UNEMPLOYMENT

• MEANING OF UNEMPLOYMENT

• CONCEPTS OF UNEMPLOYMENT

• TYPES OF UNEMPLOYMENT

• CAUSES OF UNEMPLOYMENT

• GOVERNMENT POLICIES FOR REMOVING

UNEMPLOYMENT
1. Major Employment Programs
2. Implementation of Employment Programs

• MICRO FINANCE
 MEANING OF UNEMPLOYMENT

Unemployment is a situation where able and willing people are not able to find a
suitable job that yields them regular income.

Criteria of unemployment:-
o Time: If a person works less than optimal hours (or days) during the year.
o Income: If a person earns an income less than desirable minimum during
the year.
o Productivity: If a persons contribution to output is less than normal and
his removal will not reduce the output.

CONCEPTS OF UNEMPLOYMENT

1. Usual Status Unemployment

2. Current Weekly Status Unemployment
3. Current Daily Status Unemployment

1) Usual Status Unemployment: It is meant to determine the Usual Activity

Status - employed, unemployed or outside the labour force. The activity status is
determined with reference to a longer period, say a year preceding to the time of
survey .It is a person rate and indicates chronic unemployment.

2) Current Weekly Status: This concept determines activity status of a person

with reference to a period of preceding seven days. In this period, if a person seeking
job fails to get work for even one hour on any day, he is deemed to be unemployed.

3) Current Daily Status: This concept considers the activity status of a person for
each person for each day of the preceding seven days .If he works for one day but less
than four hours, then he is considered as employed for half a day.

Out of these concepts of unemployment, Current Daily Status concept provides

most appropriate measure of unemployment.
 TYPES OF UNEMPLOYMENT

Some types of unemployment are:-

• STRUCTURAL UNEMPLOYMENT: Structural unemployment is

caused by a mismatch between the sufficiently skilled workers looking for jobs and
the vacancies available. Even though the number of vacancies may be equal to the
number of the unemployed, the unemployed workers lack the skills needed for the
jobs, or are in the wrong part of the country or world to take the jobs offered.
Structural unemployment is a result of the dynamics of the labour market and the fact
that these can never be as flexible as, e.g., financial markets.

• SEASONAL UNEMPLOYMENT: Seasonal unemployment results from

the fluctuations in demands for labour in certain industries because of the seasonal
nature of production. In such industries there is a seasonal pattern in the demand for
labor. During the period when the industry is at its peak there is a high degree of
seasonal employment, but during the off-peak period there is a high seasonal
unemployment. Seasonal unemployment occurs when an occupation is not in demand
at certain seasons.

• FRICTIONAL UNEMPLOYMENT: Frictional unemployment occurs

when a worker moves from one job to another. While he searches for a job he is
experiencing frictional unemployment. This specially applies for new entrants (such
as graduating students) and re-entrants (such as former homemakers). Frictional
unemployment is always present in an economy. Frictional unemployment exists
because both jobs and workers are heterogeneous, and a mismatch can result between
the characteristics of supply and demand. Such a mismatch can be related to skills,
payment, work-time, location, attitude, taste, and a multitude of other factors.

• CYCLICAL UNEMPLOYMENT: Cyclical or Keynesian unemployment,

also known as demand deficit unemployment, rises during economic downturns and
falls when the economy improves. Keynesians argue that this type of unemployment
occurs when there is inadequate effective Aggregate Demand. This is caused by a
business cycle recession, and wages not falling to meet the equilibrium level. This
type of unemployment is the most serious one. This arises when demand for most
goods and services fall, i.e., in recession. When demand falls, less production is
needed and consequently fewer workers are being demanded, in such a case mass
unemployment can be expected.
 CAUSES OF UNEMPOYMENT

The main causes of unemployment in India are:-

• HIGH POPUALTION GROWTH: The rapid increase in population of

our country during the last decade has further worse the unemployment problem in
the country. Due to rapidly increasing population of the country, a dangerous
situation has arisen in which the magnitude of unemployment goes on increasing
during each plan period.

• JOBLESS GROWTH: Although India is a developing country, the rate of

growth is inadequate to absorb the entire labour force in the country. The
opportunities of employment are not sufficient to absorb the additions in the labour
force of the country, which are taking place as result of the rapidly increasing
unemployment in India.

• INEFFICIENT AGRICULTURAL AND INDUSTRIAL

SECTORS: Industrialisation is not rapid in our country and industrial labour finds
few job opportunities. As enough other employment opportunities are not available,
agriculture is the principal area of employment in our country. Thus, pressure on land
is high, as about 2/3 of the labour force is engaged in agriculture. Land is thus
overcrowded and a large part of the work force is underemployed and suffer from
disguised unemployment.

• INAPROPRIATE EDUCATION SYSYTEM: After remaining at

schools and colleges for a number of years men and women come out in large
numbers, having gained neither occupational nor vocational training nor functional
literacy from which all future skilled, educated professional, and managerial
manpower is drawn.

• INAPPROPRIATE TECHNOLOGY: In India, while capital is a scarce

factor, labour is available in abundant quantity. However, not only in industries, but
also in agriculture producers are increasingly substituting capital for labour. On
account of abundance of labour, this policy is resulting in large unemployment.

• WEAKNESSES IN PLANNING TECHNIQUES: The growth strategy

underlying our plans has been found to be faulty. Lack in infrastructure development
and poor labour-intensive techniques planning has made unemployment a severe
issue in our Indian economy.
 GOVERNMENT POLICY FOR REMOVING
UNEMPLOYMENT

• Employment Policy up to the 1980s: Direct measures to eliminate

unemployment were not preferred as the apprehension was that they could slow down
the growth process by raising consumption expenditure on the other hand, and cutting
down the economic surplus on the other. This policy was obviously inadequate to
tackle the unemployment problem and as a result, the number of unemployment rose.
Hence government decided to concentrate on self employment ventures in various
fields farm and non-farm operations.

Such as:-
o Rural development programme
o National rural employment programme
o National scheme of training youth for self employment
o The operation food II dairy project
o Integrated rural development programme
o Rural landless employment guarantee programme

• Employment Strategies during the 1990s: Defining its

employment perspective the Eighth Plan clearly stated, “The employment potential of
growth can be raised by readjusting the sectoral composition of output in favour of
sector and sub-sector having higher employment elasticity.” In certain sectors where
technologies are to be upgraded to a higher level of efficiency and international
competitiveness, there is little scope for generating additional employment. However,
in respect of certain other sectors some flexibility may be available in the choice of
technologies and thus it may not be difficult to generate considerable employment.

According to the present estimates, the employment strategy as stated above

will enable attainment of the goal of full employment in any case not before 2012
A.D. Therefore, special employment programmes as in the past should be continued
to provide short-term employment to unemployed and underemployment among the
Poor and the Vulnerable.
 1. MAJOR EMPLOYMENT PROGRAMS

• Swaranjayanti Gram Swarozgar Yojana (SGSY) was launched from April 1,

1999 after restructuring the IRDP and allied schemes. It is the only self-
employment programme for the rural poor.

• Sampoorna Grameen Rozgar Yojana (SGRY) was launched on September 23,

2001 and the scheme of JGSY and Employment Assurance Scheme was fully
integrated with SGRY. It aims at providing additional wage employment in rural
areas.

• The Swarana Jayanti Shahari Rozgar Yojana (SJSRY) came into operation
from December 1, 1997, subsuming the earlier urban poverty alleviation
programmes. It aims to provide gainful employment to the urban unemployed and
underemployed poor by encouraging the setting up of self-employment ventures
or provision of wage employment.

• Prime Minister’s Rozgar Yojana (PMRY) was designed to provide self-

employment to more than a million educated unemployed youth by setting up
seven lakh micro-enterprises under the Eighth Five Year Plan.

• The National Rural Employed Programme (NREP) was started as a part of the
Sixth plan and was continued under the Seventh Plan. It was meant to help that
segment of rural population which largely depends on wage employment and has
virtually no source of income during the lean agricultural period.

• The Rural Landless Employment Guarantee Programme (RLEGP) was

started on 15th August, 1983, with the objective of expanding employment
opportunities for the rural landless, i.e., to provide guarantee to at least one
member of the landless household for about 100 days in a year.

• The Integrated Rural Development Programme (IRDP) was launched in

1978-79 and extended all over the country in 1980-81.It was to provide self-
employment in a variety of activities like sericulture, animal husbandry etc. in
primary sector, handicrafts etc. in secondary sector , and service and business
activities in the tertiary sector.

• The Scheme of Training Rural Youth for Self-Employment (TRYSEM) was

initiated in 1979. It aimed at training about 2 lakh rural youth every year to enable
them to become self-employed.
• Jawahar Rozgar Yojana (JRY) was announced in February 1989, it was
supposed to provide intensive employment creation in the 120 backward districts.
It was later renamed Jawahar Gram Samridhi Yojana (JGSY) whose objective
was creation of infrastructure and durable assets at the village level so as to
increase opportunities for sustained employment to the rural poor.

• The Employment Assurance Scheme (EAS) aimed at providing 100 days of

unskilled manual work on demand to two members of a rural family in the age
group 18 to 60 years in the agricultural lean season within the blocks covered
under the scheme.

2. IMPLIMENTATION OF EMPLOYMENT PROGRAMS

Till now these programmes have not been launched on a sufficiently large
scale and thus their contribution from the point of view of the reduction in the
incidence of unemployment seems to be only marginally.

The three major problems which prevent pursuit of these programmes on a

considerable scale are the choice of appropriate works are to be done; finding the
resources to finance the programmes; and the lack of clarity with regard to the
organisation of the rural work programmes meant to generate employment.
 MICRO FINANCE

• DEFINITION: Micro finance involves financing for Self-help Groups which

are small, informal and homogeneous groups. After its formation, the group regularly
collects a fixed amount of thrift from each member. With this amount, it starts
lending to members for petty consumption needs. The working fund grows with time
and the group can approach Microfinance Institutions (MFIs) for credit.

• NEED: Despite having a wide network of rural bank branches in the country
and implementation of many credit linked poverty alleviation programmes, a large
number of the very poor continue to remain outside the fold of the formal banking
system. The existing policies, systems and procedures and the savings and loan
products often did not meet the needs of the hardcore and assetless poor.

Therefore, the concept of microfinance has gained currency among donors

and practitioners for its two significant roles:-

o In freeing the credit market of its countless dysfunctionalities that arise

mainly from political interference, imprudent financial policies and
systematic deficiencies.

o In replacing state-sponsored directed credit programmes for poverty

alleviation, which are seen as basically non-feasible because of high dose
of subsidy, by private initiatives.