Presentation on Unemployment

7/27/2019 Presentation on Unemployment

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UNEMPLOYMENT

PRESENTATION BY

MOOLA RAM

ROLL NO.- 72NUSRL, Ranchi

“unemployment is a condition in which a person able andwilling to work normally, dependent upon his earning toprovide the necessities of life for himself and family inunable to obtain gainful employment”

By; - Gillin and Gillin



DEFINITION OF

UNEMPLOYMENT• Unemployment refers to a situation in which the

workers who are capable of working and

willing to work do not get employment.

• Unemployment is the state in which a person

is without work, available to work, and is currently

seeking work. It is a situation where there is non-

availability of job for the persons. Its is an situation

in which a person who is physically capable,

mentally willing to work at existing wage rate does



INTRODUCTION

• It involves a waste of human resource and

results in many social evils like theft, pick-

pocketing, robbery, murder etc. It’s a serious

economic, social and political problem of thecountry. It’s a cause as well as effect of poverty.

The unemployment rate is used in

economic studies. Rate is determined as the

percentage of those in the labour force without jobs.

• There are a variety of different causes of

unemployment, and disagreement on which

causes are most important. Different schools of



Conti…

• Monetarists for example, believe thatcontrolling inflation to facilitate growth andinvestment is more important, and will lead toincreased employment in the long run. Keynesians

on the other hand emphasize the smoothing out of business cycles by manipulating aggregate demand.

• There is also disagreement on how exactly tomeasure unemployment. For example, the

conservative government, when in power in theUnited Kingdom, changed the way in whichemployment was measured several times. Eachtime, the figure reduced (Social Trends). Differentcountries experience different levelsof unemployment; the USA currently



Features of unemployment

• The incidence of unemployment is much

higher in urban areas than in rural areas.

• Unemployment rates for women are higher

than those for men.

• 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.



Types of unemployment

• Voluntary unemployment

• Involuntary unemployment

• Rural unemployment

• Urban unemployment

• Cyclical or Keynesian unemployment

• Frictional unemployment

• Structural unemployment

• Classical unemployment

• Hidden unemployment



Conti….

• Voluntary unemployment: There are some

persons in a society who for various reasons

prefer to remain jobless even though thereare possibilities of getting job; some have the

desire to have jobs only of their liking or

giving better remuneration than that in the

earlier jobs and therefore they prefer to

remain unemployed. Such a kind of



Conti…

• Involuntary unemployment:Involuntary unemployment is a situation where a

person is physically and mentally fit to work and

also willing to work at existing wage rate, but

does not get a job. He is forced to remain idle

even if he is willing to work.

• RURAL UNEMPLOYMENT: This kind of

employment prevails on rural areas. The natureof problem is also complicated. There are

only two types of unemployment commonly

found in agricultural economy e.g. India. It is

divided into two parts. i.e. Seasonal



Conti…

• (a) SEASONAL UNEMPLOYMENT: in an agrarian economylike India, seasonal unemployment is the most significant

type of unemployment in rural sector. Agricultural labour

in India is mostly dependent on monsoon.

Seasonal unemployment occurs when an occupation isnot in demand at certain seasons

• (b)DISGUISED UNEMPLOYMENT: In the rural subsistence

agrarian sector of the Indian economy, the problem of

disguised unemployment is also typical. Disguisedunemployment refers to that type of unemployment in

which labourers appears to be working and employed

but in reality , they are not employed as they do not add

to the total output. In other words they are removed their



Urban unemployment

• This the type of unemployment is found in urban areas i.e.town and cities.

(a) industrial unemployment: this is refers to unemployment

amongst workers in industries and factories in urban areas.

Industrial workers may be skilled or unskilled. Industrial isopen unemployment.

(b) educated unemployment: it is the problems of educated

middle, class people of urban society. It means joblessness

amongst the graduates, post graduates, doctors and engineer

etc.

However, this type of unemployment does not exist in

countries world wide. This are specific type of unemployment

that exist only few countries especially those in involved in

agriculture activities like, India. Economic distinguishbetween four major types of unemployment, i.e. cyclical,



CYCLICAL UNEMPLOYMENT:

• Cyclical or demand deficient unemployment occurs whenthe economy is in need of low workforce. The demand

for labour increases with the economy in the growth

phase. Again, when the economy passes through

depression, demand for labour decreases and the extra

workers are released as the unemployed labour force.

• This type of unemployment exists due to inadequate

effective aggregate demand. It gets its name because it

varies with the business cycle, though it can also

be persistent, as during the Great Depression of the1930s. Gross domestic product is not as high

as potential output because of demand failure, due to

(say) pessimistic business expectations which

discourages private fixed investment spending.



Conti… • Some consider this type of unemployment one type

of frictional unemployment in which factors causing the

friction are partially caused by some cyclical variables. For

example, a surprise decrease in the money supply may

shock participants in society.

• Then, we may see recession and cyclical unemploymentuntil expectations adjust to the new conditions. In this

case, the number of unemployed workers exceeds the

number of job vacancies, so that if even all open jobs

were filled, some workers would remain unemployed. Thiskind of unemployment coincides with unused industrial

capacity (unemployed capital goods).• Classical economics rejects the conception of

cyclical unemployment, seeing the attainment of



FRICTIONAL UNEMPLOYMENT:

• Frictional unemployment occurs when a worker moves

from one job to another. It is a result of imperfect

information in the labour market, because if job seekers

knew that they would be employed for a particular

job vacancy, almost no time would be lost in getting a

new job, eliminating this form of unemployment.• This unemployment involves people in the midst of

transiting between jobs, searching for new ones; it is

compatible with full employment. It is sometimes

called search unemployment and can be voluntary. Newentrants (such as graduating students) and re-entrants

(such as former homemakers) can also suffer a spell

of frictional unemployment.

• Frictional unemployment exists because both jobs andworkers are hetero eneous, and a mismatch can result



Conti….

• Such a mismatch can be related to skills, payment,work time, location, attitude, taste, and a multitudeof other factors. Workers as well as employersaccept a certain level of imperfection, risk or compromise, but usually not right away; they willinvest some time and effort to find a better match.

• This is in fact beneficial to the economy since it results ina better allocation of resources. However, if the searchtakes too long and mismatches are too frequent, the

economy suffers, since some work will not get done.Therefore, governments will seek ways to reduceunnecessary frictional unemployment.

• Frictional unemployment coincides with an equal number of vacancies. Numerically, it is therefore maximal

when the labour market is in equilibrium. When



STRUCTURAL UNEMPLOYMENT

• Structural unemployment arises when thequalification of a person is not enough to

meet his job responsibilities. Conversely,

structural unemployment arises when thesalary offered to a person falls short of the

minimum wage that can be paid for the

concerned job.

• Unemployment which occurs due to

fundamental changes in the structure

of economy, is called structural

unemployment. Mainly these are the changes



CLASSICALUNEMPLOYMENT:

• In this case, like that of cyclical unemployment, thenumber of job-seekers exceeds the number of vacancies. However, the problem here is notaggregate demand failure. In this situation, real

wages are higher than the market-equilibrium wage.In simple terms, institutions such as "the minimumwage" deter employers from hiring all of theavailable workers, because the cost would exceed

the technologically-determined benefit of hiring them(the marginal product of labour).

• Some economists theorize that this type of unemployment can be reduced by increasing theflexibility of wages (e.g., abolishing minimum wages

or employee protection), to make the labour market



HIDDEN UNEMPLOYMENT:

• Hidden, or covered unemployment is the unemploymentof potential workers that is not reflected in officialunemployment statistics, due to the way thestatistics are collected. In many countries only those whohave no work but are actively looking for work (and/or

qualifying for social security benefits) are counted asunemployed. Those who have given up looking for work(and sometimes those who are on Government"retraining" programmes) are not officially countedamong the unemployed, even though they are not

employed.• The same applies to those who have taken early

retirement to avoid being laid off, but would prefer to beworking. The statistic also does not count the"underemployed" - those with part time or seasonal jobswho would rather have full time jobs. Because of



Causes of unemployment

• High Population growth.

• Absence of employment opportunities.

• Seasonal Employment.• Joint Family System.

• Increasing turnout of students from Indian

Universities.• Slow Developing of Industries.

• Insufficient Rate of Economic Progress.



Conti…. • Unemployment levels are increasing dramatically in many parts of

the world. There is considerable debate among economists as to thecauses of unemployment. Keynesian economic emphasizes

unemployment resulting from insufficient effective demand for goods

and service in the economy. Others point to structural problem,

insufficiencies inherent in labor markets. Classical economics tends

to reject these explanations, and focuses on more rigidities imposedon the labor markets from the outside, such as minimum wage,

laws, taxes, and other regulations that may discourage the hiring of

workers.

• In the set up of a modern markets, economy, there are many factors,

which contribute to unemployment. Causes of unemployment arevaried and it may be due to the following factors:

• Rapid changes in technology

• Recessions

• Inflations

• Disability



Measurement of unemployment • The National Sample Survey Organization (NSSO),

which provides estimates of the rates of unemployment

based on its quinquennial surveys, uses three different

concepts. Usual Principal Status (UPS).

(a) Estimates the number of persons who may be said

to be chronically unemployed. Current Weekly StatusBasis (CWS).

(b) According to this, a person is said to be

unemployed for the week even if he is employed only for

a day during that week. Current Daily Status Basis(CDS).

(C) Any person who works for one hour or more during

the day is considered to be employed for a half day. As

such, CDS is aggregate of all unemployment days of all



Conti…

• Economists typically focus on the unemployment rate.

The unemployment rate is expressed as a percentage,

and is calculated as follows:

• Unemployment rate=unemployed worker/total

labor force*1oo

As defined by the International labour organization,

"unemployed workers" are those who are currently

not working but are willing and are able to work for pay,

currently available to work, and actively



Solutions of unemployment

• A Change in the pattern of investment

• Encouragement to small enterprises as

against big enterprises

• Problem of Choice of technique

• Encouragement of New Growth Centres in

Small Towns and Rural Areas• Subsidies on the Basis of Employment

• Reorientation of Educational Policy



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THANK YOU !!

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Presentation on Unemployment