Unemployment is a phenomenon that occurs when a person who is actively searching for employment is unable to find work. The most frequently measure of unemployment is the unemployment rate, which is the ratio of unemployed people to the number of people in the labor force.
Unemployment is broadly broken down into five types:
1. Frictional Unemployment: This type of unemployment occurs because of workers who are voluntarily unemployed between jobs.
Example: A software professional resigning from one company and looking for another job.
2. Structural Unemployment: This occurs when changes in market economies lead to situations where demand increases for some job skills while other job skills become outmoded and are no longer in demand.
Example: Computerization in banking meant people with no computer skills were no longer needed.
3. Cyclical Unemployment: This occurs due to downturns in overall business activity.
Example: In Indian economy, it was partially visible in 2008 when IT MNCs retrenched employees.
4. Seasonal Unemployment: It is unemployment that occurs during certain seasons of the year. In some industries and occupations like agriculture, holiday resorts etc., production activities take place only in some seasons. People engaged in such type of activities may remain unemployed during the off-season.
Example: In India, between Rabi and Kharif period many farmers and agricultural labour remain unemployed. Some of them use opportunities provided by MGNREGA programme.
5. Disguised Unemployment: It is a situation in which more people are doing work than actually required. Even if some are withdrawn, production does not suffer.
Example: Overcrowding in agriculture due to rapid growth of population and lack of alternative job opportunities means more people work on a farm than needed.
India’s unemployment numbers hide the huge disguised unemployment in agriculture. This, along with the fact that around 1 lakh people are joining the labour force every month in India, necessitates prioritizing job creation. Self-employment opportunities and labour intensive industries must be the focus of the government, along with increased industrialisation.