Class: +2

Subject: Economics
Part: Indian Economy
Chapter-9
Unemployment: Causes and Types

Assignment No.: 51-55

Question: What is meant by Unemployment?

Answer: Unemployment may be defined as “a situation in which the person is capable of working both
physically and mentally at the existing wage rate, but does not get a job to work”. In other words,
unemployment means only involuntary unemployment wherein a person who is willing to work at the
existing wage rate does not get a job.
Question: What is meant by employment?
Answer: Employment may be defined as “a situation in which the person is capable of working both
physically and mentally at the existing wage rate, and get a job to work”. In other words, employment
means wherein a person who is willing to work at the existing wage rate and is getting a job. Question:
What is meant by underemployment?
Answer: Underemployment is a condition in which workers are employed in less than full-time or regular
jobs or insufficient jobs for their training or economic needs. Also, underemployment is a worker's
underuse because a job does not use the skills of the worker, i.e. part-time, or leaves the worker idle.
Examples include maintaining a part-time job while desiring full-time work, and over-qualification in
which the employee has qualifications, experience, or expertise beyond the work requirements. Types of
Underemployment: Visible underemployment is underemployment in which an individual works fewer
hours than is necessary for a full-time job in their chosen field. Due to the reduced hours, they may work
two or more part-time jobs in order to make ends meet.
The second type of underemployment is invisible underemployment. It refers to the employment situation
in which an individual is unable to find a job in their chosen field. Consequently, they work in a job that is
not commensurate with their skill set and, in most cases, pays much below their customary wage. Question:
What is meant by Labour Force?
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Answer: The labour force is the number of people who are employed plus the unemployed who are
looking for work. The labour pool does not include the jobless who aren't looking for work. For example,
stay-at-home moms, retirees, and students are not part of the labour force. Discouraged workers who would
like a job but have given up looking are not in the labour force either. To be considered part of the labour
force, you must be available, willing to work, and have looked for a job recently. The official
unemployment rate measures the jobless who are still in the labour force. The size of the labour force
depends not only on the number of adults but also how likely they feel they can get a job. So, the labour
pool shrinks during and after a recession. That's true even though the number of people who would like a
full-time job if they could get it may stay the same. The real unemployment rate measures all the jobless,
even if they're no longer in the labour force.
Question: What is meant by Work Force?
Answer: Persons who are engaged in economic activities are termed as workers and they constitute the
workforce. The workforce is the total number of persons actually working. Workforce participation rate is
the ratio of the workforce to the total population of a country.

Question: What is meant by Labour Supply?

Answer: The supply of labour is defined as the amount of labour, measured in person-hours, offered for
hire during a given time-period. Taking population as given, the quantity of labour supplied depends on
two main factors. First, there are the numbers engaged in or seeking paid employment, which together
make up the labour force or the supply of workers. Second, there is the number of hours that each person is
willing to supply once he or she is in the labour force — the supply of hours.
Question: What are the various types of unemployment found in India?
Answer: In India, following types of unemployment are found both in urban and rural areas: 1. Open
unemployment: Open unemployment refers to that situation wherein although the worker is willing to
work and he has the necessary ability to work yet he does not get work. He remains unemployed for full
time. He is totally dependent on the other earning members of the family. This type of unemployment is
usually found among agricultural labourers, educated persons and those who come from villages to urban
areas in search of job but fail to get any work
2. Structural Unemployment: Structural unemployment occurs due to structural changes in the
economy. Structural changes are broadly of two types:

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(a) Changes in technology as a result which, old technocrats are no longer needed; they are rendered
unemployed.
(b) Change in the pattern of demand because of which certain industries are closed down and the
workers are thrown out.
A less developed country like India suffers from serious structural changes during the course of
economic development. Hence a high degree of structural unemployment exists both in the rural and the
urban areas.
3. Underemployment: Underemployment is that situation in which a worker gets work for less time
than the time he can work. In other words he remains unemployed for some months in a year or some
hours everyday. Underemployment is of two kinds:
(a) Visible underemployment: In this case, people get work for less than normal hours of work. For
example, in India a person normally works for 8 hours. If he works against his will for 4 hours only, it will
be a case of visible underemployment.
(b) Invisible underemployment: In this case, people work full time but their is very low or they have
to do those jobs where they cannot make full use of their ability. For instance, if an MA degree holder has
to work as a peon, he will be called an invisible underemployed.
4. Frictional Unemployment: It occurs due to imperfections in the mobility of labour across different
occupations. One wishes to move from one job to the other, but in the process of change may remain
unemployed for sometime. ( Example: working ladies getting married may decide to remain out of jobs for
a couple of weeks or months. ) This is called frictional unemployment. To the extent it is a preferred choice
of the individuals to remain unemployed for a while, this type of unemployment may be deemed as a
variant of voluntary unemployment.
5. Cyclical unemployment: It occurs owing to cyclical fluctuations in the economy. Phases of boom,
recession, depression and recovery are typical characteristics of a capitalist economy. Boom characterises
high level of economic activity and accordingly a high degree of employment. Recession is a phase when
aggregate demand in the economy tends to decline and depression is a phase when aggregate demand
declines significantly, compelling the producers for a cut in output and employment. This is cyclical
unemployment. Recovery is a phase when economic activity starts picking up: aggregate demand starts
increasing and the cuts in production and employment are gradually withdrawn.

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Question: What are the various types of unemployment found in India?

Answer: In India, following types of unemployment are found both in urban and rural areas: 1. Open
unemployment: Open unemployment refers to that situation wherein although the worker is willing to
work and he has the necessary ability to work yet he does not get work. He remains unemployed for full
time. He is totally dependent on the other earning members of the family. This type of unemployment is
usually found among agricultural labourers, educated persons and those who come from villages to urban
areas in search of job but fail to get any work
2. Structural Unemployment: Structural unemployment occurs due to structural changes in the
economy. Structural changes are broadly of two types:
(a) Changes in technology as a result which, old technocrats are no longer needed; they are rendered
unemployed.
(b) Change in the pattern of demand because of which certain industries are closed down and the
workers are thrown out.
A less developed country like India suffers from serious structural changes during the course of
economic development. Hence a high degree of structural unemployment exists both in the rural and the
urban areas.
3. Underemployment: Underemployment is that situation in which a worker gets work for less time
than the time he can work. In other words he remains unemployed for some months in a year or some
hours everyday. Underemployment is of two kinds:
(a) Visible underemployment: In this case, people get work for less than normal hours of work. For
example, in India a person normally works for 8 hours. If he works against his will for 4 hours only, it will
be a case of visible underemployment.
(b) Invisible underemployment: In this case, people work full time but their is very low or they have
to do those jobs where they cannot make full use of their ability. For instance, if an MA degree holder has
to work as a peon, he will be called an invisible underemployed.
4. Frictional Unemployment: It occurs due to imperfections in the mobility of labour across different
occupations. One wishes to move from one job to the other, but in the process of change may remain
unemployed for sometime. ( Example: working ladies getting married may decide to remain out of jobs for
a couple of weeks or months. ) This is called frictional unemployment. To the extent it is a

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preferred choice of the individuals to remain unemployed for a while, this type of unemployment may be
deemed as a variant of voluntary unemployment.
5. Cyclical unemployment: It occurs owing to cyclical fluctuations in the economy. Phases of boom,
recession, depression and recovery are typical characteristics of a capitalist economy. Boom characterises
high level of economic activity and accordingly a high degree of employment. Recession is a phase when
aggregate demand in the economy tends to decline and depression is a phase when aggregate demand
declines significantly, compelling the producers for a cut in output and employment. This is cyclical
unemployment. Recovery is a phase when economic activity starts picking up: aggregate demand starts
increasing and the cuts in production and employment are gradually withdrawn.
Question: What suggestions can be given for the solution of the problem of unemployment from
India?
Answer: The following suggestions can be given for the solution of the problem of unemployment from
India:
1. Control on population: - Efforts must be made to check the fast population growth. This will reduce the
supply of labour and the problem of unemployment will get solved.
2. Increase in production: - If there is rapid growth in agricultural and industrial sector, there is fast
increase in production. Then large number of employment opportunities will be created. This will also help
in solving the problem of unemployment in the country.
3. Quality of Education: - Quality of education must be thoroughly improved. More stress should given
to the vocationalisation of education. This will improve employability of Indian youth and the problem of
unemployment will get solved.
4. Promotion to self-employment:- Youth must be encouraged and supported to opt for self-employment.
They will generate employment not only for themselves, but for many others if Government will provide
facilities to them.
5. High rate of capital formation: - Saving, investment and capital formation should be promoted. Efforts
must also be made to maintain capital output ratio at a low level. This will help in generating employment
opportunities and tackling the problem of unemployment.
6. Proper planning:- Comprehensive and proper planning should be done. Requisite steps should be taken
to effectively implement various plans and policies concerning this. This will also help in solving the
problem of unemployment in India.

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7. Immigration:- Government should promote the immigration Of Indian labour to the labour deficient
countries. This will not only help in solving the problem of unemployment, rather country will also can save
the precious foreign exchange.
8. Expansion of Employment exchanges:- To tackle the problem of unemployment more employment
exchanges should be opened up and their working should be improved. These must help and guide the youth
in getting employment. Otherwise, the youth must be given unemployment allowance. 9. Use Of
appropriate techniques:- India is labour abundant and capital scarce country. Hence. capital intensive
techniques of production should be used only where it is utmost essential. Otherwise. labour absorbing
techniques of production should be employed to mitigate unemployment. 10. Rapid Agricultural and
Industrial growth:- If agricultural and industrial sectors grow rapidly, large number of employment
opportunities will be created. This will also help in solving the problem of unemployment in the country.
11. Rapid rate of economic growth- Efforts must be made to achieve a rapid rate of economic growth_
With this. sufficient employment opportunities will be generated in the economy. This will help to tackle the
problem of unemployment.
Question: What are the various measures adopted by the government to solve the problem of
unemployment from India.
Answer: Government has been making earnest efforts to increase employment. Following measures have
been undertaken by the govt.
1. National Food For Work Programme: This programme was started on 14 Nov. 2005 in 150 most
backward districts of the country. The main objective of this programme is to generate wage employment.
In this, programme food is given to the labourers for their work in various projects. Food grains is provided
to states free of cost by centre. During 2004-05, Rs. 2020 crores were allocated along with 20 lakh tonnes
of food grains.
2. Small And Cottage Industries: GOVT. has made special efforts to develop small and cottage
industries to reduce unemployment. In 2003-04, 270 lakh persons were employed in these industries. 3.
Development Of Organised Sector: Organised public and private sector includes industries, mining,
transport, construction etc. In 1961, organised public sector provided employment to 70 lakh people and
now it provides employment 1.86 crore persons. In 1961, organised public sector provided employment to
50 lakh persons and in 2004, it provided employment to 94 lakh persons.

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4. Employment Exchange: Government has set up about 950 employment exchange providing
information on the possible vocational avenues. Though these exchanges do not provide employment
directly yet provide great assistance to job seekers.
5. Prime Ministers Rozgar Yojana [PMRY]: This project was launched in 1993 to provide
employment to more than 10 lakh educated youth by establishing 7 lakh micro enterprises during 8th plan.
Upto 2004, it generated employment for 30 lakh educated youth.
6. Rural Employment Generation Programme [REGP]: This programme was started in 1995. The
objective of this programme is to create self-employment opportunities in the rural areas and small towns. It
is implemented by Khadi and Village Industries Commission (KVIC) and banks provide financial
assistance to persons who want to establish village industries.
7. National Rural Employment Guarantee Scheme [NREGS]: The central govt. introduced national
rural employment guarantee bill 2004 in the parlimant in december 2004. The objective of this scheme is
that the state govt. will provide atleast 100 days of guaranteed wages employment every year to un skilled
rural workers.
8. The Swarna Jayanti Shahir Rozgar Yojana [SJSRY]: This scheme is for unemployment youth. It
was implemented on 1 Dec, 1997. The objective of this scheme is to provide gainful employment to urban
unemployed by helping them in setting self-employment enterprises.
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