Revision Notes: Unemployment- Meaning, Types & Measurement

By Sudheer Kumar K|Updated : August 2nd, 2021

'Unemployment' is a very important topic for UPSC Prelims 2021. In this blog, we will be discussing the basic concepts with respect to Unemployment- meaning of unemployment and different types of unemployment, and measurement of unemployment.

Table of Content

Unemployment: Meaning, Types & Measurement

Meaning: Unemployment

  • It is a situation in which people are ready and willing to work at the existing rate of wages but still, they cannot get work.
  • Measurement of unemployment and employment are done by National Sample Survey Organization (NSSO) in India.
  • NSSO divides people into the following three categories -
    1. Working people (engaged in an economic activity)
    2. Not working (looking for work)
    3. Neither working nor looking for work
  • People in category (a) are called workforce.
  • People in category (b) are called unemployed.
  • People in categories (a) and (b) are called Labour force.
  • People in category (c) are called not in the Labour force.
  • Number of unemployed = Labour force – Workforce
  • Unemployment data in India are kept under the Ministry of Labour and Employment.

Types of Unemployment

S. No.

 Type of Unemployment

 Meaning

1

Structural Unemployment

  • Caused by structural change in economy.
  • Example- technological change, growing population etc.
2

Frictional Unemployment

  • When people shift from one job to another and remain unemployed during this interval period.
3

Cyclical Unemployment (Demand Deficiency Unemployment)

  • When people are thrown out from the job due to a decrease in demand.
  • Example- recession
4

Disguised Unemployment

  • In this type of employment, people are employed but their marginal productivity is zero.
  • Example- One man is engaged in some agriculture work, his friend joins him but the productivity of both remains same. His friends come under disguised unemployment.
5

Educated Unemployment

  • If one educated person not able to get a suitable job suited to his qualification.
  • Example- Engineering graduate is getting clerk post instead of engineer post.
 6

Open Unemployment

  • A condition in which people do not find any work to do.
  • It includes both skilled and non-skilled people.
 7

Under Unemployment

  • When people obtain work but their efficiency and capability are not utilized at their optimum and they contribute to the production up-to a limited level.
8

Voluntary Unemployment

  • In this type of unemployment, jobs are available but individual wants to remain idle.
  • Example- lazy people, people who have ancestor property do not want to earn.
9

Natural Unemployment

  •  2 to 3 % unemployment considered natural and cannot be eliminated.
10 

Chronic Unemployment

  •  Caused due to the long-term unemployment present in the economy.
11

Seasonal Unemployment

  • In this type of unemployment, people are unemployed for a few months of the year.
  • Example- Farmers

Unemployment in India is measured in a variety of ways.

The National Sample Survey Office (NSSO), which is part of the Ministry of Statistics and Programme Implementation (MoSPI), uses the following methods to calculate unemployment in India:

  • Usual Status Approach: It estimates only those persons as unemployed who had no gainful work for a major time during the last 365 days before the date of survey.
  • Weekly Status Approach: It records only those persons as unemployed who did not have gainful work even for an hour on any day of the week before the date of survey.
  • Daily Status Approach: In this approach, unemployment status of a person is estimated for each day in a reference week. A person having no gainful work even for 1 hour in a day is described as unemployed for that day.

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