PRESENTED BY:

Unemployment as defined by the Bureau of Labor Statistics (BLS) occurs when

people are without jobs and have actively looked for work in the past four weeks, and are currently available for work. Also, people who were temporarily laid off and are waiting to be called back to that job are counted as unemployed.

 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.

FEATURES

CLASSIFICATION OF UNEMPLOYMENT
Involuntary Unemployment
Cyclic Sudden Seasonal Structural Disguised

Voluntary Unemployment

 Voluntary Unemployment

In this type of unemployment a

person is out of job because of his own desire to not work on the prevalent or prescribed wages.

Involuntary Unemployment
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

Cyclic Unemployment Part of the capitalist system and a result of trade cycle. There is greater unemployment and when there is depression a large number of people are rendered unemployed.
Seasonal Unemployment Certain industries and traders engage workers for a particular season. When the season has ended the workers are rendered unemployed. Sudden Unemployment Prevalent in industries, trades and business where people are employed for a job and suddenly when the job has ended or due to some changes they are asked to go.

 Structural Unemployment - It occurs when labor market is unable to provide jobs for everyone. - Reasons : mismatch b/w skills of unemployed and expectation of employers , population overgrowth Disguised unemployment - It occurs when more people are engaged in work than required actually. - common in agriculture sector in our country.

MEASUREMENT OF UNEMPLOYMENT
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.

Usual Principal Status (UPS) Estimates the number of persons who may be said
to be chronically unemployed.

Current Weekly Status Basis (CWS) 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) 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 persons.

Unemployment Rate

Unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.

Country

2002 8.8

2003 9.5

2004 9.2

2005 8.9

2006 7.8

2007 7.2

2008 6.8

2009 10.7

2010 10.8

2011 9.4

India

INDIA
12 10 8 6 4 2 0
Country 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 INDIA

Main causes of unemployment in India

Explosive population growth Backward and seasonal agriculture Poverty Decay in small scale and cottage industries Defective social system Less means of self-employment Joint family system and immobility of

labour

Economic and Social Costs of Unemployment

The private costs for the unemployed Loss of income

Fall in real living standards Increased health risks

Stress Reduction in quality of diet Social exclusion because of loss of work and income

Loss of marketable skills (human capital) and motivation

The longer the duration of unemployment, the lower the chances of finding fresh employment - the unemployed become less attractive to potential employers

Consequences of Unemployment
Economic Consequences for Businesses Negative consequences Fall in demand for goods and services Fall in demand for businesses further down the supply chain Consider the negative multiplier effects from the closure of a major employer in a town or city Some positive consequences Bigger pool of surplus labour is available but still a problem if there is plenty of structural unemployment Less pressure to pay higher wages Less risk of industrial / strike action fear of job losses leading to reduced trade union power

Continued..
Consequences for the Government (Fiscal Policy) Increased spending on unemployment benefits and other income related state welfare payments

Fall in revenue from income tax and taxes on consumer spending Fall in profits reduction in revenue from corporation tax May lead to rise in government borrowing (i.e. a budget deficit)

Continued..
Consequences for the economy as a whole Lost output (real GDP) from people being out of work the economy will be operating well within its production frontier

Unemployment seen as an inefficient way of allocating resources labour market failure? Some of the long-term unemployed may leave the labour force permanently fall in potential GDP Increase in the inequality rise in relative poverty

POLICIES TO REDUCE UNEMPLOYMENT

Demand side Policies to Reduce Unemployment

These are mainly measures to boost total labour demand (reduce cyclical unemployment)

Lower interest rates (a monetary policy stimulus) A lower exchange rate (helps exporters) Lower direct taxes (fiscal stimulus to spending power) Government spending on major capital projects (e.g. improving the transport infrastructure) Employment subsidies (including the New Deal programme) designed to reduce the cost to a business of employing additional workers Incentives to encourage flows of foreign investment in the UK particularly in areas of above average unemployment

Supply-side Policies To Reduce Unemployment

Supply-side policies These are measures to improve labour supply (reduce frictional and structural unemployment) Increased spending on education & training including an emphasis on lifetime-learning)

Improved flows of information on job vacancies Changes to tax and benefits to improve incentives Measures designed to make the labour market more flexible so that workers have the skills and education that gives them improved employment options

Consequences of falling unemployment

The circular flow and the multiplier:

Incomes flowing into households will grow

Falling unemployment adds to demand and creates a positive multiplier

effect on incomes, demand and output.
The balance of payments:

When incomes and spending are growing, there is an increase in the

demand for imports. Unless this is matched by a rise in export sales, the trade balance in goods and services will worsen

Continued..
Government finances: With more people in work paying income tax, national insurance and value added tax, the government can expect a large rise in tax revenues and a reduction in social security benefits Inflationary effects Falling unemployment can also create a rise in inflationary pressure particularly when the economy moves close to operating at full capacity However this is not really a risk when the economy is coming out of recession, since aggregate supply is likely to be highly elastic because of a high level of spare capacity

SOLUTIONS
A Change in the pattern of investment

Encouragement to small enterprises as against big enterprises

Problem of Choice of technique Encouragement of New Growth Centers in Small Towns and Rural Areas Subsidies on the Basis of Employment Reorientation of Educational Policy

Government initiatives

Swarnjayanti Gram Swarozgar Yojana(SGSY)

The persons taking up self-employment are called swarozgaris.
Swaranjayanti gram swarozgar yojna(SGSY) is a holistic programme for promoting self employment of rural poor. The SGSY is being implemented by the District Rural Development Agencies(DRDAs), with the active involvement of Panchayati Raj Institutions(PRIs), the Banks, the Line departments and the NonGovernment Organisations(NGOs)

Swarnjayanti Shahari Rozgar Yojana(SJSRY)

Implementation of SJSRY begins from 1st December 1997 under funding pattern of Centre and State in 75:25 basis.

Objectives
Gainful Employment to Urban Poor, Unemployed and Underemployed. Setting up Self employment ventures and provision of wageemployment Community empowerment trough creation of suitable community structures on UBSP pattern

Prime ministers Employment generation programme(PMEGP)

The rozgar yojna(PMRY) directly creates self-emploment by
providing credit linked subsidy for setting up of micro

enterprises. The programme came into existence after merger

of two earlier schemes namely Rural Employment Generation

Programme(REGP) and Pradhan Mantri

The Mahatma Gandhi National Rural Employment Guarantee Act(MGNREGA)

It aims at enhancing the livelihood security of people in rural areas by guaranteeing hundred days wage-employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work.