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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
  • 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.
  • 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.

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.

Source: IE

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