What is Unemployment?
Unemployment occurs when people are actively looking for work through brokers, job fairs, friends and relatives, or applying to potential employers but cannot find one. The unemployment rate is the most common indicator of unemployment.
Types of Unemployment
The various types of unemployment include cyclical unemployment, seasonal unemployment, technological unemployment, frictional unemployment, disguised unemployment, underemployment, structural unemployment, educated unemployment, etc. Some of them are discussed below.
Open Unemployment: It occurs when a person is willing to work and has the necessary ability to work but does not get work and remains unemployed full-time.
Structural Unemployment: It occurs due to changes in technology because of this old workers are no longer needed and they become unemployed. Another reason is due to changes in the pattern of demand, certain industries are closed down and workers lose their jobs. For example, the typewriter industry.
Frictional Unemployment: It occurs when people change or move from one job to another, they remain unemployed in this process of change.
Cyclical Unemployment: It occurs due to business cycle fluctuations. During the boom period, the level of economic activity remains high and this increases the employment rate but in the case of the recession period loans/funds are not easily available so there is a slowdown in production which leads to a decrease in employment.
Types of Unemployment
Technological Unemployment: It occurs due to technological advancement. Some workers are being replaced by machines because of the introduction of new machinery, improvements in the manufacturing process, labour-saving technology, etc.
Underemployment: In this, workers do not get full-time jobs and remain unemployed for some months in a year or some days.
Effect of Unemployment
Effects of Unemployment
Unemployment in any nation has the following effects on the economy.
Non-utilisation of Manpower: Due to unemployment, manpower resources of our country are not fully utilised. People who are assets of the economy turn into liabilities.
Low capital Formation: Unemployed people live only as consumers and they do not contribute to production so the rate of capital formation remains low.
Loss of Output: there is a loss of output because manpower resources are not utilised and unemployed persons make no contribution to output even when they have the potential to do so.
Low Quality of Life: The problem of unemployment gives rise to the problem of poverty.
Greater Inequality: Higher the degree of unemployment, the greater the inequality in the distribution of income and wealth.
Social Unrest: Unemployed youth may turn to antisocial activities like thefts, murders, terrorism etc.
Case Study:
Read the following statements carefully and identify the type of unemployment.
If a person remains unemployed for a week after giving up one job and taking up another, his unemployment is termed as-
A situation when a person does not get employment according to his capabilities and qualifications is called-
Unemployment caused by the fluctuations in business activity is called-
If a person is engaged in a job but his productivity is zero, it is called-
Answer-
Frictional unemployment because It occurs when people change or move from one job to another
Underemployment because workers do not get full-time jobs according to their capabilities and qualifications.
Industrial/cyclical unemployment is the correct answer as it is caused by fluctuations in business activity. During the boom period, the level of economic activity remains high and this increases the employment rate but in the case of the recession period loans/funds are not easily available so there is a slowdown in production which leads to a decrease in employment
If a person is engaged in a job but his productivity is zero, it is called Disguised unemployment
Summary
High unemployment means the economy cannot create enough jobs for job seekers.
The main causes of unemployment include slow growth of the agricultural sector, industrial sickness, rapid increase in population, educational system, and attitude of persons.
The various types of unemployment include cyclical unemployment, seasonal unemployment, technological unemployment, frictional unemployment, disguised unemployment, underemployment, structural unemployment, and educated unemployment. The suggested remedies for the removal of unemployment include the growth of the agriculture sector and industry and special programs for employment generation.
FAQs on Impact of Unemployment
1. What do you mean by unemployment? Name its types.
Unemployment is one of the most serious problems. There are many people, both educated and uneducated, who are looking for a job but are unsuccessful. unemployment refers to the situation when people are willing and able to work at the current wage rate but are unable to find work. The unemployment rate is the most common indicator of unemployment. The various types of unemployment include cyclical unemployment, seasonal unemployment, technological unemployment, frictional unemployment, disguised unemployment, underemployment, structural unemployment, educated unemployment, etc.
2. State the causes of unemployment.
Some of the major causes of unemployment are listed below-
High population
Lack of professional qualifications or low levels of education in the workforce
The low productivity in the agricultural sector and lack of alternative opportunities for farm workers make transitions between the three sectors difficult.
The country's vast workforce, lacking the necessary education and skills, is tied to the informal sector, and this data is not captured in employment statistics.
A major cause of structural unemployment is education in schools and colleges that do not meet current industry requirements.
3. Describe disguised unemployment.
This type of unemployment is particularly prevalent in the agribusiness industry and is the most prevalent form of rural unemployment in India. It occurs when more people work than they should be due to a lack of alternative employment opportunities. Poor people in disguise are individuals who work for themselves and are so numerous compared to the resources they work for that many of them were transferred to other sectors of the country. This kind of unemployment has devastating consequences. This leads to frustration for some and dissatisfaction for others.
