Types of Unemployment in India [UPSC Economy Notes]

Unemployment represents the number of people in the workforce who want to work but do not have a job. It is generally stated as a percentage and calculated by dividing the number of people who are unemployed by the total workforce.

Types of Unemployment

Unemployment can be due to various reasons like slow economic growth, lack of skilled workforce, lack of education rate and resistance in the physical mobility of the workforce which in turn lead to different types of unemployment.

Structural Unemployment

This type of unemployment arises due to changes in the economic structure of a country. Economic structure implies a rapidly growing population and a slow rate of capital formation, etc.

Structural unemployment is a natural outcome of economic development and technological advancement and innovation that are taking place rapidly all over the world in every sphere.

Disguised Unemployment

It is a situation of employment with surplus manpower in which some workers have zero marginal productivity such that production does not suffer when some workers are withdrawn.

Disguised unemployment is a very common phenomenon in the agriculture sector where more people work than what is required due to a lack of alternative job opportunities.

Seasonal Unemployment

As the name suggests, people are employed only during particular seasons in some sectors. For example, people engaged in agriculture work for a season and are unemployed during the off-season.

Cyclical Unemployment

It occurs due to the business cycles at regular intervals, especially recessionary cycles in business activities resulting in unemployment.

Cyclical unemployment is generally a temporary and short-term phenomenon and usually occurs in capitalist economies which are subject to trade cycles.

Frictional Unemployment

It is temporary joblessness during the period of shifting from one job to another and other reasons like strikes, layoffs by the company, lock-outs, imperfect mobility of labour, etc.

Casual Unemployment

It refers to the unemployment of casual labourers employed on a day-to-day basis due to shortage of raw materials, fall in demand, change of ownership, short-term contracts, etc.

Chronic Unemployment

When unemployment continues to be a long-term feature of a country it is called chronic unemployment. It is due to the vicious cycle of poverty, under-utilisation of resources, use of traditional techniques or technology, etc.