Unemployment in India

Unemployment in India is subject to the prevailing conditions in the market. The Unemployment rates vary from time to time. So, what is the meaning of unemployment? The term unemployment mainly refers to the situation in which the people actively searching for a job are unable to get a job due to a crisis of employment or other factors. 

The rate of Unemployment directly affects the economic health of a country. The higher the unemployment rate, the lower is the socio-economic development of the country. The Rate of unemployment continuously varies depending on several situations. Recently, in the month of July 2021, the rate of unemployment in urban areas increased. On the other hand, the rate of unemployment in rural areas decreased. 

However, an overall increase in employment has been seen in India in the following areas due to the development and introduction of newer technologies. 

In this article, we have listed some of the primary reasons for unemployment in India. Also, we have mentioned some of the significant types of unemployment in India. 

What is Unemployment?

As mentioned above, unemployment is a condition where the people actively searching for a job do not get any job. This adversely affects the economic health of a society and, ultimately, the country. 

Sometimes unemployment may be due to the job crisis. However, it also depends on the scope of a particular stream in a specific area. For example, there is no scope for IT jobs in rural areas. Also, the people may be employed at some point of the year. However, they may be unemployed in other months or other seasons. This seasonal nature is mainly seen in the farming sector.

The youths are affected the worst by unemployment. The unemployment rate in India is often a bit overwhelming as many youths are sitting at home unemployed.

There are several types of unemployment in India. In the following paragraphs, we have presented a detailed meaning of different types of unemployment in India.

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Terminologies Related to Unemployment

The following are some of the crucial terminologies that you must know before going into details about the three types of unemployment. 

• Labor Force – the people in a country who can work and are willing to work. Both the employed and unemployed people are considered below this category.

• Employed – the people in the labour force can earn money by jobs or by running their own business. Employment also includes small start-ups. It consists of the people who make money by any fair means.

• Unemployed – the people under the labour force who are willing to do the job but are not getting any job or do not have any other source of income. In the developed countries such as the USA, if the people do not get the deserved job according to their qualifications, they are known as underemployed.

• Participation rate – the number of people out of the total population who are present under the labour force from the participation rate. The diseased or highly sick people who cannot work are not considered under the participation rate.

Types of Unemployment 

Unemployment is a broad yet straightforward term. The unemployment rate is constantly varying. To maintain a constant speed and decrease unemployment, it is essential to know what are the types of unemployment present in an area and how we can manage the situation. 

There are mainly three types of unemployment. However, there may be some subdivisions too.

1. Cyclic Unemployment 

This type of unemployment occurs with changes in the economic activities that are present in a business cycle. During an economic downfall, the demand for several goods decreases. One such example of economic downfall is the Covid-19 pandemic. The people were unemployed, and as a result, the need for goods decreased. As a result, it led to even more unemployment, and the cycle continues.

This is a continuous cycle in the circumstances of economic downfall. It is often defined as medium-term unemployment and lasts for about 12 months at once. An increase in the cyclic type of unemployment points towards an area's lower economic potential and causes underemployment due to lower wages.

2. Seasonal Unemployment 

Seasonal unemployment is a type of unemployment where people remain unemployed for a specific period or some particular months each year. The seasonal unemployment definition suggests the precarious nature of this type of unemployment. It is mainly seen in agriculture, where heavy labour is required during the transplanting, harvesting, and threshing time. However, in another period, such as the average growth of the plant, there is no labour requirement or lesser need for labour. Therefore, unemployment during this period increases.

Seasonal unemployment encompasses many people under it because almost 50% of labourers are dependent on agricultural work for money.

3. Frictional Unemployment 

The frictional unemployment definition is that people continuously switch from one mode of income to another. Also, they are constantly moving in and out of the labour force. It mainly causes the workers, employees, or labourers to move across different states. As a result, it creates greater flexibility in the market. 

However, there is not a sure chance of getting employment. People are often searching for a job but do not get the job and roam across the states. 

It does not create any change in wages. Moreover, it does not cause any lowering of inflation. However, the chance of getting employment varies. Frictional unemployment can occur at any time of the cycle of business and affect the unemployment rate. 

Other Types of Unemployment seen in India 

If you ever come across a question asking – what are the types of unemployment, then the following points can also be included.

• Hidden Unemployment – It is a common type seen in India. In rural areas, the family members work in the same field and help in getting the income. They may seem to be working, but they are not employed. If they would have worked in other areas, they may have gotten some money.

• Underemployment – When people do not get a good earning job as per their qualifications, it is known as underemployment. Underemployment rates are higher in the case of people who look for part-time jobs and work as a part-timer in a small company.

Causes of Unemployment 

There are several causes of unemployment. Following are some of the primary reasons: 

A higher population like India can lead to a job crisis. If the number of youths increases, the situation will aggravate even further. Even though many companies provide jobs, it is still not sufficient for the ever-growing population of countries like India.

• Sudden Economic Downfall 

The sudden economic downfall is another reason for the rate of unemployment. One such example is the covid-19 pandemic and the lockdown conditions. These conditions paused the economic growth, and more people got unemployed. 

• Qualification 

Qualification is one of the most important aspects of getting a job. However, all the areas do not provide job opportunities for all types of streams. Therefore, being highly qualified and living in a place with no scope or job opportunity for that particular qualification can also lead to unemployment.

Unemployment is one of the significant factors determining economic growth. A lower unemployment rate is preferred for a faster and smoother socio-economic development of a country. Therefore, necessary steps must be undertaken to provide more job opportunities, such as opening newer infrastructures and adopting more unique technologies concepts.