Governance
Unemployment in India
- 04 Jan 2022
- 9 min read
Relevance for Prelims: Types of Unemployment in India, Support for Marginalised Individuals for Livelihood and Enterprise (SMILE), PM-DAKSH (Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Start Up India Scheme
Relevance for Mains: Types of Unemployment in India, Causes and solutions of unemployment in India.
Why in News
According to data from the Centre for Monitoring Indian Economy (CMIE), India’s unemployment rate touched a four-month high of 7.9% in December 2021.
- With Covid-19 cases on the rise amid the threat posed by the Omicron variant and many states imposing fresh curbs, economic activity and consumption levels have been affected.
- This could adversely affect economic recovery further going ahead.
Key Points
- About Unemployment:
- Unemployment occurs when a person who is actively searching for employment is unable to find work.
- Unemployment is often used as a measure of the health of the economy.
- The most frequent measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labour force.
- National Sample Survey Organisation (NSSO) defines employment and unemployment on the following activity statuses of an individual:
- Working (engaged in an economic activity) i.e. 'Employed'.
- Seeking or available for work i.e. 'Unemployed'.
- Neither seeking nor available for work.
- The first two constitute the labour force and unemployment rate is the percent of the labour force that is without work.
- Unemployment rate = (Unemployed Workers / Total labour force) × 100
- Unemployment occurs when a person who is actively searching for employment is unable to find work.
- Types of Unemployment in India:
- Disguised Unemployment: It is a phenomenon wherein more people are employed than actually needed.
- It is primarily traced in the agricultural and the unorganised sectors of India.
- Seasonal Unemployment: It is an unemployment that occurs during certain seasons of the year.
- Agricultural labourers in India rarely have work throughout the year.
- Structural Unemployment: It is a category of unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market.
- Many people in India do not get jobs due to lack of requisite skills and due to poor education level, it becomes difficult to train them.
- Cyclical Unemployment: It is a result of the business cycle, where unemployment rises during recessions and declines with economic growth.
- Cyclical unemployment figures in India are negligible. It is a phenomenon that is mostly found in capitalist economies.
- Technological Unemployment: It is the loss of jobs due to changes in technology.
- In 2016, World Bank data predicted that the proportion of jobs threatened by automation in India is 69% year-on-year.
- Frictional Unemployment: The Frictional Unemployment also called as Search Unemployment, refers to the time lag between the jobs when an individual is searching for a new job or is switching between the jobs.
- In other words, an employee requires time for searching a new job or shifting from the existing to a new job, this inevitable time delay causes frictional unemployment.
- It is often considered as voluntary unemployment because it is not caused due to the shortage of job, but in fact, the workers themselves quit their jobs in search of better opportunities.
- Vulnerable Employment: This means, people working informally, without proper job contracts and thus sans any legal protection.
- These persons are deemed ‘unemployed’ since records of their work are never maintained.
- It is one of the main types of unemployment in India.
- Disguised Unemployment: It is a phenomenon wherein more people are employed than actually needed.
- Causes of Unemployment in India:
- Social Factors: In India the caste system is prevalent. The work is prohibited for specific castes in some areas.
- In big joint families having big business, many such persons will be available who do not do any work and depend on the joint income of the family.
- Rapid Growth of Population: Constant increase in population has been a big problem in India.
- It is one of the main causes of unemployment.
- Dominance of Agriculture: Still in India nearly half of the workforce is dependent on Agriculture.
- However, Agriculture is underdeveloped in India.
- Also, it provides seasonal employment.
- Fall of Cottage and Small industries: The industrial development had adverse effects on cottage and small industries.
- The production of cottage industries began to fall and many artisans became unemployed.
- Immobility of Labour: Mobility of labour in India is low. Due to attachment to the family, people do not go to far off areas for jobs.
- Factors like language, religion, and climate are also responsible for low mobility.
- Defects in Education System: Jobs in the capitalist world have become highly specialised but India’s education system does not provide the right training and specialisation needed for these jobs.
- Thus many people who are willing to work become unemployed due to lack of skills.
- Social Factors: In India the caste system is prevalent. The work is prohibited for specific castes in some areas.
Recent Initiatives by Government
Way Forward
- Promoting Labour Intensive Industries: There are a number of labour intensive manufacturing sectors in India such as food processing, leather and footwear, wood manufacturers and furniture, textiles and apparel and garments.
- Special packages, individually designed for each industry are needed to create jobs.
- Decentralisation of Industries: Decentralisation of Industrial activities is necessary so that people of every region get employment.
- Development of the rural areas will help mitigate the migration of the rural people to the urban areas thus decreasing the pressure on the urban area jobs.
- Drafting National Employment Policy: There is a need for a National Employment Policy (NEP) that would encompass a set of multidimensional interventions covering a whole range of social and economic issues affecting many policy spheres and not just the areas of labour and employment.
- The underlying principles for the National Employment Policy may include:
- Enhancing human capital through skill development.
- Creating sufficient number of decent quality jobs for all citizens in the formal and informal sectors to absorb those who are available and willing to work.
- Strengthening social cohesion and equity in the labour market.
- Coherence and convergence in various initiatives taken by the government.
- Supporting the private sector to become the major investor in productive enterprises.
- Supporting self-employed persons by strengthening their capabilities to improve their earnings.
- The underlying principles for the National Employment Policy may include: