What Is Unemployment? – Indian Economy

Table of Contents

Unemployment rate is the number of people unemployed divided by the working population or people working under labour force
- Unemployment rate = (Unemployed Workers / Total labour force) × 100
- NSSO under Ministry of Statistics and Programme Implementation measures India’s unemployment on three approaches:
- Daily Status Approach: Unemployment status of a person under this approach is measured for each day in a reference week and person having no gainful work even for one hour in a day is described as unemployed for that day
- Weekly Status Approach: Highlights the record of those persons who did not have gainful work or were unemployed even for an hour on any day of the week preceding the date of the survey
- Usual Status Approach: Gives the estimates of those persons who were unemployed or had no gainful work for a major time during the 365 days

Types of Unemployment

Unemployment is a situation when a person actively searches for a job and is unable to find work
- Disguised Unemployment: Phenomenon wherein more people are employed than actually needed and is primarily traced in the agricultural and the unorganized sectors of India
- Seasonal Unemployment: Unemployment that occurs during certain seasons of the year as agricultural labourers in India rarely have work throughout the year
- Structural Unemployment: Category of unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market
- Technological Unemployment: Loss of jobs due to changes in technology
- Cyclical Unemployment: Result of the business cycle where unemployment rises during recessions and declines with economic growth and is mostly found in capitalist economies
- Frictional Unemployment [Search Unemployment] refers to the time lag between the jobs when an individual is searching for a new job or is switching between the jobs means an employee requires time for searching a new job or shifting from the existing to a new job
- Vulnerable Employment: One of the main types of unemployment in India which means people working informally, without proper job contracts and thus sans any legal protection

Engel’s Law

Economic theory introduced in 1857 by Ernst Engel
Percentage of income allocated for food purchases decreases as income rises
As household’s income increases, the percentage of income spent on food decreases while the proportion spent on other goods (such as luxury goods) increases

Kuznets Curve

Idea was first proposed by American economist Simon Kuznets
Used to demonstrate the hypothesis that economic growth initially leads to greater inequality, followed later by the reduction of inequality
Kuznets curve diagrams show an inverted U curve

Lorenz Curve

Shows the proportion of income earned by any given percentage of the population
Gini Coefficient measures the degree of income equality in a population
Gini Coefficient = Area above Lorenz curve / Area below the line of equality
Gini Coefficient can vary from 0 (perfect equality) to 1 (perfect inequality)

CURRENT AFFAIRS

National Database of Unorganised Workers: First-ever national database of unorganized sector workers including migrant workers
Sahakar Mitra: An internship programme to provide paid internship to youth and ensure availability of assured project loans to young cooperators
YuWaah: Multi-stakeholder platform that aims to prepare young people to transition from education and learning to productive work and active citizenship
Student Entrepreneurship Programme (SEP): launched by NITI Aayog’s Atal Innovation Mission in collaboration with Dell Technologies for young innovators of Atal Tinkering Labs (ATLs) CHUNAUTI: (Challenge Hunt Under NGIS for Advanced Uninhibited Technology Intervention)
NextGen Startup Challenge Contest to find products & solutions to address challenges faced during and post pandemic situation with special focus on Tier-II towns of India

MCQs

Q) Which of the following committee is not related to poverty estimation?

Alagh Committee
Balwantrai Mehta Committee
Rangarajan committee
Lakdawala Committee

Answer: 2

Q) “A category of unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market.” Which type of unemployment is being discussed here?

Cyclical Unemployment
Frictional Unemployment
Structural Unemployment
Disguised Unemployment

Answer: 3

Q) What is unemployment trap?

A situation when unemployment benefits discourage the unemployed to go to work.
A situation where people working informally, without proper job contracts and thus sans any legal protection.
It refers to the time lag between the jobs when an individual is searching for a new job or is switching between the jobs.
It is loss of jobs due to changes in technology.

Answer: 1

Q) Relative poverty refers to a situation where:

a person falls behind others
a person is unable to obtain the necessaries for life
a person is below poverty line
a person is poorer than another in the developed World

Answer: 1

Q) Which of the following are causes of the Poverty in India?

1.Efficient Resource utilisation
2.Unemployment
3.Colonial Exploitation
4.Population Explosion Select the correct code:

1 and 2 only
2, 3 and 4 only
1, 3 and 4 only
All of the above

Answer: 2

Q) Usual status (US) unemployment is calculated with reference to a period of:

Yearly
Monthly
Biannually
Weekly

Answer: 1

Q) Consider the following statements with reference to MNREGA:

It is an employment scheme that was launched to provide social security by guaranteeing a minimum of 100 days paid work per year to unskilled labour.
The scheme was launched in 2007.
This act provides Right to Work to people. Which of the following statements is not correct?