Poverty and Unemployment

The problem of poverty in India is not new. Since the pre-independence era, the majority of the population of India has been living in poverty. Poverty, in simple words, is the state of extreme economic poorness, where the person does not have enough money to fulfil the basic life needs such as food, cloth, and shelter. People living in poverty have little to no access to proper healthcare, education, clean water, and other fundamental human rights. For any country to progress, its poverty levels should be as low as possible. Unfortunately, India has high poverty levels, and the COVID-19 pandemic has only made it worse by pushing thousands of people below the poverty line.

What is Poverty?

Poverty is not just a situation wherein a person is in financial distress. Defining poverty just in terms of money is too narrow. Considering this, the World Bank has provided a more holistic definition of poverty. It states poverty as a condition wherein the income levels are so low that the person is deprived of necessities and well-being required to survive with dignity. It includes poor health, education, no access to safe water and sanitation, no physical and financial security, and limited opportunities to make life better.

Poverty has several significant consequences, one of them being unemployment. Individuals with no access to education, healthcare, or even food cannot apply for jobs. They are not qualified enough to get any job that guarantees security and sound money. But unemployment is not just a consequence of poverty but is also a cause. One of the primary reasons for poverty is not being able to find work. Without work, the people do not have access to the money required to afford goods and services. Hence, poverty and unemployment are not exclusive. They are closely related to one another.

Unemployment

It is defined as the situation in which a person in the working-age group and actively looking for a job is unable to find work. Unemployment can either be voluntary or involuntary. Voluntary unemployment is when a person refuses to work out of choice. On the other hand, involuntary unemployment is when a person wants to take up a job but cannot find anything. It is a highly problematic situation as it reduces the productivity of a country’s working-age population. 

There can be the following causes of unemployment:

1. Rapid population growth: When the population of a country explodes (increases very rapidly in a short span of time), the job market cannot absorb so many people, leaving many unemployed. India’s unemployment problem stems from its rapid population growth in the 20th century,

2. Slow economic growth: When the development of non-agricultural related sectors is slow, unemployment also becomes a huge problem. If the economic growth remains slow, enough jobs are not created to absorb deserving candidates.

3. Migration: People migrate to urban areas from rural areas to find better job opportunities. However, when the migration happens in large numbers, it does more harm than good if there are not enough jobs in cities. Staying unemployed in an urban area pushes people into poverty rapidly because the living expenses are higher.

4. Problems in the education system: The education system often does not prepare the youth for real work challenges. Rot learning does not develop aptitude skills, which are much needed in the job market. Due to a lack of such skills, students cannot find good jobs and stay unemployed.

Types of Unemployment

1. Cyclical unemployment: When the economy does not require enough people in the workforce, it results in cyclical unemployment. It happens in times of economic depression and recession.

2. Seasonal unemployment: Demand fluctuates with the season in certain industries, eventually affecting employment rates. For example, the need for a workforce in the catering sector is high during the wedding and festival season and remains low otherwise.

3. Frictional unemployment: When a person leaves one job (either voluntarily or involuntarily) without finding another one, they are known to be going through frictional unemployment.

4. Disguised unemployment: When a person seems to be working, but their work is not contributing to the output, it is known as disguised unemployment. For example, if eight people work on a farm that requires only five people, three are under disguised unemployment.

Conclusion

The high levels of poverty and unemployment are significant impediments to the country’s growth. To combat these problems, the government in India has come up with multiple schemes to reduce the number of people living below poverty line (BPL). The poverty line is set at $1.9 per day by the World Bank. One of the best ways to fight poverty is to target its root cause – unemployment. If people are given employment, that would increase their productivity and reduce the pressure on the government to provide for them. Hence, reducing unemployment can also reduce poverty to a large extent as the two are highly interdependent.