Syllabus- Unemployment: Concepts, estimates and trends of Unemployment.
Number of questions- Mains: 02, Prelims – 10
Mains Questions of the day-
1.Despite overall growth in the economy the employment rate is low. Explain the major reason of unemployment in India and mention the measures to overcome those challenges.
Introduction:
Write the unemployment trends in India. Mention present unemployment status.
Body:
Mention the major causes of unemployment in India.
Mention the measures to overcome those challenges.
Conclusion:
Content:
Skilling, reskilling, upskilling and
Unemployment:
- Unemployment occurs when a person who is actively searching for employment is unable to find work.
- Unemployment is used as a measure of the health of the economy.
National Sample Survey Organisation (NSSO):
It defines unemployment in the following way:
Working (engaged in an economic activity) i.e. ‘Employed’.
Seeking or available for work i.e. ‘Unemployed’.
Neither seeking nor available for work.
The first two constitutes the labour force
The measure of unemployment is the number of unemployed people divided by the number of people in the labour force.
Unemployment rate = (Unemployed Workers / Total labour force) × 100
The following are the major causes of unemployment in India:
- Large population.
- Mismatch between required skills for industries and available skills of individual.
- Lack of vocational skills or low educational levels of the working population.
- Labour-intensive sectors suffering from the slowdown in private investment particularly after demonetization.
- The low productivity in the agriculture sector.
- Legal complexities, Inadequate state support, low infrastructural, financial and market linkages to small businesses making such enterprises unviable with cost and compliance overruns.
- Inadequate growth of infrastructure and low investments in the manufacturing sector, hence restricting the employment potential of the secondary sector.
- The huge workforce of the country is associated with the informal sector because of a lack of required education or skills, and this data is not captured in employment statistics.
- Improper education system: The main cause of structural unemployment is the education provided in schools and colleges are not as per the current requirements of the industries.
- Regressive social norms that deter women from taking/continuing employment.
- Limited success of Government schemes or expenditure.
- Slowing economic growth rate and the Covid-19 pandemic further worsened the condition as:
- Almost 90% workforce is engaged in hard hit informal sector with no social security.
- Closure of digitally disconnected businesses and businesses facing supply chain disruptions due to lockdowns.
- Increasing the disguised unemployment in agriculture and
- Job losses among Indian Diaspora in Middle East countries like Kuwait, Saudi Arabia, Oman, Qatar and Bahrain.
Measures to overcome the challenges of Unemployment in India:
- Address increasing demand and speed up the recovery through comprehensive employment policy including a creation of draft in National Employment Policy.
- Tapping into the digital economy’s potential of mass employment.
- Building Back Better-Informal Economy for higher productivity and networking ability.
- Reskilling and upskilling of worker in light of changing demands across sectors.
- Facilitating the transition of economy from informal to formal sector.
- Introducing a centralised unemployment insurance scheme for all unemployed individuals and removing bottlenecks of existing unemployment benefit schemes.
- Promoting Labour-Intensive Industries:
There are a number of labour intensive manufacturing sectors in India such as food processing, leather and footwear, wood manufacturers and furniture, textiles and apparel and garments.
- Special packages, individually designed for each industry are needed to create jobs.
- Decentralisation of Industries: Decentralisation of Industrial activities is necessary so that people of every region get employment.
- Drafting National Employment Policy: The underlying principles for the National Employment Policy may include:
- Enhancing human capital through skill development.
- Creating sufficient number of decent quality jobs for all citizens in the formal and informal sectors to absorb those who are available and willing to work.
- convergence in various initiatives taken by the government.
- Supporting the private sector to become the major investor in productive enterprises.
- Supporting self-employed persons by strengthening their capabilities to improve their earnings.
2.Mention the overall Employment scenario in India since independence?
Introduction:
Define the Employment Rate and current statics related to the Employment.
Body:
Mention overall scenario of employment sector since independence in India.
Conclusion:
- There has been a change in the structure of workforce in India.
- Newly emerging jobs are found mostly in the service sector.
- Outsourcing of work is becoming a common practice.
- The nature of employment has become more informal with only limited availability of social security measures to the workers.
- In the last few decades, there has been rapid growth in the gross domestic product, but without simultaneous increase in employment opportunities.
- This has forced the government to take up initiatives in generating employment opportunities particularly in the rural areas.
Content:
Employment rate has grown in comparison to GDP:
- Nearly seventy years of planned development have been aimed at expansion of the economy through increase in national output and employment.
- During the period 1950–2010, Gross Domestic Product (GDP) of India grew positively and was higher than the employment growth.
- However, there was always fluctuation in the growth of GDP.
- During this period, employment grew at the rate of not more than 2%.
- Another development in the late 1990s: Employment growth started declining and reached to the level that India had in the early stages of planning.
- During these years, we find a widening gap between the growth of GDP and employment.
- This means that in the Indian economy, without generating employment, we have been able to produce more goods and services.
- This refer to this phenomenon as jobless growth.
The growth pattern of employment and GDP affected different sections of workforce:
The employment of people in various industries and their status was given below:
- India is an agrarian nation. A major section of population lives in rural areas and is dependent on agriculture of their livelihood.
- Developmental strategies in India, have aimed at reducing the proportion of people depending on agriculture.
- Distribution of workforce by industrial sectors shows substantial shift from farm work to non-farm work.
- In 1972-73, about 74% of workforce was engaged in primary sector and in 2011-12, this proportion has declined to about 50%.
- Secondary and service sectors have showed a future for the Indian workforce.
- The shares of these sectors have increased from 11 to 24% and 15 to 27% respectively.
- The distribution of workforce over the last five decades (1972-2018), people have moved from self-employment and regular salaried employment to casual wage work due to stagnation of secondary sector and moderate rise in self-employement.
- This phenomenon is called casualisation of workforce which was noticed during 1972-2018.
- This makes the workers highly vulnerable.
- In 2017-18 a moderate rise in the share of regular salaried employees.
- In 2011-12 there were about 473 million workers in India.
- There were about 30 million workers in the formal sector which is about 6%.
- Thus, the rest 94 per cent are in the informal sector.
- About 20% of formal sector and 30% of informal sector workers are women.
- Since the late 1970’s India, started paying attention to enterprises and workers in the informal sector as employment in the formal sector is not growing.
- By the efforts of the International Labour Organisation (ILO), the Indian government has initiated the modernisation of informal sector enterprises and provision of social security measures to informal sector workers.
Prelims Questions of the day:
1.Which of the following represents the Disguised unemployment?
- Large number of people remain unemployed
- Alternative employment is not available
- Marginal productivity of labour is zero
- Productivity of workers is low
Answer: C
Explanation:
- Disguised unemployment is unemployment that does not affect aggregate economic output.
- It occurs when productivity is low and too many workers are filling too few jobs.
- It can refer to any part of the population that is not employed at full capacity.
- In disguised unemployment, the marginal productivity of labour is zero.
2.Which of the following sector is related to the term “usual status approach”?
- Infrastructure sector
- Agriculture sector
- Manufacturing sector
- Employment sector
Answer: D
Explanation:
Usual Status Approach: –
- This approach measures the number of persons who remained unemployed for a major part of the year and gives the lowest estimates of unemployment.
- It enables one to determine the usual activity status of a person as being employed or unemployed or outside the labor force.
- The Usual Status Approach captures long-term unemployment prevalent in the economy.
- Usual Principal Activity status (UPS), or Usual Status (PS), is determined using the majority time criterion and refers to the activity status on which he/she spent a longer part of the year.
3.Which of the following organization measures the unemployment rate in India?
- The National Statistics Office (NSO)
- Ministry of labour and Unemployment.
- Central Statistical Office
- The Ministry of Health and Family Welfare (MoHFW)
Answer: A
Explanation:
Measurements of Unemployment are developed by National Statistics Office (NSO). They are:
1. Usual Status Unemployment:
- Also known as open unemployment or chronic unemployment. This measure estimates the number of persons who remained unemployed for a major part of the year. This measure gives the lowest estimates of unemployment.
- This concept used to determine the usual activity status of a person as employed or unemployed or outside the labour force. The persons covered may be classified into those working or available for work in their principal activity sector and subsidiary sector.
2. Weekly Status Unemployment:
- The estimate measures unemployment with respect to one week. A person is said to be unemployed if he is not able to work even for an hour during the survey period. In other words, according to this estimate a person is said to be employed for the week even if he/she is employed only for a day during that week.
3. Current Daily Status Unemployment:
- It considers the activity status of a person for each day of the preceding seven days. The reference period here is a day. If a person did not find work on a day or some days during the survey week, he/she is regarded as unemployed.
- Normally if a person works for four hours or more during a day, he or she is considered as employed for the whole day. The daily status unemployment is considered to be a comprehensive measure of unemployment.
4.Which of the following represent the Employment Elasticity?
- It is unemployed who are willing to work.
- It is a situation in which more people are doing work than actually required.
- A measure of the percentage changes in employment associated with a 1 percentage point change in economic growth
- It is unemployment that occurs during certain seasons of the year.
Answer: C
Explanation:
- Employment elasticity is a measure of the percentage change in employment associated with a 1% change in economic growth.
- The employment elasticity indicates the ability of an economy to generate employment opportunities for its population as per cent of its growth (development) process
5. Which of the following is the definition of a workforce?
- The workforce is defined as the labour force that is employed by another individual or organisation
- The workforce is defined as the total population that is not employed by another individual or organisation
- The workforce is defined as the total population that is forced to work by another individual or organization
- None of the above
Answer: A
Explanation:
- Workforce refers to those actually engaged in commercially productive activity.
- Worker Population Ratio (WPR) is defined as the number of persons employed per 1000 persons.
6.What is the percent of urban workers are casual labourers in 2017-18?
- 54 percent
- 47 percent
- 38 percent
- 15 percent
Answer: D
Explanation:
The PLFS numbers suggest that in urban areas, casual workers were around 14.6% of total urban employment in 2017–18.
7. Due to the efforts of which of the following organisation the Indian government, initiated the modernization of informal sector?
- World Bank
- WTO
- International Labour Organisation
- G-20
Answer: C
Explanation:
- According to the Internal Labour Organisation approximately 60 percent of the world’s population participates in the informal sector.
- Although this is mostly prevalent in emerging and developing economies, it is also an important part of advanced economies.
- In developing countries like India, a large share of the population typically depends upon the informal economy.
- So there is a need to modernize the informal sector was suggested by the International Labour organisation.
8.What was the average rate of growth of employment during 1950-2010?
- 1 percent
- 2 percent
- 5 percent
- 10 percent
Answer: B
Explanation:
- During the period 1950–2010, Gross Domestic Product (GDP) of India grew positively and was higher than the employment growth.
- However, there was always fluctuation in the growth of GDP.
- During this period, employment grew at the rate of not more than 2 per cent
9. If new computers are being installed in a company and some employees are fired from the job due to lack of computer knowledge then what kind of unemployment would it be called?
- Disguised Unemployment
- Structural unemployment
- Hidden unemployment
- Frictional unemployment
Answer: B
Explanation:
- This category of unemployment arises from the mismatch between the jobs available in the market and the skills of the available workers in the market.
- If there is a mismatch between them, structural unemployment arises.
10. Which of the following countries experiences the Cyclical and Frictional Unemployment?
- Less developed and developing countries both
- Developing countries
- Developed countries
- Less developed countries
Answer: C
Explanation:
- Cyclical and frictional unemployment are found in developed countries mainly.
- Cyclical unemployment rises during recessions and declines with economic growth.