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On a national basis, economic slowdowns are the leading cause of unemployment. When the economy slows, businesses are forced to minimise expenditures by cutting payroll spending. Unemployment rates were greater during the COVID-19 outbreak than during the Great Recession of 2007–2009. In fact, during the first few months of the pandemic, unemployment rates were comparable to those seen during the Great Depression.
Unemployment isn’t evenly distributed among the population. The rate of unemployment can be higher or lower for certain groups, depending on multiple factors, including:
- Region
- Industry
- Gender
- Race
- Socioeconomic class
Disguised Unemployment
This is the type of unemployment that arises when a portion of the workforce is made redundant due to low productivity or is laid off. As a result, this sort of unemployment has little impact on an economy’s overall production. Persons who perform below their capabilities, people whose income-generating activities scarcely benefit them or the economy, and those who can conduct more labour activities are all examples of disguised unemployment. It is frequent in both rich and developing countries when big populations generate a labour force excess. It’s also widespread in unorganised labour marketplaces like agricultural markets.
Types of Disguised Unemployment
- Disability and illness- Even if the disabled and sick are unable to work, they can nevertheless contribute to economic progress.
- Underemployment- People who work part-time fall into this category. It also covers those who take jobs that are under their talent level.
- Those who are no longer looking for work- An individual who is not actively looking for work is not considered unemployed.
Seasonal Unemployment
This is a type of unemployment that happens when the demand for labour is lower than usual, usually around specific times of the year. For example, when demand is higher during the holiday season, some firms, such as resorts, recruit extra people. Some employees may be laid off during the low holiday seasons. Seasonal adjustment by governments to unemployment figures. Seasonal unemployment rates, as a result, have an impact on a country’s unemployment figures. Although seasonal unemployment is almost always unavoidable, it can be mitigated by creating jobs in the off-season and diversifying the economy, particularly in the tourism sector. Governments can also impose restrictions requiring firms to pay workers throughout the year with monies earned during peak season.
Difference Between Disguised and Seasonal Unemployment
Disguised Unemployment | Seasonal Unemployment |
Null marginal labour productivity is a situation in which no marginal labour productivity exists. It is not visible and is only identified between wage earners, primarily in farming. | Seasonal unemployment is defined as having a job for only part of the year in some industries, such as agriculture. |
Common in the agriculture sector. | Common in the agro-based sectors. |
It is only found in rural areas. | It can be found in both rural and urban environments. |
Consider a situation in which five individuals are needed to do a task that only requires three. The two extra persons in this situation are in a state of disguised unemployment. | In the tourism industry, for example, individuals are laid off during the low season and hired during the high season. |
Example of Disguised Unemployment and Seasonal Unemployment
In Disguised unemployment, even if 8 of the 20 persons working in agricultural land migrate to another city, the land’s productivity remains the same. This means that the contribution of 8 people to production is 0 percent.
In Seasonal unemployment, Agriculture is mostly reliant on weather conditions, which means that there is a tremendous effort during certain times of the year, such as when sowing seeds, threshing, and harvesting crops. However, once the work is done, the workers are left idle.
Disadvantages of Unemployment
Individuals suffer both financially and emotionally as a result of unemployment. Long-term unemployment can result in financial insecurity or poverty, as well as physical and mental health issues.
When unemployment rises above 5% or 6%, the implications might be detrimental to the economy. When that many people are unemployed, the economy loses one of its most important growth drivers: consumer spending. Until they find another job, workers have less money to spend.
Conclusion
Even though it may seem that both disguises and seasonal unemployment can be caused by a lack of demand and inventory decrease, there is actually a clear difference between the two. Disguised unemployment can arise when a nation’s businesses are looking to cut costs. In this situation, the businesses do not want their product to suffer less quality or quantity and consider hiring fewer workers. This type of unemployment results in people working below their capacities. Seasonal unemployment, on the other hand, occurs during times when there is an overproduction in labour (i.e., high unemployment rate). In this case, employees are laid off or put on part-time status for a period when there is no need for extra staff to handle tasks in the business. Unemployment causes a waste of the country’s human resources, turning assets into liabilities for the economy as it adds to the economic overburden. When an individual does not contribute anything to the total production, it is referred to as “disguised unemployment.” Seasonal unemployment, on the other hand, occurs at a specific period of the year.
