Unemployment

Indian Economics & Policies

 Nature of Unemployment- India
• Unemployment caused by deficiency in
demand faced in 1930s
– It is cyclical in nature
• Frictional unemployment: caused by closure
of industries and retrenchment
• Under employment Structural
Unemployment
• Disguised employment
caused by shortage of
• Unemployment Capital and other
complementatry
resources
 NSSO
• The National Sample Survey Office (NSSO) has
been the key governmental agency in India at
the national and state levels to study
employment, unemployment and
unemployment rates through sample surveys. 
• Employment surveys are generally done once in
5 years
• Last publicly available report is for the period
2011-2012
 Concepts in Employment
As defined by NSSO
• Labour force: people who are seeking work
• Workforce: Part of labour force which finds
employment
• Who is considered employed?
– A person working 8 hours a day for 273 days a
year is regarded as employed on a standard
person year basis
 Concepts in Employment
• Usual Status Concept: Meant to determine the
usual activity status –employed ,unemployed
or outside labour force
– Activity status is determined with reference to a
longer period ( 1 year before the time of survey
– Usual status unemployment is also called Chronic
unemployment: no.of persons who remained
unemployed
– Also called as open unemployment
 Concepts in Employment
• Current weekly Status: Meant to determine the
usual activity status –employed ,unemployed or
outside labour force with reference to 7 days
before the survey
– Weekly status employment: no. of persons who have
worked for atleast for 1 hour in one or more days of
the 7 days taken for survey
– Weekly status unemployment: no. of persons who
did not find even an hour of work during the survey
week
 Concepts in Employment
• Current Daily Status: considers activity status of
a person for each day of 7 days of the survey
period
– Daily status unemployment: no. of persons who did
not find work on a day or some days during the
survey week

• Unemployment rate: No. of unemployed

Labour Force
•Declining trend in
unemployment rate from
1978 to 1994

•Period of liberalisation
1994 to 2004 saw
increase in
unemployment

•Unemployment rate is
higher in Urban area in
comparison to rural
Employment Rate

Graduates & above show highest rate

of employment
Sectoral Distribution % of Employment

-Absolute no. of people employed in Agriculture fell down for the first time in the
period 2005- 2012
-- Highest growth in employment was in sub sector Construction
-- Employment in Manufacturing did not increase at fast rate. This is important for
Nation’s economic development
 Structure of Employment
• Informal Sector: Denotes tiny units engaged in
production of goods & services but whose
activities are not recongnised, recorded or
regulated by public authorities
– Ex: street vending, tailoring, repair services etc.
• Organised Sector: All establishments in publoic
sector and all non agricultural establishments
in private sector employing 10 or more persons
• Urorganised Sector: All units not coming under
organised sector.
 Structure of Employment
• Employment in organised sector is only 17% of
total employment
• Informal sector employment was 92%
• Absolute employment in formal sector is
constant
• Small & Medium Enterprises contribute to
almost 80% of total employment in the
manufacturing sector
 Structure of Employment
• Public & Private sector employment

- Reduction in % share of employment in Public sector. (Fell to 60% in

2012 from 72% in 1991)
 Structure of Employment
• Casualisation of Workforce -High increase in
casual labour
among men in
rural area
-Agriculture is
incapable of
productively
absorbing
growing rural
labour force
- Higher % of
casual labour
generally
indicated
deterirating
quality of
employment
2011-12
% Self Employed = 52%, Regular employees = 18% , Causal labour= 30%
 Quality of Employment
Indicators of quality of Employment
• Wages received by workers
• No. of days in a year which the causal labourers
were employed
• Share of workers engaged in organised sector
• Proportion of workers engaged as self
employed, regular employee and casual labour
• Share of workforce in Primary , Secondary &
Tertiary sectors
 Urban Unemployment
• Unemployment is open and undisguised
• Important forms of urban unemployment are
– Industrial unemployment: Industrial growth has
not been able to absorb the growing labour force
– Educated unemployment: mismatch between
jobs available and expected
• Lack of right technical qualification for jobs available
• Demand and supply of educated workers
 Rural Unemployment
• Seasonal unemployment: Only 28% of
cultivable land have 2 crops. Farmers growing
1 crop are unemployed for 3-4 months

• Disguised unemployment: Indian agriculture is

characterised by existence of of surplus
labour. More people than actually required
are working in agriculture sector