A REPORT ON MEASUREMENT OF UNEMPLOYMENT IN INDIA

Submitted to:
Mr. Dinesh

Submitted by:
YASH BABBAR 3098 PREETI MANDERENA 3136 B. com(h) IIIyr Sec- B

DECLARATION
As a student of B.COM. (H), final year Yash Babbar & Preeti Manderna has prepared this project on measurement of unemployment in india. I certify that the information contained in this report is an original work and fully based on my understanding. The information taken from different sources has been acknowledged.

GUIDE:

STUDENT Yash Babbar & Preeti Manderna

Objectives of study
1. To gain insight of measurement of unemployment practices in India 2. To understand the procedure for estimation of unemployed population under different types of unemployment 3. To understand the difference between different types of measurement of unemployment in India 4. To identify the target population that needs immediate government attention 5. To gain insight about difficulties faced in estimation of unemployment in India 6. To gain insight in the areas of unemployed population 7. To suggest an appropriate change in the measurement of unemployment in India in context of globalization.

Reasons of measurement of unemployment in India

1. To address the problem of unemployment 2. To identify the causes of unemployment in India 3. To undertake appraisal of government policy vis--vis employment generation in the economy 4. To identify the sectors with labor-intensive technology 5. To decide on pattern of investment expenditure on education 6. To identify the trends and pattern of unemployment in India during the planning era 7. To identify the scope for promotion of various sectors through state support such that they contribute to the employment growth of the country

8. To identify the manners in which fiscal expansionary policy is framed such that short term employment generation and opportunities be created to immediately address the problem of unemployment 9. To foster planning for balanced regional development 10.To discover the structure of unemployment and their implications on various socio-economic parameters 11.For designing poverty alleviation programs that target the unemployed, the daily status measure would seem to provide the best estimate of unemployment, since it is the poor who are likely to experience short spells of unemployment rather than the nonpoor who can afford to stay unemployed longer.

Guidelines for the Measurement of Unemployment India

1. In measuring unemployment in a country like India, certain specific features of the workforce need to be taken into account. They are: 2. The sample size of the unemployed should be such that the characteristics exhibited by them should be representative of the entire population. 3. The field workers should be efficient. 4. A time for the survey should be selected such that there exists less of mobility of the people in that time period. 5. Use of information technology and satellite pictures shall be used to get the information about the density of the population in a given region.

6. While recording information about the unemployment, the interviewee should be also asked about their highest educational qualification and areas of interest. 7. The unemployed people should be asked to report about their unemployment in the office of Employment Exchange.

Types of unemployment in India

India as a nation is faced with massive problem of unemployment. Unemployment can be defined as a state of worklessness for a man fit and willing to work. It is a condition of involuntary and not voluntary idleness. Some features of unemployment have been identified as follows: 1. The incidence of unemployment is much higher in urban areas than in rural areas. 2. Unemployment rates for women are higher than those for men. 3. The incidence of unemployment among the educated is much higher than the overall unemployment. There is greater unemployment in agricultural sector than in industrial and other major sectors. Economists and social thinkers have classified unemployment into various types. Generally unemployment can be classified in two types: (1) Voluntary unemployment In this type of unemployment a person is out of job of his own desire doesn't work on the prevalent or prescribed wages. Either he wants higher wages or doesn't want to work at all. It is in fact social problem leading to social

disorganization. Social problems and forces such as a revolution, a social upheaval, a class struggle, a financial or economic crisis a war between nations, mental illness, political corruption mounting unemployment and crime etc. threaten the smooth working of society. Social values are often regarded as the sustaining forces of society. They contribute to the strength and stability of social order. But due to rapid social change new values come up and some of the old values decline. At the same time, people are not is a position to reject the old completely and accept the new altogether. Here, conflict between the old and the new is the inevitable result which leads to the social disorganization in imposed situation. In economic terminology this situation is voluntary unemployment. (2) Involuntary unemployment In this type of situation the person who is unemployed has no say in the matter. It means that a person is separated from remunerative work and devoid of wages although he is capable of earning his wages and is also anxious to earn them. Forms and types of unemployment according to Hock are: 1. Cyclical unemployment - This is the result of the trade cycle which is a part of the capitalist system. In such a system, there is greater unemployment and when there is depression a large number of people are rendered unemployed. Since such an economic crisis is the result of trade cycle, the unemployment is a part of it. 2. Sudden unemployment - When at the place where workers have been employed there is some change, a large number of persons are unemployed. It all happens in the industries, trades and business where people are employed for a job and suddenly when the job has ended they are asked to go.

3. Unemployment caused by failure of Industries - In many cases, a business a factory or an industry has to close down. There may be various factors responsible for it there may be dispute amongst the partners, the business may give huge loss or the business may not turn out to be useful and so on. 4. Unemployment caused by deterioration in Industry and business In various industries, trades or business, sometimes, there is deterioration. This deterioration may be due to various factors. In efficiency of the employers, keen competitions less profit etc. are some of the factors responsible for deterioration in the industry and the business. 5. Seasonal unemployment - Certain industries and traders engage workers for a particular season. When the season has ended the workers are rendered unemployed. Sugar industry is an example of this type of seasonal unemployment. The problem of unemployment has becoming a colossal. Various problems have caused this problem. There are individual factors like age, vocational unfitness and physical disabilities which restrict the people. External factors include technological and economic factors. There is enormous increase in the population. Every year India adds to her population afresh. More than this every year about 5 million people become eligible for securing jobs. Business field is subject to ups and downs of trade cycle and globalization. Economic depression or sick industries are often close down compelling their employees to become unemployed. Technological advancement contributes to economic development .But unplanned and uncontrolled growth of technology is causing havoc on job opportunities. The computerization and automation has led to

technological unemployment. Strikes and lockouts have become inseparable aspect of the industrial world today. Due to these industries often face economic loses and production comes down. Since workers do not get any salary or wages during the strike period they suffer from economic hardships. They become permanently or temporarily unemployed. Today young people are not ready to take jobs which are considered to be socially degrading or lowly. Our educational system has its own irreparable defects and its contribution to the unemployment is an open truth. Our education does not prepare the minds of young generation to become self-employed on the contrary it makes them dependent on government vacancies which are hard to come. Our State right from the beginning of Five year plans has introduced several employment generating schemes and programmes over the years but in the absence of proper implementation and monitoring have failed to achieve the required targets.

Measurement of unemployment in India: an Introduction

The National Sample Survey Organization (NSSO), which provides estimates of the rates of unemployment on the basis of its quinquennial surveys, uses three different concepts. A person is considered unemployed on Usual Status (US) basis, if he/she was not working, but was either seeking or was available for work for the major part of the reference year. On the basis of a week as the reference period, a person is considered unemployed by Current Weekly Status (CWS), if he/she had not worked even for one hour during the week, but was seeking or was available for work. The third concept of unemployment is the Current Daily Status (CDS), which is in terms of total person days of unemployment, and is the aggregate of all

the unemployment days of all persons in the labor force during the reference week. Thus, unemployment is measured through labor force surveys which elicit the `activity status of the respondent for a given reference period. First, the respondent is identified as not working. Second, for those not working, the typical question is of the form: are you available for work, and have you made some effort to find work during the last x days. Those who answer in the affirmative are the unemployed while those who answer in the negative are the people who have opted out of the labor force. The labor force is the sum of the employed and the unemployed and the rate of unemployment is the proportion of labor force that is unemployed. The reference period could vary from a week, to four weeks to a year. Such an approach works well when the activity status is invariant within the reference period, i.e., either the person is employed, unemployed or out of the labor force. Beginning with the 27th round in 1972/73, labor force surveys have been conducted every five years using standardized concepts and procedures based on the recommendations of the Committee of Experts (Planning Commission, 1970). The usual status unemployment measure is defined with respect to a reference period of a year. The multiple activity status issue, which is more acute longer the reference period, is resolved on the basis of majority time. This criterion is used first to classify a person as either belonging to the labor force (i.e., employed or unemployed) or not belonging to the labor force. If the person belongs to the labor force, then whether the person is to be classified as employed or unemployed is decided once again on majority time. The survey also uses a reference period of a week to compute a `weekly status unemployment measure. Here a person is regarded as employed if she or he worked for at least one hour during the reference week. It follows that a person is unemployed if she or he did not work for even one

hour during the reference week and sought work or was available for work during the reference week. Clearly, the usual status measure reflects only long unemployment spells. For instance, a male in the working age group (who is never out of the labor force) would be unemployed on the usual status measure only if the unemployed spell during the year is longer than the employed period. While, the weekly status measure captures short unemployment periods, it ignores unemployment for less than a week. A third approach is to abandon the effort to assign every individual a unique activity status over the reference period. The NSS employment survey elicits an individuals time disposition during each day of the reference week. A day is split into two half-units and an individual is assigned a unique activity status for that period (rather than the reference week). This information can be used to compute person days of unemployment in the economy. As households are surveyed uniformly throughout the year, the aggregates derived from weekly data are representative of annual aggregates. The `daily status rate of unemployment is the proportion of labor force (measured in person days) that is unemployed (also in person days). For most of the labor force work is seasonal, short-term and without tenure. Consequently, an individuals activity status can vary even within as short of a reference period as a week. The daily status unemployment rate would therefore seem the appropriate one for capturing their unemployment.

Approaches to Measurement of Unemployment in India

The NSSO survey has adopted three different approaches to measure employment and unemployment. The three approaches are: (1) Usual status approach with a reference period of 365 days preceding the date of survey. (2) Current weekly status approach with a reference period of seven days preceding the date of survey. (3) Current daily status approach with each day of the seven days preceding date of survey as the reference period. This approach attempts classification of persondays and not persons. The NSS classifications of economic activity are based on the recommendations of Expert Committee on Unemployment Estimates (1970) set up by the Planning Commission. The estimates are generated separately for four quarters of year. These quarters are almost co-terminus with four seasons. This helps to study the seasonal pattern of employment and unemployment. (a) Classification according to Usual Status Approach The status of activity on which a person has spent relatively longer time of the preceding 365 days prior to the date of survey is considered to be the usual principal activity status of the person. Accordingly, a persons principal usual status was considered as working or employed if he or she is engaged relatively for a longer time during the reference period of last 365 days, in any one or more of the work activities. A person was treated as Seeking or Available for Work or unemployed if he or she was not working but was either seeking or available for work for a relatively longer time of the specified reference period. Similarly, one

was classified as not in labor force, if he or she was engaged in relatively longer period in any one of the non-gainful activities. Within the two broad activity categories working and not in labor force, the detailed activity category was determined on the basis of time spent criterion. A person categorized as worker on the basis of his/her principal status is referred to as principal status worker. A non-worker who pursued some gainful activity in a subsidiary capacity is referred to as subsidiary status worker. Principal status workers and subsidiary status workers together constitute all workers according to the usual status classification. The usual status concept covering the principal and subsidiary workers is the closest to the concept used in the Census to enumerate workers. By including even those who are not principal workers but work in a subsidiary capacity, e.g., students, pensioners, etc., the usual status concept comprehensively covers all those engaged in or seeking economic activities. In a situation where social security in the form of a reasonable and assured support as allowance for unemployment is not guaranteed, those who take to work in a subsidiary capacity do so generally out of economic compulsion. Hence both the Principal and the Subsidiary workers need to be considered in estimating both the labor force and employment. Moreover the usual status concept; with one year as the reference period over which disposition of time to activities is seen in classifying an individual as being in or out of labor force, and those in labor force as being employed or seeking work, yields more stable estimates of employment in contrast to the other two concepts which have shorter reference periods of a week or an average day of the week respectively. Taking the usual status concept as the reference, it is possible to study the nature and characteristics of those employed, using the information available from the data compiled on current weekly and current daily status concepts bases

(b) Classification according to current weekly status approach For classification of the population under current weekly status approach, a priority-cum-major time rule has been adopted. According to the criteria, status of working gets priority over status of not working or being available for work. Status of seeking or being available for work in turn gets priority over nongainful activities pursued. When a person is found to be possessing more than one gainful activity, the unique activity is decided as that activity on which relatively more time has been spent. A person is considered to be employed if he or she pursues any one or more of the gainful activities for at least one-hour on any day of the reference week. On the other hand, if a person does not pursue any gainful activity, but has been seeking or available for work, the person is considered as unemployed. (c) Classification according to current daily status approach Under this approach, all the activities of a person are listed on each day of the preceding week. Up to two statuses were recorded for each day of the reference week for persons pursuing more than one activity during the seven days of the reference week. The unit of classification is half day. Under this concept, a person is considered as working (employed) for the entire day if he had worked four hours or more during the day. If he had worked for one hour or more, but less than four hours, he is considered as working for half day and seeking/available for work (unemployed) and not in labor force for other half of the day, depending on whether he was seeking or available for work or not. If a person is not engaged in any work, even for one hour on the day, but was seeking/available for work for four hours or more, he is considered unemployed for the entire day. If he is available for work for less than four hours only, he is considered as unemployed for half day and not in labor force for other half day. A person who neither had any

work to do nor was available for work even for half of the day is considered not in labor force for the entire day. The aggregate of day units, either half or full, under the different activity categories during the reference week divided by seven provides the estimates of average number of person days by activity category during an average week over the survey period on one year.

The detailed activity categories under each of the three broad activity statuses used in the survey
WORKING (OR EMPLOYED) 1. worked in a household enterprise (self-employed) as an own-account worker; 2. worked in a household enterprise (self-employed) as an employer; 3. worked in a household enterprise (self-employed) as helper; 4. worked as a regular salaried/wage employee; 5. worked as a casual wage labor in public of works; 6. worked as a casual wage labor in other types of works; 7. Did not work due to sickness though there was work in household enterprise; 8. Did not work due to other reasons though there was work in household enterprise; 9. Did not work due to sickness but had regular salaried/wage employment; 10.did not work due to other reasons but had regular salaried/wage employment,

NOT

WORKING

BUT

AVAILABLE

FOR

WORK

(OR

UNEMPLOYED) 11.sought work, 12.Did not seek but was available for work. NEITHER WORKING NOR AVAILABLE FOR WORK (OR NOT IN LABOUR FORCE) 13.attended educational institutions; 14.attended domestic duties only; 15.Attended domestic duties and was also engaged in free collection of goods (vegetables, roots, fire-wood, cattle feed, etc.,) tailoring, weaving etc., for household use. 16.rentiers, pensioners, remittance recipients, etc., 17.not able to work due to disability; 18.beggars, prostitutes etc; 19.others; 20.did not work due to sickness (for casual workers only) 21.Children of age 0 4 years. (Sl.no. 7,8,9,10,12 and 20) are applicable only in the case of current weekly and current daily status approaches.) Further, the population as belonging to different economic activity categories was classified independently by adopting three different approaches, namely: (i) (ii) (iii) the usual status approach the current daily approach and the current weekly status approach

Bibliography
1. www.economywatch.com 2. www.isid.ac.in 3. ideas.repec.org 4. www.legco.gov.hk/ 5. www.jstor.org/stable/1818137 6. www.informaworld.com 7. www.cdedse.org/pdf/work174.pdf 8. www.icai.org/resource_file/16789ppui.pdf

Bibliography