasing rate of migration of workers from rural to urban areas. Every year, thousands of illiterate individuals travel to more developed areas in search of jobs of menial labour in production units and factories. Due to high demand, most of them suffer from industrial Unemployment meaning their inability to secure such jobs.
Structural Unemployment
Referred to as educated Unemployment, this is probably the most disappointing type of Unemployment. Structural Unemployment arises when an educated individual fails to find a job matching their qualifications. This occurs due to a lack of adequate job opportunities in concerned fields compared to the number of learned individuals.
Technological Unemployment
Rapid advancement in technology is leading to Unemployment of individuals who fail to match or adapt to required skills and, thus, become obsolete for the industry. This is mostly seen in employees belonging to the retiring age group.
What Causes Unemployment?
Following is a list of some of the most common causes of Unemployment in India.
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A rapidly growing rate of the population overruns available Employment opportunities.
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A negligible growth rate of the economy failing to keep up with a growing labor force.
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Lack of proper infrastructure and required investment in sectors lagging.
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The advent of smart technology and AI reduces human resources previously employed for those tasks.
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Lack of necessary field-specific skills, as a result of school and college education not relevant to concerned industries.
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Physical unskilled labor is undervalued by today’s educational system. Physical labor is disliked by educated people. As a result, after completing formal schooling, the rural teenager seeks sedentary Employment in a government agency or a private company. They are both unable and reluctant to work in agriculture. As a result, rural Unemployment is exacerbated by the current educational system.
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Indeed, there is no genuine attempt in India to plan for personnel. Employment has not been given the attention it deserves in our development strategy. It is not related to the development process because it is assumed that economic progress will lead to the establishment of job possibilities. However, this has not resulted in the integration of jobs and growth. Poverty, in general, and rural poverty, in particular, are caused by all of these reasons.
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In India, the caste system is a major contributor to underdevelopment. It is a system of occupational distribution that limits rural residents’ occupational mobility. In rural India, occupations are inherited due to the caste system. When the number of members of a caste grows faster than the demand for services, the remaining populace becomes unemployed.
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India’s agriculture is chaotic and diverse. Because even though the Indian farmer must willfully invest more to receive less, it follows an inverted economics model. Regional insecurity is a result of this.
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The Indian farmer’s traditional farming approach is outdated and unscientific. Agricultural productivity is hampered by a lack of improved farming technologies and a shortage of skilled labour. Fertilizer aversion, a lack of proper irrigation facilities, and insufficient funding to purchase sophisticated agricultural instruments, seeds, and vermicompost all have an impact on agricultural output. As a result, rural agriculture reduces its potential for Employment.
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Agriculture does not keep the farmland busy all year. The rural population is frequently fully engaged throughout the sowing and harvesting seasons, and economically inactive during the post-harvest and before the following sowing season. Farmers in South India are only busy for five months of last year, and the other seven months are spent doing nothing financially productive. Peasants all over India are in a similar situation. As a result, rural communities experience high levels of seasonal Unemployment.
Employment and unemployment are a not only crucial topic for CBSE Class 12 Commerce but is also a necessary concept for students to understand the working of a real economy. comes with additional detailed explanations and examples to help you prepare Class 12 Economics projects on employment and unemployment. For step-by-step answers to questions like what is rural unemployment and what is industrial unemployment, visit our website or install the app today!
The Employment Generation
Elevated enterprises account for a considerable amount of new jobs created, as measured by Employment expansion rates, and are important contributors to the country’s economic growth. Small and medium-sized businesses (SMEs) create more net jobs than larger corporations. SMEs are key Employment producers, according to much research. According to these findings, job creation and job contraction occur hand in hand in all countries. It is common to see some companies shed employees while others gain, and some of them exhibit a considerable increase in the labour force, even in the same industry or market.
The World Bank Group’s commitment to entrepreneurship development as a major aspect of its tool for enhancing economic growth, Employment, and poverty alleviation in various countries is established in the World Bank Group’s evaluation on small company activities (World Bank Review, 2001). The importance of SMEs in long-term global and regional economic recovery is increasingly becoming more widely recognised.
However, due to a lack of data, very little research has been done in this area. Small and medium-sized enterprises (SMEs) play a vital role in a country’s industrial growth since they create more gainful Employment, utilise fewer resources, generate more money, and reduce poverty. It’s plausible to assume that if SMEs had been given more weight in industrial development, prior patterns of disastrous economic development may have been averted. However, the significant role in a country’s economic progress is seldom fully appreciated. As a result of the relevance and contribution of SMEs to economic activity, there is a substantial opportunity to boost their growth by increasing their operational efficiency.