Unemployment

Meaning


Every sixth person in the world is an Indian and every third poor person in the world is also an Indian. Person who is not gainfully employed in any productive activity is called unemployed. Till 5th plan no serious concern for solving the unemployment problem.

Types
        

Voluntary unemployment Frictional unemployment Casual unemployment Seasonal unemployment Structural unemployment Technological unemployment Cyclical unemployment Chronic unemployment Disguised unemployment

Nature of employment in India

 

 

In India, it is structural. Apart from structural, it is cyclical unemployment. Rural and urban unemployment. Industrial and educated unemployment.

Causes
   

Economic growth Growing population Inappropriate technology Inappropriate education system

Criteria of unemployment
   

Time criteria Income criteria Willingness criteria Productivity criteria

Time criteria

If a person is gainfully occupied during the year for a number of hour (or days) less than some normal or optimal hour (or days) defined as full employment hours (or days).

Income criteria

If he earns an income per year less than some desirable minimum.

Willingness criteria

If she is willing to do more work than she is doing at present on terms to which she is accustomed.

Productivity criteria

If he is removable from his present employment in the sense that his contribution to output is less than normal productivity, and therefore ,his removal would not reduce output if the productivity of the remaining workers is normalized with minor changes in technique and organization.

Theories of unemployment
 

Classical view: Supply creates its own demand. Flexibility of wage rates.

  

Keynesian view: Effective demand. Multiplier effect.

Problem of unemployment in India

 1. 2.

Urban unemployment: Industrial unemployment Educated unemployment Rural unemployment: Open unemployment Disguised unemployment.

 1. 2.

Extent of unemployment
LABOUR FORCE = PERSONS WORKING+THOSE WHO ARE SEEKING AND/OR AVAILABLE FOR WORK WORK FORCE = * PERSONS AT WORK +PERSONS WITH A JOB BUT NOT AT WORK a) at work for pay (cash or kind) * b) at work for profit c) producing for self- consumption UNEMPLOYED = NOT AT WORK BUT SEEKING WORK + NOT SEEKING WORK BUT ARE AVAILABLE FOR WORK.


These concepts have little meaning without reference to a time concept.

REFERENCE PERIOD: A year , a month, or a week is

specified in questions pertaining to statistics related to employment/unemployment

NSS uses this reference period:

The NSS Collects information for two reference periods:  To ascertain the usual status (for a long period such as a year)  To ascertain the current status: (a) current weekly status (for a week) (b) current daily status ( for each day of the week)

Estimates of unemployment
Estimates Current daily status Usual Status

Current weekly status

Usual status:
1. 2.

3.

4.

5.

It is the status of the individual which prevailed over a long period such as one year. It gives us the number of people who can be categorized as chronically unemployed. It gives the lowest estimate of unemployment as few can afford to remain without work for a long period. This estimates has a reference period of one year, and classifies a person as being in the labour force, employed or unemployed. according to his activity for the major part of the year. It also states the multiple status of a person according to a priority rule.

Priority rule:

Usual principal status

Usual principal & subsidiary status

Those workers who have worked for most of the year i.e. at least for 183 days in a Particular activity.

Where workers has worked for less than 123 days in a year.

Current weekly status:



Current weekly status (gives a persons weeks of unemployment) It reduces the reference period (the period for which data is collected from the respondents ) to one week. It follows the priority rule in which ,if during the reference week a person is employed even for one hour on any of the seven days of the week then that person is termed as employed'. a person under this measure would be considered as unemployed only if he/she had not worked for a single hour on any day of the week but was seeking and/or available work.

Current daily status



Current daily status (gives a persons days of unemployment) the third estimate current daily status counts every half-day activity status of the respondent over the week. This measures gives the most accurate status of the unemployment situation.

Rate of unemployment:

Rate of unemployment (person-days) = Aggregated count of unemployed days Aggregated estimate of total number of labour force days.

Major employment programmes undertaken by the govt. to reduce unemployment

  

A committee was set up by Govt. of India. Under the chairmanship of Jagdish.N.Bhagwati. To suggest measure to solve the problem of unemployment.

Suggestions given by the committee to undertake schemes like:

1. 2. 3. 4.

Rural electrification Rural housing Minor irrigation works Agro service Center

On the basis of suggestions of Bhagwati Committee(1973) the govt. took the following measures to provide employment.
    

Marginal Farmers and Agricultural labourers. Rural works Programme. Integrated dry land agriculture development. National rural employment programme. (NREP). Rural landless employment guarantee programme (RLEGP). The scheme for training rural youth for self employment (TRYSEM). Jawahar Rojgar Yojna (JRY).

Marginal Farmers and Agricultural labourers

MFAL Schemes assisted families with subsidized credit support for agricultural operations. Subsidiary occupations like horticulture, floriculture poultry, fishery, diary farm.

Rural Works Programme



The emphasis was on the construction of civil works of permanent nature which would reduce the scarcity condition in the areas concerned.

Integrated Dry Land Agriculture Development



Permanent works of labour intensive nature like soil conservation ,land development and water harnessing are under taken. It is estimated that for an expenditure of every one crore of rupees, about 15000 persons would get employment

Rural landless Employment Guarantee Programme



This programme was started in the sixth plan.15th Aug 1983 With the aim of expanding employment opportunities for the rural landless. Providing guarantee of employment to at least one member of the landless household for about 100 days a year This programme was also merged with Jawahar Rozgar Yojana

The Scheme For Training Rural Youth For Self Employment (TRYSEM) (later merged with
Swarnajayanti Gram Swarozgar yojana in april 1999)
 

Scheme started in late 70s.(1979) Objective Tackling unemployment problem among the rural youth Aimed atTraining about 2 lakh rural youths every year so as to enable them to become self employed Preference to be given to SC & ST class (1/3rd of rural youths trained were women)

Jawahar Rozgar Yojana



   

Jawahar Rozgar YojanaA new wage employment programme. Started in 1989. Objectivecreating intensive employment. Target areas..120 backward districts. Renamed as Jawahar Gram Samridhi Yojana

Major Objectives.


Generation of additional gainful employment for unemployed and underemployed in rural areas. Creation of productive community assets for benefits of priority groups. Improvement in overall quality of life in the rural areas.

Other measures of JRY include

a. b. c. d. e.

Opening of vocational centers. Encouraging people for self employment Setting up employment exchanges in every state. Faster economic development Family planning programmes to control population

National Rural Employment Programme

 

NREP started in 6th plan. NREP 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. This programme later merged with Jawahar Rozgar Yojana.

Employment strategies


Growth alone cannot solve the problems of poverty and unemployment. Neither higher growth alone nor the special programmes but an employment oriented growth strategy can provide an effective solution.

Measures taken
 

1.

2.

A task force was set up by the planning commission. Under the chairmanship of Shri M.S Ahulwalia . (To Examine the existing employment situation in the country To suggest strategies of employment generation for achieving the target of providing employment opportunities to 100 million people over the next 10 years)

Structural Adjustment Programme and Unemployment

  i.

ii. iii. iv.

New economic policy package. Impact on labour force. Because: Emphasis only on Industrial sector like chemical based or consumer durable industries. Not considered export and employment. Lack of investible resources in the economy. Major gap between industrial and agricultural sectors.

New economic policy package affect the employment growth adversely.

Favourable effects:


In longer run, liberalization will help employment. One vision, where capital moves over time from govt. and large scale industry and is invested in agriculture, small scale industry and services. These changes will not only increase income but increases employment also.

Effect on the structure of Employment:

1.

o o

o o

Sector wise: The following changes may be expected. Agriculture : declined Unorganised secondary sector: invariable increased Organised secondary sector: declined Tertiary sector: increased

Occupation wise:
 

Competition, more quality, precision-oriented. Share of professional and technical jobs is bound to increase. The share of all other (goods and services) occupations divisions will also increase.

Elements of suggested employment strategy


1. 2.

Agriculture and Allied Sectors:

Backward areas. Focused on stimulating agriculture growth.


1. 2. 3.

Three imp goals of this strategy should be:

An increase in the yield levels of individual crops. An increase in cropping intensity Changes in cropping pattern in favour of high value crops. horticulture, floriculture, cultivation of oil seeds for extraction of edible oil, etc.

Animal husbandry and fishery:



Employment in processing and marketing of milk and milk products. 2/3rd of the existing marine and inland potential is unexploited. Value added agri business (animal husbandry, fishery, aquaculture) gives more employment.

Regeneration of Natural Resources such as Land and Forests

  

 

Programmes of afforestation. Regeneration and restoration of degraded land. Benefit for tribals and women (degradation of ecosystem) Rural poor participation in wasteland development. Promote urban agriculture. ( Green belts)

Rural Non Farm Employment



Rural economy should get diversified into nonagricultural activities:

To provide productive employment to the growing rural labour force. To reduce the wide economic differences between rural and urban areas.

Measures to be taken:
   

Suitable promotional policies (in relation to location) Infrastructural development in rural towns, High employment potential for rural workers. Measures for orientation of credit and lending practices of banks suited to small business and manufacturing enterprises. Strengthening of producers co operatives and assistance in marketing technology.

Rural Non Formal Sector



To encourage and promote the valuable innovations made in the rural non formal sector:

   

Each state govt. department should have a designated organization for continuously scouting the inventions that are being made by the villagers. The patent organization of the govt. of India should also come with a fast track procedure to protect the grass root innovators. Incentives for the manufacture from local inventions. Venture capital fund must be encouraged to fund such inventions. Data must be built of all such inventions by networking with the NGOs Electronic media and the internet must be fully exploited to spread this information.

Industrial Sector:


Decline in employment elasticity of the industrial sector has primarily been caused by the declining employment potential of output growth in the organized sector.

Facts:  Employment elasticity is estimated to be as low as 0.15 per cent for organized manufacturing sector.  It is between 0.5 and 0.6 for the unorganized sector  Imp (a larger contribution of the small and un- organized sector is likely to raise the employment elasticity and employment growth in the manufacturing sector)

Small Scale industry Policy

Policy for promotion of small scale industry is not effective.
  

It is not directly related to employment. (eligibility for preferential treatment in terms of incentives & assistance) It has not benefited the really small units. Due to the cumbersome procedures and non existence of the promotional and service network in small towns and villages, the concession and assistance have only reached the not so small sector. Existing administrative and service agencies are not well suited to meet the requirements of the decentralized sector.

Suggestion


The tiny or the micro-enterprise sector is recognized as a separate segment for evolving and implementing promotional policies

Information Technology Sector

Facts:


IT sector is opening new way for the educated youth. It is expected to emerge as one of the largest employers of the workforce in the country (providing jobs to about 25% of the labour force in the long run) It broadly includes all sub sectors dealing with generation, transmission and utilization of information like informatics, statistics, office automation, data processing, management information system, decision support system, online and real time computer applications, telecommunications, broadcasting and computer networking (the possibilities are endless)

Steps taken by the govt.

 

The govt. is giving big thrust to IT Sector. The IT action plan has suggested conscious efforts to spread the IT culture to all walks of life. Operation knowledge campaign has been launched for universalizing IT education and IT based education in the country.

Other sectors


Construction Road construction and Housing are a part of the basic needs of the people and therefore ,deserve to be given priority, as they will create the necessary assets and generate large scale employment in the short run.

Services Sector
1.

2.

3.

Service sector has shown significant potential for employment generation both in rural and urban areas. Tourism, rural transport and repair services are such sectors identified as having relatively high growth as well as employment potential. Large job opportunities are opening up in areas like IT enabled services like (customer interaction services, transaction processing, multimedia ,animation etc.) healthcare, insurance, retail and telecom.

Social Sector:

1.

Basic objectives:
Improving education and health system by utilizing more manpower for strengthening them as institutions particularly in rural areas. Strengthening of teaching staff in rural areas particularly single teacher schools and adequate manning of health system (technical and paramedical occupations)

2.