Unemployment | ICSE Class 9 Economics Notes

This note explains what unemployment means, how it is measured, who counts as a worker, how the worker-population ratio is calculated, the main types of unemployment (seasonal, structural, technological, disguised and open), the main causes of unemployment in India, its effects, and the ways of creating more employment.

What is unemployment?

People work to earn a living, but work does more than provide income. Being employed gives a sense of self-worth and helps people relate meaningfully to others. Every working person also contributes to the development of the country.

Unemployment is the opposite situation: people who want work cannot get it. Data on employment and unemployment in India come from several sources, one of which is the National Statistical Office (NSO), previously known as the National Sample Survey Organisation (NSSO).

Definition: Unemployment is a situation in which a person who is willing to work under the prevailing conditions of work and pay cannot find work.

How does the NSO define an unemployed person?

The NSO counts as unemployed all those who, owing to lack of work, are not working but who do one of the following.

• They seek work through employment exchanges, which are offices where job seekers register for vacancies notified through them.
• They seek work through intermediaries, friends or relatives.
• They seek work by making applications to prospective employers.
• They express their willingness or availability for work under the prevailing condition of work and remunerations (pay).

There are a variety of ways by which an unemployed person is identified. Economists define an unemployed person as one who is not able to get employment of even one hour in half a day.

How do people look for work?

Some people look for jobs in newspapers or through friends and relatives. In many cities, people stand in select areas looking for someone to employ them for that day's work.

Many people in rural areas do not go out and ask for a job but stay at home when there is no work.

Photograph: Unemployed mill workers waiting for casual jobs (NCERT Class 11 Figure 6.5). The photograph is in black and white. In the foreground a man seen in profile rests his chin on his hand. Behind him, several men sit or stand along a pavement in front of shops.

Who is a worker, and what is the worker-population ratio?

The total money value of all final goods and services produced in a country in a year is its gross domestic product (GDP). Adding the country's net earning from foreign transactions, which may be positive, negative or zero, gives its gross national product (GNP).

Activities that contribute to the gross national product are called economic activities. All those who are engaged in economic activities, in whatever capacity, high or low, are workers.

A person who is away from work temporarily because of illness, injury or other physical disability, bad weather, festivals, or social or religious functions is still a worker. Workers also include those who help the main workers, and the self-employed, not only those paid by an employer.

How many people work in India?

The workforce is the number of people actively engaged in economic activities. During 2022-23, India had a workforce of about 545 million (a million is 10 lakh, and one lakh is 1,00,000). Rural workers made up about two-thirds of it, and about 77 per cent of the workers were men.

Women carry out work such as cooking, fetching water and fuelwood, and they take part in farm labour.

They are not paid wages in cash or grain, and at times they are not paid at all, so they are not categorised as workers. Economists argue that these women should also be called workers.

What is the worker-population ratio?

Population is the total number of people who reside in a particular locality at a particular point of time. The worker-population ratio (WPR) shows the proportion of the population that is actively contributing to the production of goods and services.

WPR = (Number of workers ÷ Population) × 100

Multiplying by 100 expresses the ratio per hundred persons. If the ratio is higher, the engagement of people is greater. If the ratio for a country is medium or low, a very high proportion of its population is not involved directly in economic activities.

Table: Worker-population ratio in India, 2023-24

What does the table show?

Compared to women, more men are working: the ratio for men is 56.4 in total against 30.7 for women. For women, the rural ratio (34.8) is much higher than the urban ratio (20.7).

Overall, the rural ratio (45.6) is higher than the urban ratio (38.9). People in rural areas have limited resources to earn a higher income and participate more in the employment market.

Many do not go to schools, colleges and other training institutions, and some who go discontinue in the middle to join the workforce.

Urban people have a variety of employment opportunities and look for a job to suit their qualifications and skills. Two further points help explain why fewer women work, especially in urban areas.

It is common to find that, where men are able to earn high incomes, families discourage female members from taking up jobs. Many household activities done by women are not recognised as productive work.

Draw a grouped bar graph. Put Men, Women and Total on the horizontal axis and the ratio from 0 to 60 on the vertical axis.

For each group draw three bars for Total, Rural and Urban using the table values (men 56.4, 56.3, 56.4; women 30.7, 34.8, 20.7; total 43.7, 45.6, 38.9). Label each bar with its value.

Note: The worker-population ratio is not an unemployment rate. It divides the number of workers by the whole population, which includes people who are not looking for work. The unemployment rate divides the number of unemployed persons by the labour force.

Number of workers = Population × WPR ÷ 100

Worked example 1. In 1999-2000 India's urban population was estimated at 28.52 crore and its worker-population ratio at 33.7. (One crore is 10 million.) Estimate the number of urban workers.

Answer: Number of workers = Population × WPR ÷ 100 = 28.52 × 33.7 ÷ 100 = 961.124 ÷ 100 = 9.61 crore, correct to two decimal places. The same method on the rural figures (71.88 crore and a ratio of 41.9) gives 30.12 crore.

How is unemployment measured?

To measure unemployment, we need to know how many people are working and how many are looking for work. Together they form the labour force.

The unemployment rate may be defined as the number of people who are not working and are looking for jobs, divided by the total number of people who are working or looking for jobs.

Labour force = Employed persons + Unemployed persons

Unemployment rate = (Unemployed persons ÷ Labour force) × 100

The rate is stated as a per cent, that is, per hundred persons in the labour force.

Worked example 2. In the USA the unemployment rate rose from 3 per cent in 1929 to 25 per cent in 1933.

How many people were unemployed for every 100 people in the labour force in each year, and by how many percentage points did the rate rise? (A percentage point is the difference between two percentages.)

Answer: Unemployment rate = (Unemployed persons ÷ Labour force) × 100, so a rate of 3 per cent means 3 unemployed persons for every 100 in the labour force in 1929, and 25 per cent means 25 for every 100 in 1933.

The rate rose by 25 − 3 = 22 percentage points. The 1933 rate was more than eight times the 1929 rate, since 25 ÷ 3 is about 8.3.

Where do data on unemployment come from?

There are three sources of data on unemployment in India: the reports of the Census of India; the NSO's reports on the employment and unemployment situation, including the annual reports of the Periodic Labour Force Survey; and the data of the Directorate General of Employment and Training on registration with employment exchanges.

Though these sources provide different estimates of unemployment, they do provide the attributes of the unemployed and the variety of unemployment prevailing in the country.

A count of people with no work at all leaves out those who work but are not fully employed, which is why disguised unemployment and underemployment, described later, also matter.

What are the main types of unemployment?

Unemployment takes different forms, depending on why people are without work and how visible the lack of work is. Five forms are described below: seasonal, structural, technological, disguised and open unemployment. Later sections take each in turn.

Table: Types of unemployment with meaning and example

What is seasonal unemployment?

Definition: Seasonal unemployment is unemployment in the months of the year when there is no work in an occupation, because the work of that occupation is available only in certain seasons.

Why is farm work seasonal?

Work in agriculture is seasonal, so a village does not offer employment in every month of the year. When there is no work to do on farms, people go to urban areas and look for jobs.

Many people migrate to an urban area, pick up a job and stay there for some time, but come back to their home villages as soon as the rainy season begins. Seasonal unemployment is a common form of unemployment prevailing in India.

How long can the idle period last?

There is massive underemployment in agriculture in India, particularly in the unirrigated tracts. In these areas there is seasonal unemployment ranging from 4 to 8 months.

Even in the cropping season, work is not available throughout, because agricultural operations are not labour intensive (they do not use much labour). Hence, the people engaged in agriculture do not have the opportunity to work round the year.

Farm labourers between the harvest of one crop and the sowing of the next have no farm work for part of the year.

How can seasonal unemployment be reduced?

Take a small farmer, Laxmi, who owns about two hectares of unirrigated land. If the government spends some money, or a bank gives a loan, for a well to irrigate her land, she can take a second crop, wheat, during the rabi season, which begins with the onset of winter.

Suppose that one hectare of wheat can provide employment to two people for 50 days, including sowing, watering, fertiliser application and harvesting. On her two hectares that is work for 2 × 2 = 4 people for 50 days, so the second crop gives extra work on her own land.

Industries and services located in semi-rural areas can also employ many people. Examples are a dal mill, a cold storage for potatoes and onions, and honey collection centres near forest areas.

What is structural unemployment?

Definition: Structural unemployment is unemployment that arises from a change in the structure of the economy, when jobs in some industries disappear and the workers who lose them cannot readily take up the jobs available elsewhere.

What does the structure of the economy mean?

The GDP of a country comes from the agricultural sector, the industrial sector and the service sector. The contribution made by each sector makes up the structural composition of the economy.

As a country develops, it undergoes structural change. Usually the share of agriculture declines and the share of industry becomes dominant. At higher levels of development, the service sector contributes more to GDP than the other two sectors.

In the course of development, labour flows from agriculture and related activities to industry and services, and workers migrate from rural to urban areas.

Eventually, at a much later stage, the industrial sector begins to lose its share of total employment as the service sector enters a period of rapid expansion.

Such shifts mean that some kinds of work shrink while others grow. Workers in the shrinking kinds of work may not have the skills, or may not live in the places, that the growing kinds need.

Table: Trends in employment pattern by sector, 1972-73 to 2023-24 (per cent of workforce)

The asterisk (*) marks rounded-off data. The primary sector includes agriculture, mining and quarrying. The secondary sector includes manufacturing, electricity, gas and water supply, and construction. The service sector includes trade, transport and storage, and services.

In 1972-73 about 74 per cent of the workforce was engaged in the primary sector, and in 2023-24 this had declined to about 46 per cent. The shares of the secondary and service sectors increased from 11 to 24 per cent and from 15 to 30 per cent, respectively.

What are Indian examples of structural unemployment?

During the colonial period, India's world-famous handicraft industries declined, and no corresponding modern industrial base was allowed to come up. The decline of the indigenous handicraft industries created massive unemployment in India.

A later example is the textile mills of Ahmedabad. The city's wealth rested on more than 60 textile mills, which employed a labour force of 1,50,000 workers. These workers had secure jobs with a living wage, social security schemes protecting health and old age, and a strong trade union.

In the early 1980s, textile mills all over the country began to close down. In Ahmedabad the closure was long drawn out and spread over 10 years. By approximate count, over 80,000 permanent workers and over 50,000 non-permanent workers lost their jobs.

They were driven to the informal sector, which covers all enterprises other than public sector establishments and private sector establishments employing 10 hired workers or more, together with the workers in them. In both examples, jobs disappeared because an industry shrank, which is the pattern of structural unemployment.

Photograph: Informalisation in Ahmedabad (NCERT Class 11 Box 6.2). Two black-and-white photographs sit side by side. At left, a man sits on a cot beside a barred window with something in his hands.

At right, a woman in spectacles looks at the camera with a child behind her.

The caption reads: Change in the balance of power in a house: an unemployed mill worker peeling garlic whereas his wife has a new job of beedi rolling.

How does a mismatch between education and skills lead to structural unemployment?

Structural unemployment is also linked to a mismatch between the skills workers have and the skills the available jobs need. In India, the level of unemployment among educated youth is the highest.

As per NSSO data for 2011-12, the rate of unemployment among youth males who studied graduation and above was 19 per cent in rural areas and 16 per cent in urban areas.

Nearly 30 per cent of young rural female graduates were unemployed, while only about 3 to 6 per cent of primary-level educated youth were unemployed.

The situation has improved moderately, as indicated by the Periodic Labour Force Survey 2023-24. Higher education institutions need to improve so that students are imparted employable skills.

What is technological unemployment?

Definition: Technological unemployment is unemployment that arises when machines or new technology take over work that workers did earlier, so that fewer workers are needed to produce the same output.

How do machines affect jobs?

Every producer must decide whether to use more human labour or more capital (machines). In a market economy, if labour is cheaper than capital, more labour-intensive methods of production are used, and the reverse also holds.

To increase output, producers adopt new technology. For example, a factory can increase output by using a new type of machine. The adoption of new technology is called modernisation, although modernisation also covers changes in social outlook.

Mahatma Gandhi objected not to machinery as such but to the craze for labour-saving machinery. He warned that men go on saving labour until thousands are without work and thrown on the open streets.

Common examples of technological unemployment are an automatic machine that does the work of several factory workers, and a harvesting machine that does the work of many farm labourers.

What do Indian data show about output and jobs?

Between 1977-78 and 2017-18, industrial output went up by more than nine times, but employment in industry went up by around three times. In the service sector, production rose by 14 times while employment rose around five times.

So output grew much faster than employment. The ratio of output to the number of workers shows how much each worker produces.

Output per worker = Total output ÷ Number of workers

Worked example 3. Industrial output went up by more than nine times while employment in industry went up by around three times. Roughly how many times did industrial output per worker rise?

Answer: Output per worker = Total output ÷ Number of workers. If output rose by 9 times and workers by 3 times, output per worker rose by about 9 ÷ 3 = 3 times.

Because both figures are approximate, the answer is also approximate: about 3 times.

What is jobless growth?

During 1951 to 2023, the GDP of India grew positively and was higher than the growth of employment. Employment grew at a rate of not more than 2 per cent most of the times.

In the late 1990s employment growth started declining, and the gap between the growth of GDP and of employment widened.

This means that, without generating employment, the economy was able to produce more goods and services. Scholars refer to this phenomenon as jobless growth.

A line graph with two lines, GDP and Employment. The vertical axis is the rate of growth in per cent, from 0 to 10.

The horizontal axis lists periods from 1951-56 to 2022-23, and each point carries its value. The GDP line lies above the employment line at every period shown. The highest GDP label is 8.7 and the highest employment label is 3.2.

Reference: NCERT Class 11 Chart 6.3

Does technology only destroy jobs?

New technology also changes the kind of work available. Modern jobs include programming work in the IT industry, and technology has enabled people to produce factory-based goods at home in villages. The advent of high technology now frequently permits a highly competitive existence for efficient small-scale enterprises and specialist workers.

What are disguised unemployment, underemployment and open unemployment?

Definition: Disguised unemployment is a situation in which more people work on a farm or in an activity than are needed, so that some of them could move out without reducing output.

What is the farm example of disguised unemployment?

Economists call the unemployment prevailing on Indian farms disguised unemployment. Suppose a farmer has four acres of land and actually needs only two workers and himself to carry out the various operations on his farm in a year.

If he employs five workers and his family members, such as his wife and children, the situation is known as disguised unemployment. One study conducted in the late 1950s showed about one-third of agriculture workers in India as disguisedly unemployed.

How does Laxmi's family show underemployment?

Laxmi's two hectares of unirrigated land depend only on rain, and she grows crops such as jowar and arhar. All five members of her family work in the plot throughout the year. They have nowhere else to go for work.

Everyone is working and none remains idle, but their labour effort gets divided. Each one does some work, but no one is fully employed. This is underemployment: people are apparently working, but all of them work less than their potential.

This kind of underemployment is hidden, in contrast to someone who does not have a job and is clearly visible as unemployed. Hence it is also called disguised unemployment.

Suppose two of them move to work in a factory. Production on Laxmi's land is not affected, and the family earns extra income.

Surplus workers = Workers employed − Workers needed

Worked example 4. Laxmi's family of five works on about two hectares of unirrigated land. If two of the members move to work in a factory, production on the land is not affected. What share of the family's workers is at least not needed on the land?

Answer: Surplus workers = Workers employed − Workers needed. Production is unaffected when 2 of the 5 leave, so at least 2 workers are not needed. The share is at least 2 ÷ 5 × 100 = 40 per cent. The farm family shows disguised unemployment.

Is underemployment found outside farms?

There are thousands of casual workers in the urban service sector, such as painters, plumbers and repair persons, who search for daily employment, and many of them do not find work every day.

Others push a cart or sell something on the street, spending the whole day but earning very little.

What is open unemployment?

When people look for jobs openly, through newspapers, friends and relatives, employment exchanges, applications to employers, or by standing in select areas of a city for a day's work, the situation is called open unemployment.

Table: Disguised unemployment and open unemployment compared

What are the main causes of unemployment in India?

Several causes explain why unemployment persists in India.

Why does dependence on agriculture cause unemployment?

In 2023-24 the primary sector still accounted for the largest share of the workforce, 46.1 per cent. Farm work is seasonal, and small farms such as Laxmi's carry more workers than they need, so seasonal and disguised unemployment are common.

Why do jobs grow more slowly than output?

Industrial output rose by more than nine times but industrial employment by around three times. In the last few decades there has been rapid growth in GDP without a simultaneous increase in employment opportunities, which is jobless growth.

How do gaps in irrigation, credit, storage and transport limit jobs?

Without a well, Laxmi cannot take a second crop. To cultivate her land she also needs seeds, fertilisers, equipment and pumpsets. Being poor, she cannot afford many of these and must borrow from moneylenders at a high rate of interest.

Better rural roads, transport and storage would also let farmers sell more produce and give work to others in transport and trade.

How does the decline of industries cause unemployment?

When an industry shrinks or closes, its workers lose their jobs, as happened with handicrafts and with the textile mills. Since the late 1970s, many developing countries, including India, have paid attention to the informal sector because employment in the formal sector is not growing.

How does a mismatch between education and skills cause unemployment?

When compared to the less educated, a large proportion of educated persons are unemployed. Institutions of higher education need to impart employable skills, so that what people learn matches the work that is available.

How does a fall in demand cause unemployment?

Falling demand is a general cause of unemployment, shown by the Great Depression of 1929 and the years after it, when output and employment fell by huge amounts in Europe and North America.

Demand for goods in the market was low, many factories were lying idle, and workers were thrown out of jobs. In the USA, aggregate output fell by about 33 per cent from 1929 to 1933.

Why does a large labour force add to the problem?

India is described as a land-scarce but labour-abundant country, so a very large number of people must find work from limited land and a limited number of jobs. When the number of people looking for work grows faster than the number of new jobs, unemployment rises.

What are the effects of unemployment?

What happens to people without work?

Scholars say that people in India cannot remain completely unemployed for very long, because their desperate economic condition would not allow them to be so. They are forced to accept jobs that nobody else would do, such as unpleasant or even dangerous jobs in unclean or unhealthy surroundings.

Many workers do not get fair wages for their work, and those driven into the informal sector do not get regular income and can be dismissed without any compensation.

What happens to families and communities?

The Ahmedabad mill closures show the effect on a whole community. A whole class of workers was thrown back from the middle class into the informal sector, into poverty. There was widespread alcoholism and there were suicides, and children were withdrawn from school and sent to work.

How does unemployment affect migration and the economy?

Unemployment is the reason for rural-urban migration in India. Migration has costs: the cost of transport, a higher cost of living in the new place, and the psychic costs of living in a strange socio-cultural setup.

Workers are engaged in activities that contribute to the gross national product, so the work that unemployed people are not able to do is a contribution that is not made.

Rapid growth in GDP without a matching rise in employment has forced the government to take up initiatives to generate employment, particularly in rural areas.

How can more employment be created?

How can employment be created in farming and villages?

Irrigation helps. A well, or a dam with canals, lets farmers take a second crop and creates employment within agriculture itself, which reduces underemployment. Cheap agricultural credit helps farmers buy seeds, fertilisers and equipment in time.

Industries and services can be set up in semi-rural areas, such as a dal mill, a cold storage, honey collection centres, and industries that process vegetables and farm produce. It is believed that small-scale industries are more labour intensive, using more labour than large-scale industries, and so generate more employment.

How can education, health and tourism create jobs?

If all children are to attend schools, more buildings, teachers and other staff are needed. A study by the erstwhile Planning Commission (now known as NITI Aayog) estimates that nearly 20 lakh jobs can be created in the education sector alone.

Improving health needs many more doctors, nurses and health workers in rural areas. The same study says that if tourism is improved, more than 35 lakh additional people can be employed every year.

What do governments do directly and indirectly?

In the direct way, the government employs people in various departments, and runs industries, hotels and transport companies. In the indirect way, when a government-owned steel company raises its output, private companies that buy steel from it also raise their output and so their employment.

The Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA 2005) guaranteed 100 days of employment in a year to those in rural areas who are able to work and in need of work, and who volunteer to do unskilled manual work.

If the government failed in its duty to provide employment, it would give an unemployment allowance.

In 2025, this Act was replaced by the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Viksit Bharat-G RAM G 2025).

Glossary

• Unemployment — a situation in which a person who is willing to work under the prevailing conditions of work and pay cannot find work.
• Labour force — all the people who are working or looking for work; it is the base on which the unemployment rate is calculated.
• Unemployment rate — the unemployed (not working and looking for jobs) divided by the labour force, multiplied by 100 and stated as a per cent.
• Worker-population ratio — the number of workers divided by the population, multiplied by 100; it shows the share of people engaged in economic activities.
• Seasonal unemployment — lack of work in the months when the work of an occupation, such as farming, is not available.
• Structural unemployment — loss of jobs caused by a change in the structure of the economy, such as the shrinking or closure of an industry.
• Technological unemployment — loss of jobs when machines or new technology take over work that workers did earlier.
• Disguised unemployment — a situation in which more people work than are needed, so some could leave without reducing output.
• Underemployment — a situation in which people are apparently working but all of them work less than their potential.
• Open unemployment — visible lack of work, in which people look openly for jobs through newspapers, relatives, employment exchanges or applications.
• Jobless growth — a situation in which more goods and services are produced without a matching increase in employment.

Common errors and misconceptions

• Misconception: Everyone without a job is unemployed. Correct: The NSO counts as unemployed those who, owing to lack of work, are not working but seek work or express willingness or availability for work.
• Misconception: A low worker-population ratio means a high unemployment rate. Correct: The ratio divides workers by the whole population, while the unemployment rate divides the unemployed by the labour force. They measure different things.
• Misconception: If everyone in a family is working, nobody is unemployed. Correct: When the work could be done by fewer people, there is disguised unemployment. Everyone works, but their labour effort gets divided.
• Misconception: Only people paid by an employer are workers. Correct: The self-employed and those who help the main workers are workers too, and so are people temporarily away because of illness or festivals.
• Misconception: Seasonal unemployment means having no work for the whole year. Correct: It is tied to the seasons, so work is available in some months and not in others. In unirrigated tracts the idle months range from 4 to 8.
• Misconception: When GDP grows, jobs grow at the same pace. Correct: GDP growth has been higher than employment growth, and more goods and services have been produced without generating employment, which is jobless growth.

Exam-style questions with model answers

Q1. Define unemployment and state how the NSO identifies an unemployed person. [2 marks]

1. Unemployment is a situation in which a person who is willing to work under the prevailing conditions of work and pay cannot find work.
2. The NSO counts as unemployed those who, owing to lack of work, are not working but seek work through employment exchanges, intermediaries, friends or relatives, or by applying to prospective employers, or who express their willingness or availability for work.

Q2. In 2023-24 the worker-population ratio of women in India was 34.8 in rural areas and 20.7 in urban areas. Find the difference in percentage points and give two reasons why the ratio is lower for urban women. [3 marks]

1. The difference is 34.8 − 20.7 = 14.1 percentage points, with the rural ratio higher.
2. It is common to find that, where men are able to earn high incomes, families discourage female members from taking up jobs.
3. Many household activities done by women are not recognised as productive work, which leads to an underestimation of the number of women workers.

Q3. Explain seasonal unemployment with an example. [3 marks]

1. Seasonal unemployment is unemployment in the months of the year when there is no work in an occupation, because its work is available only in certain seasons.
2. Work in agriculture is seasonal, so a village does not offer employment in every month of the year. When there is no work on farms, people go to urban areas and look for jobs, and many return to their home villages as soon as the rainy season begins.
3. Even in the cropping season, work is not available throughout, because agricultural operations are not labour intensive, so people do not get work round the year.

Q4. Distinguish between disguised unemployment and open unemployment. [4 marks]

1. Meaning: in disguised unemployment more people work than are needed, so each works less than their potential. In open unemployment people have no work and look for it openly; an unemployed person is one who cannot get even one hour of work in half a day.
2. Visibility: disguised unemployment is hidden, because people are apparently working, and production is not affected if some leave. Open unemployment is clearly visible.
3. Where seen: disguised unemployment is common in farm work. Open unemployment is seen where people look for jobs through newspapers, friends, employment exchanges or applications.
4. Example: five members of a family all working on a small unirrigated plot show disguised unemployment. People standing in select areas of a city, waiting to be hired for the day, show open unemployment.

Q5. State and explain any five causes of unemployment in India. [5 marks]

1. Dependence on agriculture: farm work is seasonal, so people have no work in some months of the year.
2. Slow growth of jobs: output has grown much faster than employment, so more goods are produced without generating employment (jobless growth).
3. Decline of industries: when an industry shrinks or closes, as the textile mills of Ahmedabad did from the early 1980s, its workers lose their jobs.
4. Mismatch between education and skills: a large proportion of educated persons are unemployed, so institutions must impart employable skills.
5. Large labour force: India is land-scarce but labour-abundant, so a very large number of people must find work from limited land and a limited number of jobs.

Q6. Explain seasonal, structural and technological unemployment, giving an example of each. [6 marks]

1. Seasonal unemployment is lack of work in the months when the work of an occupation, such as farming, is not available.
2. Example: farm workers have no work when there is nothing to do on farms, and many migrants return to their villages when the rainy season begins.
3. Structural unemployment is loss of jobs caused by a change in the structure of the economy, when some industries shrink or close.
4. Example: textile mill workers in Ahmedabad lost their jobs when the mills began to close in the early 1980s.
5. Technological unemployment is loss of jobs when machines or new technology take over work that workers did earlier.
6. Example: an automatic machine in a factory that does the work of several workers means fewer workers are needed for the same output.

Key takeaways

• Unemployment is a situation in which a person willing to work under the prevailing conditions of work and pay cannot find work.
• The NSO counts as unemployed those who, owing to lack of work, are not working but seek work or express willingness or availability for work.
• Worker-population ratio = (Number of workers ÷ Population) × 100, and unemployment rate = (Unemployed persons ÷ Labour force) × 100. These are different measures.
• Seasonal unemployment follows the seasons. In unirrigated tracts it ranges from 4 to 8 months, and many migrants return to villages when the rainy season begins.
• Structural unemployment comes from changes in the structure of the economy. The decline of handicrafts and the closure of textile mills in Ahmedabad are Indian examples.
• Technological unemployment arises when machines or new technology take over work done by workers. Between 1977-78 and 2017-18, industrial output rose by more than nine times but industrial employment by only around three times, so jobs grew much more slowly than output.
• Disguised unemployment is hidden: everyone seems busy, but some could leave without reducing output. Open unemployment is visible, because people openly look for jobs.

Test yourself

What does the worker-population ratio show?

It is the number of workers divided by the population, multiplied by 100. It shows the proportion of the population that is actively contributing to the production of goods and services.

What does the unemployment rate compare?

It compares the people who are not working and are looking for jobs with the total number of people who are working or looking for jobs, called the labour force, usually as a per cent.

Why do many migrants return to their villages when the rainy season begins?

Work in agriculture is seasonal, so a village does not offer work in every month. People go to urban areas when there is no farm work and come back as the rains begin.

Which type of unemployment is hidden because everyone in a farm family appears to be working?

Disguised unemployment, also called hidden underemployment. Each person does some work, but all of them work less than their potential, and some could leave without reducing production.

What happened to textile workers in Ahmedabad when the mills closed?

Over a period of 10 years, by approximate count over 80,000 permanent and over 50,000 non-permanent workers lost their jobs and were driven to the informal sector.

What did Mahatma Gandhi object to in the use of machinery?

He objected not to machinery as such but to the craze for labour-saving machinery. He warned that men go on saving labour until thousands are without work.