Home Social Issues Types of unemployment in India, causes and solutions

Types of unemployment in India, causes and solutions

The unemployment rate again went down to 6.5 per cent in January 2021 from 9.1 per cent in December 2020, while the employment rate surged to 37.9 per cent as compared to 36.9 per cent. There are seven types of unemployment in India.

September 5, 2021: The statistics amidst lockdown and restrictions on mobility put the unemployment rate in India at a 12.81% as of June 8 2021 based on the data provided by the CMIE. Previously, the unemployment rate in India shot up from 6.5 per cent in March 2021 to 8 per cent in April 2021, to 14.7% by May end, while the employment rate fell from 37.6 per cent in March to 36.8 per cent in April, says the report of CMIE – Centre For Monitoring Indian Economy. Do you know the types of unemployment in India?

Types of unemployment in India: Covid-19 impact 

The year 2020 witnessed a decline in the unemployment rate in India to 7% in September 2020 from the record high of 29% since the country went into lockdown from March 2020.

However, it later increased to 9.1% in December 2020. The unemployment rate again went down to 6.5 per cent in January 2021 from 9.1 per cent in December 2020, while the employment rate surged to 37.9 per cent as compared to 36.9 per cent.

The prevailing Covid-19 pandemic has alarmed the masses and government, the latter of which has taken recourse to the lockdown technique in order to contain the coronavirus outbreak.

This has forced many industries to shut down thus increasing unemployment across the country.

The unemployment in India stood at 6.1% in the financial year 2018 mentions the NSSO – National Sample Survey Organisation Report 2019. Candidates can check the detailed information on NSSO on the given link.

Also read: SHREYAS: Road to eradication of unemployment in India

What do you mean by unemployment?

In stark contrast to laziness or inactivity on the worker’s part, Unemployment actually refers to a situation when a person actively searches for a job and is unable to find work. Unemployment indicates the health of the economy. 
The unemployment rate is the most frequent measure of unemployment.

The unemployment rate is the number of people unemployed divided by the working population or people working under labour force.

Unemployment rate = (Unemployed Workers / Total labour force) × 100

National Sample Survey Organization (NSSO) defines employment and unemployment on the following activity statuses of an individual.

The NSSO, an organization under MoSPI – Ministry of Statistics and Programme Implementation measures India’s unemployment on three approaches:

Daily Status Approach: The measuring yardstick for unemployment status of a person under this approach is for each day in a reference week. A person having no gainful work even for one hour in a day is described as unemployed for that day.

Weekly Status Approach: This approach highlights the record of those persons who did not have gainful work or were unemployed even for an hour on any day of the week preceding the date of the survey.

Usual Status Approach: This gives the estimates of those persons who were unemployed or had no gainful work for a major time during the 365 days.

Types of unemployment in India

Image: Mint

There are seven types of unemployment in India. The types of unemployment are discussed below:

1. Disguised Unemployment: Going straight into the act or forces of employment, by Disguised unemployment it means one where people employed are more than actually needed. Disguised unemployment is generally traced in unorganised sectors or the agricultural sectors.

2. Structural Unemployment: This unemployment arises when there is a mismatch between the worker’s skills and availability of jobs in the market, owing to the idleness of skilled labour. There are thousands in India who lose at a job oppertunity just because it does not match their skills or due to lack of required skills they do not get jobs and because of poor education level, it becomes important to provide them related training. 

3. Seasonal Unemployment: That situation of unemployment when people do not have work during certain seasons of the year such as labourers in India rarely have occupation throughout the year.

The depend on the tasks that flourish in certain seasons and in those alone.

4. Vulnerable Unemployment: People are deemed unemployed under this unemployment. It is an excruciating business as it does not promise a stability that is normally part and parcel of a job. People are employed but informally i.e. without proper job contracts and thus records of their work are never maintained. It is one of the main types of unemployment in India.

5. Technological Unemployment: Industrial revolution in many first world countries has seen its repercussions on the curtailment of manual labour and subsequently leading yo massive unemployment. It is that situation when people lose their jobs due to advancement in technologies. In 2016, the data of the World Bank predicted that the proportion of jobs threatened by automation in India is 69% year-on-year.

6. Cyclical Unemployment: Under this type, the unemployment is caused due to the business cycle, where the number of unemployed heads rises during recessions and declines with the growth of the economy.

Cyclical unemployment figures in India are negligible. 

7. Frictional Unemployment: A ‘between jobs’ scenario. In Frictional Unemployment, people are unemployed for a short span of time while searching for a new job or switching between jobs. Frictional Unemployment also called Search Unemployment, is the time lag between the jobs. Frictional unemployment is considered as voluntary unemployment because the reason for unemployment is not a shortage of jobs, but in fact, the workers themselves quit their jobs in search of better opportunities

Causes of unemployment in India:

Image: My Gov

1. Rapid growth of population and increase in labour force.

2. Underdevelopment of the economy.

3. Slow growth in the agricultural sector.

4. Defective system of education.

5. Absence of manpower planning.

6. Degeneration of village industries.

7. Inappropriate technology.

8. Slow growth of industrial sector.

9. Immobility of labour.

10. Jobless growth.

Steps taken by India govt to improve employment rate

1. Integrated Rural Development Programme, an initiative to create employment opportunities in rural areas. This became official in 1980 intending to provide full employment. 

2. Training of Rural Youth for Self-Employment was another focusing on youth. The aim was to help unemployed rural youth from age of 18 till 35 years to adopt skills for self-employment opportunities. Though the emphasis was on SC/ST Youth and Women of the rural areas.

3. RSETI/RUDEST was an initiative by Sri Dharmasthala Manjunatheshwara Educational Trust, Syndicate Bank, and Canara Bank. The idea was to mitigate the unemployment problem among the youth. This became official in 1982 with the setting up of the Rural Development and Self Employment Training Institute. The acronym for it is RUDSETI and is looked after by banks with coordination with the Government of India and the State.

4. National Rural Employment program and Rural Landless Employment Guarantee Programme merged to form the Jawahar Rozgar Yojana. The JRY became official in 1989 with a cost ratio of 80:20 between the center and the States.

5. Mahatma Gandhi National Rural Employment Guarantee Act is a 2005 scheme for creating employment. The schemes make sure to provide 100 days of paid employment to individuals from families willing to do unskilled labor-intensive work. The RIght to work act comes under this scheme. 

6. Pradhan Mantri Kaushal Vikas Yojana is a 2015 scheme to enable Indian youth to move towards industry-relevant skill training. This is to help them in securing a better livelihood for the future.

7. Start-Up India Scheme is another 2016 launched scheme for developing entrepreneurship opportunities. It aims to create an environment to promote and support entrepreneurship opportunities across the country.

8. The Stand-Up India Scheme is a banking scheme that provides loans between Rs 10 lakh to 1 crore to SC/ST and women borrowers. The target of each bank is to assign loans to each of the categories setting up a greenfield enterprise.

9. National Skill Development Mission is a 2014 campaign that promotes the idea of  ‘Skill India’. The main agenda is to improve existing skill training initiatives and combine them. The scale and quality of skilling efforts, with speed, is what they want to work on. 

Solutions for reducing unemployment rate in India

1. Several manufacturers in India have labour-intensive work like food processing, hardware, apparel, and more. They can create special package jobs for individuals. 

2. The Unemployment problem can be alleviated by the increase in government jobs in fields like health, police, education, and more. 

3. There should be decentralized industrial activities for equal employment opportunities in regions. 

4. Substantial development in Rural areas will control migration and reduce urban job pressure too. 

5. The youth should remain the center of focus for entrepreneurship projects.

6. Women should receive more liberation in workplaces. 

7. The education system should focus on specific skill development more.

8. A more effective scheme must be launched like Skill India, Startup, and Stand-Up India.

9. The 2020 UN sustainable goals must align with national goals. 

10. The enhancement of human capital will help.

11. Creation of decent quality of jobs in formal and informal sectors.

12. There should be equity in the capital and labour market.

13. Self-employment must garner support as well as private sectors.

By Arpita Patro


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