Unemployment

Unemployment is a complicated issue. It denotes a condition in which a person is not gainfully employed in productive activities and thus does not work. “A man is said to be unemployed only when he is in both conditions without a job or not employed and desires to be employed”.  The unemployment rate is a measure of the prevalence of unemployment that is calculated as a percentage by dividing the number of unemployed people by the total number of people who are currently in the labour force. During a recession, an economy typically has a very high unemployment rate. According to the International Labour Organisation, more than 200 million people worldwide, or 6% of the global workforce, were unemployed in 2015.

Unemployment in India

The origins, consequences, and remedies to unemployment have all been the subject of much theoretical debate. Market mechanisms, according to classical economics, new classical economics, and the Austrian School of economics, are a dependable means of addressing unemployment. These ideas advocate against outside interventions in the labour market, such as unionisation, bureaucratic work rules, minimum wage laws, taxes, and other regulations, which they allege prevent employees from being hired.

Statistics on unemployment in India have traditionally been collected, compiled, and disseminated once every ten years by the Ministry of Labour and Employment (MoLE), primarily through sample studies conducted by the National Sample Survey Office. Aside from these 5-year sample studies, India has never routinely collected monthly, quarterly, or yearly nationwide employment and unemployment statistics, except since 2017. In 2016, the Centre for Monitoring Indian Economy, a non-government organisation based in Mumbai, began sampling and publishing monthly unemployment statistics in India.

Basic Theories of Unemployment

Voluntary unemployment and involuntary unemployment are the two main types of unemployment. When a person voluntarily leaves his or her job in search of a new one, this is referred to as voluntary unemployment. Voluntary unemployment has a variety of specific and more personal factors, including a desire to seek a greater pay, professional development, migration or relocation, and issues with the company or coworkers, among others.

Unemployment, on the other hand, is involuntary when a person is laid off and has no choice but to hunt for another job, or when he or she is willing to work at the prevailing wage but is not able to find work. An economy with a high rate of involuntary unemployment has a labour surplus.

Types of Employment

Frictional

When people freely shift occupations within an economy, this is referred to as frictional unemployment. It takes time for a person to locate another job after leaving a firm. Similarly, recent graduates who are just entering the labour field contribute to frictional unemployment.

Frictional unemployment is shown by graduating students. They enter the workforce and remain jobless until they find jobs. Another example is parents who return to work after taking time off to raise their children at home. 

Cyclical

Cyclical unemployment refers to the volatility in the number of jobless employees that occurs during economic ups and downs, such as those caused by variations in oil prices. Unemployment rises during recessions and falls during times of economic upswing.

When an automobile worker is laid off during a recession to decrease labour expenses, this is an example of cyclical unemployment. People are buying fewer vehicles during the downturn, so the company doesn’t need as many staff to meet demand.

Structure

Structural unemployment occurs as a result of a technical shift in the economy’s structure in which labour markets work. Technological advancements, such as the replacement of horse-drawn transportation with vehicles or the automation of production, result in unemployment among employees who are displaced from jobs that are no longer required.

Individuals who created and sold typewriters, for example, did not lose their employment to automation; instead, they were replaced by people who made and marketed a more efficient typewriter – computers. Structural unemployment can be a serious threat to an economy’s stability.

Voluntary

This happens when people opt to remain unemployed rather than accept offered jobs. For example, if benefits are plentiful, people may opt to continue receiving them rather than finding a job. Frictional unemployment is a sort of voluntary unemployment in which people choose to wait until they find a better job.

Voluntary unemployment is illustrated by quitting one’s job. People quit occupations for a variety of reasons, including dissatisfaction with their jobs, insufficient compensation, or hazardous working conditions. Taking a leave of absence for a health issue or a family emergency is another sort of voluntary unemployment.

Causes of Unemployment

• Caste System: The caste system is prominent throughout India. At some specific place, some people are not allowed to work because of their caste. In many circumstances, the job is not awarded to the most qualified individuals, but to someone from a certain group. As a result, unemployment rises.
• Increase in Population: In India, the constant increase in population has been a major issue. It is a major source of unemployment. In the 10th Plan, the unemployment rate is 11.1 percent.
• Agriculture is a Seasonal Occupation: Agriculture in India is undeveloped. It gives seasonal work. Agriculture employs a sizable portion of the population. Agriculture, on the other hand, is a seasonal industry that gives employment for a few months. As a result, unemployment rises.
• Cottage and small industry decline: Industrial growth harmed cottage and small industry. Cottage industry output began to decline, and many craftspeople found themselves out of work.
• Slow Industrialization: The rate of industrialization is slow. Despite the emphasis on industry, the employment opportunities generated by industrialisation are limited.

Conclusion

A man is said to be unemployed only when he is in both conditions without a job or not employed and desires to be employed. The unemployment rate is a measure of the prevalence of unemployment that is calculated as a percentage by dividing the number of unemployed people by the total number of people who are currently in the labour force. The origins, consequences, and remedies to unemployment have all been the subject of much theoretical debate. Market mechanisms, according to classical economics, new classical economics, and the Austrian School of economics, are a dependable means of addressing unemployment. The origins, consequences, and remedies to unemployment have been the subject of much theoretical debate.