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Unemployment in India

  • 25 Nov 2022
  • 9 min read

For Prelims: National Statistical Office, Types of Unemployment, Government’s Initiatives

For Mains: National Statistical Office, Unemployment; it’s Types, Causes and Related Initiatives

Why in News?

Recently, the National Statistical Office (NSO) has released the Periodic Labour Force Survey (PLFS).

  • The unemployment rate in urban areas for persons aged above 15 eased to 7.2% in July­-September 2022 from 9.8% in July-September 2021.

What are the Key Findings of the PLFS (July-September 2022)?

  • Unemployment Ratio:
    • The unemployment ratio is defined as the percentage of persons unemployed among the persons in the labour force.
    • The unemployment rate was 6.6% for men and 9.4% for women (9.3% and 11.6% in July-September 2021).
  • Worker-Population Ratio (WPR):
    • The WPR is defined as the percentage of employed persons in the population.
    • The WPR in urban areas for persons aged 15 and above stood at 44.5% (42.3% in July-September 2021).
    • The WPR among men was 68.6% and 19.7% among women (66.6% and 17.6% in 2021).
  • Labour Force Participation Rate (LFPR):
    • It is defined as the percentage of persons in the labour force who are working or seeking or available for work in the population, in urban areas for persons aged 15 and above.
    • It increased to 47.9% (46.9% in July-September 2021).
    • The LFPR among men was 73.4% and 21.7% among women (73.5% and 19.9%, in July-September 2021).

What is the Periodic Labour Force Survey?

  • Considering the importance of the availability of labour force data at more frequent time intervals, the National Statistical Office (NSO), Ministry of Statistics & Programme Implementation launched the Periodic Labour Force Survey (PLFS) in April 2017.
  • The objective of PLFS is primarily twofold:
    • To estimate the key employment and unemployment indicators (viz. Worker Population Ratio, Labour Force Participation Rate, Unemployment Rate) in the short time interval of three months for the urban areas only in the Current Weekly Status (CWS).
    • To estimate employment and unemployment indicators in both Usual Status and CWS in both rural and urban areas annually.

What is 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.
  • NSO 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.

What are Different Types of Unemployment?

  • 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.
  • 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.

What are the Major 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.

What are Government’s Initiatives to Curb Unemployment?

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Q. Disguised unemployment generally means (2013)

(a) large number of people remain unemployed
(b) alternative employment is not available
(c) marginal productivity of labour is zero
(d) productivity of workers is low

Ans: (c)

Exp:

  • An economy demonstrates disguised unemployment when productivity is low and too many workers are filling too few jobs.
  • Marginal productivity refers to the additional output that is gained by addition of one unit of labour.
  • Since, in disguised unemployment, more number of labour than required are already engaged in the work, the marginal productivity of labour is zero.
  • Therefore, option (c) is the correct answer.

Source: TH

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