Unemployment of India

Unemployment is seen nowadays as one of the most severe problems in India. Unemployment is a very critical issue in India as well as the world. There are hundreds & thousands of people out there who do not have employme- nt. Besides, the problems of unemployment are very severe in India because of the growing population & demand for jobs. Moreover, if we neglect this problem then it will be going to become the reason for the nation.

It doesn’t only mean that the person doesn’t have a job. Likewise, unemployment also includes people working in areas out of expertise. The big problem of unemployment in India is due to overpopulation, competition, and lack of proper skills which demands a large number of jobs every year. Most efforts have been to reduce the problem of unemployment. A recent study has shown India’s unemployment rate has nearly 9% which is highest in the last 43 months. With the outbreak of the covid-19. The situation is becoming worse and the rates are going to be increased day by day. So, we can say that the problem of unemployment in India has reached a critical stage. But, now the govt. and local authority both are working on it to reduce unemployment. Unfortunately, the issue of employment is the vast population of India. India is one of those underdeveloped countries where citizens are still suffering from a huge unemployment problem. In short, unemployment can work as a state of inactivity and is ready to be defined. It is very difficult to imagine our India with such a big number of unemployed youth.


  1. Cyclical unemployment : It is a type of unemployment where workers lose their jobs because of downturn in the business cycle, as a result of aggregate demand. If the economy contracts for two quarters or more it’s a recession. Cyclical unemployment is usually the main cause of high unemployment in India, where unemplo- yment rises during recessions and declines with economic growth. Cyclical unemployment figures in India are negli- gible. It is directly related to the macro- economic situation in the economy. It arises during a recession and declines when the economy begins to improve. If the economy shrinks so much it will be the lowest, the highest. If cyclical unemployment is rising, it means that the economy is showing signs of slowing down, which is not a good thing. Lack of demand means not enough consumption. It is one of the five types of unemployment identified by economists. Also the formula for the cyclical unemployment rate. The principle is as follows:

Cyclic unemployment rate= current unemployment rate – (frictional unemployment rate + Unstructural employment rate)

  1. Demand deficient unemployment : It is a type of unemployment when there is insufficient demand in the economy to maintain full employment. It is associated with the theory of J.M. keyes who developed his general theory of money against the backdrop of the great depression. During the Great Recession, unemployment rose in America due to falling demand and declining money supply.
  2. Structural unemployment : It is a type of unemployment when certain industries decline because of long term changes in market conditions. This unemployment is due to occupational or geographical immobilities. In short, structural unemployment is unemployment caused by a constant imbalance between workers’ skills and characteristics and job requirements. The causes of structural unemployment are shifts in the economy, improvements in technology and workers of job skills. It can keep the unemployment rate high long after a recession is over. This type of unemployment is also known as chronic unemployment or long term unemployment. It happens in the underdeveloped countries that are located in some regions of asia and africa, because of a deficiency of capital resources supply to demand. E.g. Closure of mines Many miners are struggling for adequate work. Jobs may be available in the service sector, but unemployed minors do not have the skills to find employment.
  3. Seasonal unemployment : This is the unemployment that some industries produce or distribute their products at certain times of the year. Seasonal unemployment are common industries to include agriculture, tourism and construction. This happens as a result of a harvest schedule or holidays, where industries slow down for a season. It is a natural part of a healthy economy that arises because of seasonal weather patterns. In short, seasonal unemployment refers to the time period when the demand for labour is lower than normal under certain conditions, however such a situation is only temporary and employment reverts to normal. A particular type of work and labor demand changes with climate change. Simply, because of a decreased demand in the economy at a particular point in a year. It is prevalent in those industries which are engaged in seasonal production activities. The seasonal unemployment not only under-utilised manpower but also the resources used in the production. It is a form of structural unemployment wherein the economy structure changes in accordance with the change in the season and hence, varies accordingly.
  4. Frictional unemployment : It is a type of unemployment when workers are jobless and looking for work in a healthy economy, and arises when workers are searching for new jobs or for transitioning from one job to another. It is a part of natural unemployment when the economy is considered at full employment. The main cause of frictional unemployment is to mismatch between job seekers and available jobs in the market. This is usually due to the natural career advancement of an employee and their natural transition to a new job. In frictional unemployment, may negatively affect the economy. The following measures can be taken to increase the transmission of information between job seekers and employees, to prevent bias on workers, jobs or places and to increase job availability. So we can say that it can be overcome by frictional unemployment. So, we can analyze that, a person may be looking for a job change for better opportunities, services, salary, and wages or because of dissatisfaction with the previous job. POLICIES TO REDUCE FRICTIONAL UNEMPLOYMENT INCLUDE :
  • Educational Advice,
  • Information on available Jobs and workers
  • Combating Prejudice
  • Incentives and Regulations
  • Relocation of industries and services.
  1. Disguised unemployment: It is a type of unemployment where labour employed in a job is not actually utilised for the production of goods and services. In other words, such employment does not contribute to the production of the economy. Sometimes disguised unemployment can only be a form of unemployment in which the skills of the workforce are not used to their full potential. However, such unemployment may be due to the lack of other alternative means of production, where surplus labor can be used profitably. It exists where a portion of the labor force is abandoned or in an unnecessary manner where labor productivity is essentially zero. In short, we can say that a person appears to be employed but he is not fully employed. The main cause of disguised unemployment is that high growth in population leads to surplus labour. The other cause is poverty to purchase land and access to limited capital. Unfortunately, In disguised unemployment is caused by limited skills and knowledge of the labours. Unemployment in disguise is usually seen in the unorganized sector, where work is not consistently available. Several solutions of tackling disguised unemployment can be:
  • Educating the masses for the population control through the family planning programmes
  • Making credit available to the people for self employment
  • Providing skills development and entrepreneurship program
  • Encouraging mobility of the workforce from rural to urban areas.

Example- Seven brothers are cultivating the family farmland but only four are actually required for production. Therefore, the remaining three are disguisedly unemployed.