UNEMPLOYMENT
MEANING
- Unemployment: a situation in which a person actively searches for a job but is unable to find work.
- Measurement: the National Sample Survey Office (NSSO) uses three approaches: Usual Status, Current Weekly Status, and Current Daily Status.
APPROACHES TO MEASURING UNEMPLOYMENT
| Approach | Key Points |
| Usual Status (US) | Reference period: last 365 days (1 year) before the survey date. Used to identify long-term or chronic unemployment. Principal Status (PS): the activity in which a person spent most of the time during the last 365 days (majority time criterion). Subsidiary Status (SS): additional economic activity for at least 30 days in the year, apart from the principal activity. Usual Status = PS + SS. |
| Current Weekly Status (CWS) | Reference period: last 1 week. A person in the labour force who finds work for at least 1 hour on any 1 day is counted as employed. |
| Current Daily Status (CDS) | Measures the intensity of unemployment; reference period: 1 day. Work for more than 4 hours = 100% engaged. Work for 1–4 hours = 50% engaged. Work for less than 1 hour = unemployed. |
UNEMPLOYMENT INDICATORS
| Indicator | Meaning |
| Labour Force Participation Rate (LFPR) | Percentage of persons in the labour force (working or available for work) in the population. |
| Worker Population Ratio (WPR) | Percentage of employed persons in the population. |
| Unemployment Rate (UR) | Percentage of unemployed persons among the persons in the labour force. |
TYPES OF UNEMPLOYMENT
| Type | Meaning | Example / Note |
| Structural | Mismatch between the skills of the workforce and the skills required for available jobs. | Advanced machinery replacing farm labour. |
| Educated | People with academic degrees are unable to find employment (graduate unemployment); seen in urban India. | An engineering graduate who lacks practical skills and cannot find a job in the field. |
| Frictional | Short-term; people search for a better job (also called search or voluntary unemployment). | An employee leaving a job to move to a better one; common in urban areas. |
| Disguised | More people work than are actually needed; their removal would not affect productivity. | A family of five on a farm that could be run by three people (rural). |
| Cyclical | Labour force reduced due to business cycles or economic fluctuations; jobs return when the economy revives (mostly urban). | Great Recession. |
| Seasonal | Occurs during specific times of the year; mostly seen in rural India. | Lights or firework sellers during Diwali. |
| Classical | Also called real wage unemployment; the real wage is too high, so job seekers exceed job openings. | Workers demanding a minimum salary higher than a company can afford. |
| Natural | The lowest unemployment level a healthy economy can sustain without causing inflation. | – |
Note: Great Recession
- Recession: significant, prolonged downturn in economic activity for 2 or more consecutive quarters (e.g., the US Subprime Lending crisis).
- Depression: a prolonged recession (e.g., the Great Depression of the USA, 1929–1939).
MAIN WORKER VS MARGINAL WORKER
| Basis | Main Worker | Marginal Worker |
| Employment period | More than 6 months (183 days). | Less than 6 months (183 days). |
| Examples | Construction workers, seasonal employees, independent contractors. | Landless agricultural labourers, people in low-wage industries. |
PYQ (Previous Years’ Questions)
1. Which of the following is the most appropriate cause of unemployment in India? (SSC CGL 12/09/2024, 3rd Shift)
(a) Excessive population
(b) Environmental conditions
(c) Higher education system
(d) Shortage of workforce
Answer: (a) Excessive population
2. In which of the following sectors is seasonal unemployment experienced in India? (SSC CGL 26/09/2024, 1st Shift)
(a) Agriculture
(b) Manufacturing
(c) Healthcare
(d) Information Technology
Answer: (a) Agriculture
3. Which type of unemployment arises due to a mismatch between the jobs available in the market and the skills of available workers? (Higher Secondary Examination 25/06/2024, Shift 2)
(a) Frictional unemployment
(b) Disguised unemployment
(c) Structural unemployment
(d) Seasonal unemployment
Answer: (c) Structural unemployment
4. Unemployment refers to the time interval during which a person is looking for a new job or moving from one job to another. (Higher Secondary Examination 21/06/2024, Shift 2)
(a) Seasonal unemployment
(b) Technological unemployment
(c) Frictional unemployment
(d) Structural unemployment
Answer: (c) Frictional unemployment
5. Which type of unemployment arises in India due to a lack of employable skills among educated youth? (SSC CGL 27/07/2023, 3rd Shift)
(a) Structural unemployment
(b) Educated unemployment
(c) Cyclical unemployment
(d) Technological unemployment
Answer: (b) Educated unemployment