Employment, Unemployment, and Poverty
- Economic Activities: Activities that contribute to the National Income of the country
- Employment: All those who are engaged in economic activity in whatever capacity are called employed or Workers.
- Full Employment: Situation under which all those who are willing & able to work at the prevailing wage rates are employed according to their skills.
- 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.
- 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
- Functional/Frictional Unemployment:
- Refers to temporary unemployment during the interval period when people change from one job to another
- 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.
- 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.
- 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.
- 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
- Labour Force (LF):
- Part of the population willing and able to work
- LF = Number of Employed Persons + Number of Unemployed Persons
- Labour Force Participation Rate (LFPR):
- Number of persons in the LF per 1000 persons in the population
- Worker Population Ratio (PR):
- Number of persons employed (Workers) per 1000 persons in the population
- Proportion Unemployed (PU):
- The number of person's unemployed per 1000 persons in the population.
- 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.
- 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.
- 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.
- 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 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
|Share in Employment||Share in GDP|
Employment situation since 1991