Employment, Unemployment, and Poverty

Employment, Unemployment, and Poverty

Terms

1. Economic Activities: Activities that contribute to the National Income of the country
2. Employment: All those who are engaged in economic activity in whatever capacity are called employed or Workers.
3. Full Employment: Situation under which all those who are willing & able to work at the prevailing wage rates are employed according to their skills.
4. Under-Employment: Situation under which persons are working less than they are willing to work or they do not get wages according to their skills.
5. Unemployment: Situation when a part of the population is seeking a job but is unable to get employed due to lack of work.

Types of Unemployment

1. Functional/Frictional Unemployment:
   • Refers to temporary unemployment during the interval period when people change from one job to another
2. Structural Unemployment:
   • Refers to unemployment due to a mismatch between the available and required skill set in the economy.
   • Result of structural changes in the economy Frictional & Structural unemployment are unavoidable in most economies & together are referred to as Natural Rate of Unemployment or minimum unemployment rate acceptable even under full employment situation.
3. Cyclical Unemployment:
   • Caused due to business cycles.
   • When an economic boom is followed by a slowdown, production falls & industries retrench employees to cut costs, causing cyclical unemployment.
4. Seasonal Unemployment:
   • This is caused due to the seasonal nature of agricultural production leading to about 75% of land remaining unused for 3 to 4 months in India.
5. Disguised Unemployment:
   • This refers to the situation of employing surplus laborers whose Marginal Productivity is 0.
   • It means that even if they are removed from agricultural activity, production will not decline.

Employment & Unemployment Indicators

1. Labour Force (LF):
   • Part of the population willing and able to work
   • LF = Number of Employed Persons + Number of Unemployed Persons
2. Labour Force Participation Rate (LFPR):
   • Number of persons in the LF per 1000 persons in the population
3. Worker Population Ratio (PR):
   • Number of persons employed (Workers) per 1000 persons in the population
4. Proportion Unemployed (PU):
   • The number of person's unemployed per 1000 persons in the population.
5. Unemployment Rate (UR):
   • The number of person unemployed per 1000 persons in the labour force (employed+unemployed).

Measuring Employment & Unemployment:

National Sample Survey Office (NSSO) conducts a detailed sample survey every 5 years to estimate employment & unemployment in 3 ways. It is based on a reference period during which respondents are asked about their activity status i.e. for how many days or hours they were working.

1. Usual Status (US): It classifies a person as unemployed if he was not working even for 30 days but was available for work during the last 1 year.
2. Current Weekly Status (CWS): It classifies a person as unemployed if he did not work for even one hour during the week preceding the survey, despite being available for work.
3. Current Daily Status (CDS): Under this, a person working between 1 to 4 hours a day denotes a half-person day of employment while one working 4 or more hours denote 1 person-day, In this way, total person-days of employment is measured during 7 days preceding the survey.

Occupational Structure

Occupational Structure Refers to distribution of employment among the different economic sectors viz. Agriculture, Industries & Services.

Generally, with economic development, the share of Agriculture in GDP & employment decreases and that in Industries increases and later there is a shift from Industries to Services.

India's occupational structure

Employment situation since 1991

References

1. https://censusindia.gov.in/census_And_You/economic_activity.aspx
2. https://labour.gov.in/