What is Unemployment?

Unemployment is 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. NSSO, an organization under
MoSPI – Ministry of Statistics and Programme
Implementation measures India’s unemployment on
three approaches:
1. Daily Status Approach: unemployment status of a
person under this approach is measured 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.
2. 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.
3. 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

In India, there are seven types of unemployment. The

types of unemployment are discussed below:
1. Disguised Unemployment: This is a type of
unemployment where people employed are more than
actually needed. Disguised unemployment is
generally traced in unorganized 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. Many
people in India do not get job matching to 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: Those situations 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.
4. Vulnerable Unemployment: People are deemed
unemployed under this unemployment. 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: the 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: unemployment 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: this is a situation when
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
The major causes of unemployment in India are as
mentioned below:
 Large population.
 Lack of vocational skills or low educational levels of
the working population.
 Labour-intensive sectors suffering from the slowdown
in private investment particularly after demonetization
 The low productivity in the agriculture sector plus the
lack of alternative opportunities for agricultural
workers that makes transition among the three sectors
difficult.
 Legal complexities, inadequate state support, low
infrastructural, financial and market linkages to small
businesses making such enterprises unviable with
cost and compliance overruns.
 Inadequate growth of infrastructure and low
investments in the manufacturing sector, hence
restricting the employment potential of the secondary
sector.
 The huge workforce of the country is associated with
the informal sector because of a lack of required
education or skills, and this data is not captured in
employment statistics.
 The main cause of structural unemployment is the
education provided in schools and colleges are not as
per the current requirements of the industries.
 Regressive social norms that deter women from
taking/continuing employment.

Impact of Unemployment
The unemployment in any nation has the following
effects on the economy:
 The problem of unemployment gives rise to the
problem of poverty.
 The government suffers extra borrowing burden
because unemployment causes a decrease in the
production and less consumption of goods and
services by the people.
 Unemployed persons can easily be enticed by
antisocial elements. This makes them lose faith in the
democratic values of the country.
 People unemployed for a long time may indulge in
illegal and wrong activities for earning money which
increases crime in the country.
 Unemployment affects the economy of the country as
the workforce that could have been gainfully
employed to generate resources actually gets
 dependent on the remaining working population, thus
escalating socio-economic costs for the state. For
instance, a 1 % increase in unemployment reduces
the GDP by 2 %.
 It is often seen that unemployed people end up getting
addicted to drugs and alcohol or attempts suicide,
leading to losses to the human resources of the
country.

Government Initiative to Control

Unemployment
Several policies have been initiated by the government
to reduce the unemployment problem in the economy.
The policies to reduce unemployment are highlighted
below:
 In 1979 the government launched TRYSEM –
Training of Rural Youth for Self-Employment The
objective of this scheme was to help unemployed
youth of rural areas aged between 18 and 35 years to
acquire skills for self-employment. The priority under
this scheme was given to women and youth belonging
to SC/ST category.

 The Government launched the IRDP – Integrated

Rural Development Programme (IRDP) in the year
1980 to create full employment opportunities in rural
areas.
 A new initiative was tried namely RSETI/RUDSETI in
1982 jointly by Sri Dharmasthala Manjunatheshwara
Educational Trust, Canara Bank and Syndicate Bank.
The aim of RUDSETI, the acronym of Rural
Development And Self Employment Training Institute
was to mitigate the unemployment problem among the
youth. Rural Self Employment Training Institutes/
RSETIs are now managed by Banks with active
cooperation from the state and central Government.
 The Jawahar
Rozgar Yojana
(JRY) was
started in April
1989 by
merging the two
existing wage
employment
programme i.e.
RLEGP – Rural
Landless
Employment
Guarantee
Programme and
NREP –
National Rural
Employment Programme on an 80:20 cost-sharing
basis between the state and centre.
 MNREGA – Mahatma Gandhi National Rural
Employment Guarantee Act launched in 2005
providing the right to work to people. An employment
scheme of MGNREGA aimed to provide social
security by guaranteeing a minimum of 100 days paid
work per year to all the families whose adult members
opt for unskilled labour-intensive work. For details
on MNREGA check the link provided.

 PMKVY –
Pradhan
Mantri
Kaushal
Vikas Yojana
was
launched in
2015. The
objective of
PMKVY was
to enable the
youth of the
country to
take up
industry-
relevant skill training in order to acquire a secured
better livelihood.
 The government launched the Start-Up India Scheme
in 2016. The aim of Startup India programmes was to
develop an ecosystem that nurtures and promotes
entrepreneurship across the nation. Check detailed
information on Startup India Scheme in the given link.
 Stand Up India Scheme also launched in 2016 aimed
to facilitate bank loans to women and SC/ST
borrowers between Rs 10 lakh and Rs. 1 crore for
setting up a greenfield enterprise. Details on Stand-Up
India is given in the linked page.
 National Skill Development Mission was set up in
November 2014 to drive the ‘Skill India’ agenda in a
‘Mission Mode’ in order to converge the existing skill
training initiatives and combine scale and quality of
skilling efforts, with speed.

The unemployment rate in India, amidst lockdown and

restrictions on mobility, is 12.81% as of June 8th 2021
based on the data provided by the CMIE. Earlier, 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.
In 2020, the unemployment rate in India fell 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 declined 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 lockdown to contain the coronavirus outbreak has
forced many industries to shut down thus increasing
unemployment across the country.

*END*