Unemployment in India: Types, trends, structure and causes of unemployment in India.

 

Unemployment refers to a condition where people are willing to work at a particular wages but do not get work. In Indian context, on a standard year basis, if a person work for 8 hours a day for 273 days in a year is treated as employed person. National sample survey organization (NSSO) developed 3 concepts of unemployment. They are:

1: The usual status:

     For measuring unemployment, it use one year preceding the date of survey of NSSO. If a person get work for 183 days in a year, he/she is treated as employed as per usual status method.

2: Weekly status:

     If a person fails to get work even for one hour in a day during preceding seven days is unemployed as per weekly status.

3: Daily status:

     It considers the daily activity status in a reference week.

The total population between the age group of 16-64 age is known as labor force. It includes both employed people  and those unemployed people who are willing to work.

 

TYPES OF UNEMPLOYMENT:

1: Frictional unemployment:

     It occurs during the period when a person leave the old job and joining the new one. It is a short term unemployment.

2: Structural unemployment:

     It is the situation of lack of supply of job opportunity to the job seekers because of limited resources. It can also occur when skills and location of job seekers are not favorable to the job vacancies. It is a long term and mainly found in the developing countries like India.

3: Cyclical unemployment:

     It occurs due to lack of spending and demands in an economy. Decrease in the demand of goods and services lead to fall in employment and hence remain many people unemployed. It occurs during the depression phase of economic cycle.

4: under-employment:

     It is a condition where the employed person is not able to work in their full capacity or ability. They contribute in the production less than they are capable of. They are not employed as per their qualification.

5: Involuntary unemployment:

     It is the condition of unemployment when people are willing to work at the prevailing wages rate but do not get job.

6: Disguised unemployment:

     It is invisible type of unemployment. It occurs when larger number of people is sharing the same work which could have been done by fewer numbers of people.

7: Seasonal unemployment:

     It occurs due to seasonal variation in production or demand. Workers get employed for a particular season and remain idle during the remaining season unless the people are engaged in some temporary job. For example, in agricultural sector of India, farmers are employed only during the particular season and remained unemployed in the remaining seasons.

8: Educated unemployment:

     It refers to the conditions when the educated people are not able to get job according to their qualification.

TRENDS AND STRUCTURE OF UNEMPLOYMENT IN INDIA:

Year                           1	Labor force     (million)            2	Employment          (million)                3	Unemployment        (million)          4=2-3	Unemployment         Rate  5=4/2*100
1990-91	356	345	11	3.1
1991-92	364	347	17	4.7
1992-93	372	353	19	5.1
1993-94	343.5	334.5	9	2.62
1999-2000	377.9	367.4	10.5	2.78
2004-05	428.37	415.27	13.1	3.06

 

                        Fig: Total labor force and employment in the Indian economy.

   Source: Planning commission and various round of NSSO survey on employment and unemployment.

 

Generally unemployment rate in India is increasing since the independence. From the above figure, it can be seen that although there was fall in unemployment rate in 1993-94 from 1992-93 by 2.62% from 5.1%, there is increasing trend in unemployment rate in the remaining years.

 

The structure of Indian economy was mainly base on agricultural sector at the time of independence. As the economic growth take place, people started shifting from agricultural sector to industrial sector and also from rural to urban.                                                                                                                  

Sectors	1951	1971	1991	2001-02	2004-05	2007-08
Primary Sector	72.1	72.1	66.8	60.4	58.4	55.9
Secondary Sector	10.7	11.2	12.7	15.8	18.2	18.7
Tertiary Sector	17.2	16.7	20.5	23.8	23.4	25.4
Total	100	100	100	100	100	100

                                                                                                                                   (In percentage)

                                  Fig: Changes in occupational structure in India

From the above figure, it is clear that there is decline in primary sector and increase in both secondary and tertiary sector.

 

Year	Agriculture And allied	Industry	Services
1950-51	55.9	14.9	29.2
1970-71	45.2	21.7	33.1
1980-81	38.1	25.9	36.0
1990-91	33.2	25.2	41.6
2006-07	20.5	24.7	54.8
2007-08	19.4	24.9	55.7

                                         Fig: GDP and its sectoral share

Contribution of agricultural sector to the GDP is diminishing while there is rise in contribution of industrial and service sector to GDP.

 

CAUSES OF UNEMPLOYMENT IN INDIA SINCE 1950s

1: Expanding the labor force:

     Health sector of India has improved a lot since independence and hence the death rate and mortality rate has declined significantly. Demographic transition has taken place which favours more on working group. Since the labor force are increasing rapidly and the job opportunity are very limited, unemployment remain exist in India.

2: Jobless growth:

     Economic growth has been taking place in India without generating the job opportunity. GDP of India from 1950-51 to 1981-82 was around 3.6 and at this rate, job creation was very much difficult. Although there was increase in GDP at around 5.6 percent per annum in 1980s to 1990s, job creation was not as expected and there was increase in unemployment.

3: Lack of economic planning:

     There has been lack of proper planning regarding employment generation programmed in the country.

4: Inappropriate education system:

     Indian education system is a very old system and not appropriate with the present era. It has not been change since its’ introduction by Macaulay. Recently, the prime minister of India Narendra Modi launched new education policy under the National education policy 2020 in objective of providing quality education.

5: Population explosion:

     There was rapid rise in population in India after Independence. Population become younger and demanded more job. In fact, creating jobs for the increasing number of population was very much difficult as the population explosion rate was much greater than  the employment explosion rate.