Notes on What is Unemployment

Unemployment refers  to all those peoples who are employable and actively looking for any kind of job but are unable to find any type of job. People in the workforce who are working but not in the right job are included in this category. Unemployment is one of the measures of a country’s economic health, and it’s commonly measured by the unemployment rate, which is derived by dividing the number of unemployed individuals by the total number of people employed.

Definition of Unemployment

Unemployment refers to all those peoples not having a job while actively looking for any types of job. Economists distinguish between cyclical or Keynesian unemployment, frictional unemployment, structural unemployment, and classical unemployment, which are all overlapping types and theories of unemployment. Other sorts of unemployment that are occasionally addressed include seasonal unemployment, hardcore unemployment, and hidden unemployment.

Types of Unemployment

Unemployment can be classified as cyclical, structural, or frictional. It happens during a downturn. The natural unemployment rate is made up of the second two factors: structural and frictional.

Cyclic Unemployment

The contraction period in the business cycle leads to cyclical unemployment. Demand for products and services plummets when  this happens. It forces businesses to fire many workers in order to save money.

Joblessness that is cyclical leads to more joblessness. Lay-offs provide workers with less money to spend on the goods and services they need. This lowers demand even further.

Government action in the form of expanded monetary and fiscal policies is required to halt the downward spiral. The government of India did not immediately intervene after the 1929 stock market disaster. The result of this delay was the Great Depression, which lasted ten years and resulted in a 25% unemployment rate. 

Frictional Unemployment

Workers experience frictional unemployment when they quit their old jobs but have yet to find new ones. Workers usually quite freely, either because they need to relocate or because they have saved enough money to hunt for a better position.

Frictional unemployment can occur when students are seeking for their first job or mothers are returning to work. It can also occur when employees are dismissed or, in some situations, laid off for business-related reasons, such as facility closure.

Frictional unemployment is the common practice that occurs during the job hunting process. In fact, frictional unemployment is beneficial to the economy because it permits workers to migrate to more productive positions.

Structural Unemployment

When the economy shifts, structural unemployment emerges, resulting in a mismatch between people’ talents and the skills employers want.The replacement of equipment employees with robots is an example of this. Those who refuse to learn must either retrain for new jobs or suffer long-term structural unemployment.

A prolonged recession frequently results in structural unemployment. If workers are unemployed for an extended period of time, their skills are likely to become obsolete. They may remain unemployed even if the economy improves unless they are willing and able to take a lower-level, unskilled job. If this occurs, structural unemployment will increase the rate of natural unemployment.

Causes of Unemployment

There are various types of causes that lead to the unemployment that are given below :

Caste System

Certain types of job are restricted for members of certain castes in some places. As a result, work is frequently allocated to members of a certain community, rather than to individuals who actually deserve the job and possess the necessary qualifications and this lead to increment of Unemployment.

Inadequate Economic Growth

This modest development isn’t providing enough job possibilities for the growing population.This means that as the population grows, the economy will be unable to meet demand for jobs, and an increasing number of people will be jobless. As a result, employment levels across the country are insufficient.

Growing Population

India’s population is expected to surpass China’s by 2024, making it the world’s most populated country for the rest of the twenty-first century.Because the country’s economic growth cannot keep up with population increase, a growing proportion of the population is unemployed.

Absence of Economic Planning

There have been no national strategies to account for the considerable imbalance between labour supply (which is plentiful) and labour demand, which is problematic (which is notably lower)It is critical that labour supply and demand are balanced in order for those who need jobs to be able to find one; otherwise, many people will compete for a single job.

Lack of Required Skills

According to a survey, 33 percent of India’s educated youth are unemployed due to a lack of future skills.Even after leaving school, millions of students in our country lack hands-on learning and solid practical expertise.

Conclusion

At the start of a downturn, the situation is reversed, with companies preferring to reduce work hours or impose pay cuts before laying off employees. Only when the downturn is prolonged does unemployment begin to rise. Unemployment is referred regarded as a lagging indicator of economic activity since it lags behind growth.