What is Unemployment, Meaning, Definition, Types of Unemployment, Effects of Unemployment

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In 2019, India became the youngest country in the world. The median age for the entire Indian population is 29 years. This holds the huge significance for India as the average age in most developed countries is approaching in late 40s. It tells us that our country is endowed with huge human resource. With human resource we understand any personnel of the country possessing significant skills and abilities. But are we unleashing the full potential of our human resource? The answer is no. Unemployment has been a major concern for our country since decades.

For a country where 1.2 crore people enter the workforce every year, the pace of job creation to utilise their human resource remains far below what is needed. Unemployment is defined as “a situation in which the person is capable of working both physically and mentally at the existing wage rage, but does not get a job to work”. In other words, unemployment is a condition where a person is willing to work but does not get a job to work. Before moving to the status and different causes and effects of unemployment, let’s understand about different types of unemployment.

Types of Unemployment

There are different types of unemployment prevailing in India which include

• Disguised Unemployment

in which more people are doing work than actually required. Even, if some are withdrawn, production does not suffer. Agriculture is the best example of this type of unemployment.

• Seasonal Unemployment

occurs during certain seasons of the year. People engaged in industries like holiday resorts, ice factories and so on may remain unemployed during the off-season.

•Cyclical Unemployment

is caused by trade cycles at regular intervals. There is greater unemployment when there is depression and a large number of people are rendered unemployed.

• Educated Unemployment

arises when many are underemployed because their qualification does not match the job.

• Structural Unemployment

arises due to drastic changes in the economic structure of a country.

• Frictional Unemployment

caused due to improper adjustment between supply of labour and demand of labour.

Status of Unemployment in India

The Periodic Labour Force Survey (PLFS) report National Statistical Office (NSO) on 1st June, 2019 states that India’s unemployment rate stood at 6.1 per cent, a four decade high. It also showed that the unemployment rate for male was higher at 7.1 per cent in urban area as compared to 5.8 per cent in rural areas. According to the report of Pew Research Centre, about 18.6 million Indians were jobless and another 393.7 million work in poor-quality jobs vulnerable to displacement. According to the report of International Labour Organisation (ILO), unemployment rising in India and the unemployment rate in the India stands at 3.5 per cent in 2018 and 2019.

Factors Responsible for Unemployment

There are number of factors which are responsible for the high unemployment rate in India are given below

• Growing Population

The most important cause is the growing population in India. The population of India has reached to 1.3 billion making it the second most populous country in the world. Growth of population directly encourages unemployment by making a large addition to labour force.

• Limited Land Resources

Another reason for unemployment is the availability of land which is limited. Indian population is increasing rapidly, therefore, land is not sufficient for the growing population. As a result, there is heavy pressure on land. It creates the situation of unemployment for a large number of people who depend on agriculture in rural areas.

• Education System

The present education system in India is also responsible for the growth of unemployment. The day-to-day education is very defective and confined within the classroom only. The system is not job oriented, it is degree oriented. Thus, young people even with degrees do not get jobs as the market conditions are different.

Apart from this, in villages, unemployment is due to lack of cottage industries. The cottage industries are in a winding state. They give whole time occupation to only a small fraction of people.

Effects of Unemployment

Unemployment is a big problem which affects the economic growth of the country. It has following bad effects

• Exploitation of Labour Due to unemployment labourers are exploited. They have to accept low wages and work under unfavourable conditions.

• Industrial Disputes Industrial disputes have adverse effects on employer-employee relations. Further, it also leads to unemployment.

• Political Instability Unemployment often results in political instability in the country. Unemployed persons engage themselves in destructive activities.

• Social Disturbances Many social evils like dishonesty, gambling and immorality etc., are attributed to the problem of unemployment. It endangers law and order situation of the country. It also causes social disruption in the society.

• Increase in Poverty Under the situation of unemployment a man has no source of income. Unemployment causes poverty, burden of debt increases, consequently, economic problems also increases.

• Loss of Human Resources Due to unemployment, human resources go waste. No constructive use of labour force is made. If human resources are properly used, economic growth of the country will increase.

Initiatives by the Government

Government of India has taken several initiatives to tackle with the issue of unemployment in India. Some of the schemes are as follows

Startup India and Standup India,

2016 With the aim of transforming the youths from job seeker to job creator and to provide entrepreneurship support, both the schemes were launched. Under Startup India, government provides a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. Apart from providing funding support and incentives to the startup, the government also intends to provide industry academia support and incubations to the startups in India. Under Standup India, government facilitates bank loans between 10 Lakh to * 1 crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one women borrower per bank branch for setting up a new enterprise.

Aajeevika-National Rural Livelihoods Programme, 2011 (NRLM)

Aajeevika-NRLM is a poverty alleviation project implemented by Ministry of Rural Development, Government of India. The scheme is focused on promoting self-employment and organisation of poor in rural area. The basic ideas behind this programme is to organise the poor into Self Help Groups (SHGs) and make them capable for self- employment.

Mahatma Gandhi National Rural Employment Guarantee Act, 2006(MGNREGA)

MGNREGA aims at enhancing livelihood security of households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. The Act came into force in February, 2006. In MGNREGA, all rural districts are covered.

• Pradhan Mantri Kaushal Vikas Yojana, 2015 (PMKVY)

PMKVY scheme seeks to provide skill training to 1.4 million youth. The plan is implemented through the National Skill Development Corporation. It will focus on fresh entrant to the labour market, especially class X and XII drop outs.

• Deendayal Antoydaya Yojana-National Urban Livelihood Mission (DAY-NLRM), 2013

This scheme was launched to reduce poverty and vulnerability of the urban poor households by enabling them to access gainful self-employment and skilled wage employment opportunities. This mission would also address livelihood concerns of the urban street vendors by facilitating access to suitable spaces, institutional credit, social security and skills to the urban street vendors for accessing emerging market opportunities.
Pradhan Mantri Mudra Yojana (PMMY), 2015 To create employment opportunities in non-farming activities, this initiative provides loans at concessional rates. The collateral free loans under Shishu (up to 50000), Kishor (From 50000 – up to 5 lakh) and Tarun (from * 5 lakh-up to 10 lakh) will be provided for entrepreneurship development.

• National Career Service, 2015

This scheme was launched with an objective to bridge the gap between those who need jobs and those who want to hire them and between people seeking career guidance and training and those who can provide the counselling and training,


Complete utilisation of human resource is a prerequisite for growth of any country. In India, unemployment is a structural issue which remains a major hindrance for inclusive growth in the country. Lack of industrial reform along with the poverty and over-population has further aggravated the problem of unemployment in India. Along with the focus on employment generation, the government needs to focus on enriching the youths of the country with industry relevant skill, education and training. This investment in human resource will pave the path for prosperous India, where fruit of development is equally shared among its population.

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