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The major ones among them are: RURAL WORKS PROGRAMME: xonstruction of civil works of permanent nature in rural areas.
INTEGRATED DRY LAND AGRICULTURAL DEVELOPMENT: permanent works like soil conservation, development of land and water harnessing are undertaken. NATIONAL RURAL EMPLOYMENT PROGRAMME: to create community assets for strengthening rural infrastructure like drinking water wells, community works, irrigation wells, rural roads, schools etc. The Rural Landless Employment Guarantee Programme aims at generating gainful employment, creating productive assets in rural areas and improving the overall quality of rural life. SKILL DEVELOPMENT: a skilled labour is one who has proper training and education to work in a particular field. Training and education increase the productivity of workers. Educate and provide specialized training to the labour force To ensure continous employment of labour Able to absorb new technologies at work. To compete with labour force of the other developed countries.
With a view to impart shills through training. the govt of India has taken many steps. Problems associated with these steps are restructuring and reorientation of ITI courses with the changing system. Giving technical and professional help in running the business. Banks providing credit faci lities at concessional rates. . Low cost capital provided by the Govt to small enterprises and self-employed persons to develop their entrepreneurial ability. The Central Board Of Workers Education (CBWE) formed in1958 is creating understanding and enthusiasm among workers. ENTREPRENEURIAL DEVELOPMENT: Growth of employment involves setting up of new businesses expertise and organizing ability training and implementing schemes which are necessary to promote selfemployment. Vocational system in schools has to be modified. Industry-institute interaction continues to be weak. There are around 4300 Industrial Training Institutes(ITI) to produce specialized workers. Various ministries of the govt of India are providing vocational Education and Training which has introduced vocational education in the school system and there is a provision for vocational education after class X.
Policies to reduce Unemployment Government policies to reduce unemployment must be based upon the types and causes of unemployment that are prevalent. If demand for workers rises. Checking of Population Explosion: Rapidly rising population should be checked by adopting family planning and welfare schemes. Subsidies to Private Sector: Subsidies and other incentives should be given to private sector. it is logical that they will demand greater real wages (diagram). 7. Real Wage Unemployment This is unemployment as a result of a kind of market failure. 2. if demand falls. however. Heavy Investment in Basic Industries: Investment in heavy and basic industries and consumer goods industries should be increased. we will go into more detail in this section. General policies such as cuts in direct taxes should be effective across any kind of unemployment. 10. 6. Modernisation of Agriculture: Modernisation of agriculture should be done. 9. They provide more employment along with the supply of consumer goods. Similarly. as it increases the appeal of any job to any potential employee. a failure of the labour market to respond to changes in demand. 10 Strategies that the Government has Undertaken to Reduce Unemployment in India 1. Development of Cottage and Small-scale Industries: As they provide more employment by adopting labour intensive techniques.- All the above have helped in expansion of India’s industries and business into newer domains and regions. Developing Infrastructure of Economy: Infra-structure of the economy should be developed. 5. 3. 8. Introduction of Rural Works Programmes: Rural works programmes should be increased. Stress on Self-employment: Young entrepreneurs should be financed for selfemployment. workers should . Waste lands should be utilised. Change in Educational System: More emphasis should be given to vocational education. It may be worth glancing back to that section to remind yourself of the major kinds of unemployment.
If a downturn in demand occurs. Frictional Unemployment Remember. for example. as it increases national income. Increased G will cause an outward shift in AD. Over the economic cycle demand changes.expect to suffer lower real wages for the same work. However. increasing firms' ability to change wages and encouraging shorter term contracts and ensuring that the minimum wage level does not adversely impact the economy. and may create a multiplier effect. Theoretically. This could result in a negative multiplier effect. Unfortunate though it may seem. as their wage levels are threatened to the benefit of firms and businesses. as demand for good and services falls. firms will not be able to reduce wages when demand is low. Policies to combat real wage unemployment include trade union reform (reducing their powers). targeted policies to increase the quality of infrastructure or levels of investment will be more effective. and making more vacancies acceptable to the unemployed individuals.giving employees greater power over deciding wage conditions with the threat of industrial action (strikes etc. Policies to reduce the impact of Keynesian unemployment include: • Increased government spending . overly strong trade unions can utterly paralyse an economy (see Margeret Thatcher's time as Prime Minister in the UK). unemployment will rise. Also. this is unemployment generated through incomplete information of the labour market. unemployment will rise of fall (diagram).this includes reductions in taxes. guaranteeing every worker a minimum standard of living. Whilst this is undoubtedly wonderful. However. without government intervention. There are clear links between the rate of economic growth and the level of unemployment.) With strong unions.they are 'sticky' Minimum wage . Firstly. leading to bankruptcy (unemployment) or layoffs of workers (unemployment) Wage 'stickiness' . increasing the incentive to search for suitable jobs (such as reducing unemployment benefits and lower taxes on wages) could serve the dual purpose of increasing incentives to search for work.This is a characteristic of most modern economies. Secondly. wages cannot fall immediately in response . the labour market is once again inflexible Government policies to tackle this form of unemployment are invariably unpopular for workers. government spending to pay workers to dig huge trenches and fill them in again will help. This can be solved in two main ways. It is clear that in a depression. that is the way the market works! Real wage unemployment is usually caused by a combination of: • • • Strong trade unions . if the minimum wage is set too high. and regardless of how flexible wages are. it is largely appreciated that. Cyclical Unemployment It is worth noting that this form of unemployment can also be known as Keynesian or demand-deficient unemployment. increasing the knowledge of the local vacancies through government funded 'job centres' could reduce time between jobs. reductions in direct taxes will encourage more people into .Employees on long term contracts will have a fixed wage over a long period of time.
.• work. this could lead to dangerous long term unemployment. This is the inability of people to relocate from areas with low demand for labour. and that their skills are in demand somewhere.is the second and more direct method of combatting geographical unemployment. as worker could simply move to an area in which their skills are in high demand. whereby workers find it increasingly difficult to find jobs as they become less desirable the longer they are unemployed.could result in no need for retraining programs. Return to that section to remind yourself that a fall in interest rates encourages consumption and investment Geographical Unemployment Naturally.remember that a fall in interest rates can also stimulate AD. Structural Unemployment This is the inability of workers to change the kind of employment (for example from manufacturing to IT) they are in. to areas with high demand for labour. and also increase the level of disposable income. such as family ties. It aims to reduce geographical immobility by reducing barriers to free movement of workers (such as no border controls and cheap housing). thus reducing regional variations in unemployment caused by geographical immobility Reducing geographical immobility .incentives for both companies to retrain and employees to take part in training to make them more attractive and useful to firms. hopefully leading to a positive multiplier effect Reduction of interest rates . Governments may also directly take part in retraining projects where unemployment levels as a result of structural unemployment are very high Reducing geographical immobility . Left without intervention. Policies to reduce occupational unemployment include: • • Retraining .this is regional policy to increase the incentives for new businesses to locate in areas of high unemployment. Policies to reduce geographical unemployment include: • • Regional Incentives . This works providing the costs associated with reducing geographical immobility are lower than those required for occupational-orientated projects such as retraining. This is more difficult within a country as the barriers are often social in nature. policies to reduce geographical unemployment will seek to decrease geographical immobility of labour.
Reflating Aggregate Demand The government can also use macro-economic policies to increase the level of aggregate demand. These policies might involve lower interest rates or lower direct taxes. Policies should focus on improving the occupational mobility of labour An improvement in the incentives for people to search and then accept paid work . Structural unemployment is the result of workers being occupationally immobile . In the diagram below we see an increase in aggregate demand leading to an expansion of aggregate supply.this may require some reforms of the tax and benefits system A sustained period of economic growth so that new jobs are being created . effective policies to reduce the total level of unemployment need to encourage An improvement in the employability of the labour supply . and therefore give them a better chance of taking the new jobs that become available in the economy. .improvements in education and training will increase the human capital of these workers.leading to an increase in total employment. It might also encourage foreign investment into the economy from foreign multinational companies.policies to reduce unemployment In the long term.this requires that aggregate demand is sufficiently high for businesses to be looking to expand their workforces Improving skills and reducing occupational immobility Policies should provide the unemployed with the skills they need to find re-employment and improve the incentives to find work. Because of the increase in demand for output. the demand for labour at each wage rate will grow .so that the unemployed have the right skills to take up the available job opportunities.
And. Each year we expect to see a rise in labour productivity (more output per worker employed).see New Deal Employment Subsidies Government subsidies for those firms that take on the long-term unemployed will create an incentive for firms to increase the size of their workforce. Employment subsidies may also be available for overseas firms locating in the UK. Benefit and Tax Reforms Reducing the real value of unemployment benefits might increase the incentive to take a job . Economic Growth and Unemployment A growing economy creates jobs for people entering the labour market for the first time. And. businesses may decide to increase production by making greater use of capital inputs (machinery and technology).particularly if the real worth of unemployment benefits is well below the national minimum wage rate. Targeted measures are designed to help the long-term unemployed find re-employment (including the Government's "Welfare to Work Schemes" .Not every increase in demand and production has to be met by using more labour. it provides employment opportunities for people currently unemployed and looking for work .
employment in the British economy was at record levels. the number of people in work has fallen sharply. These policies need to focus on the underlying causes of unemployment for them to be successful. A range of government policies are available for Governments wanting to reduce the scale of unemployment in the economy. This has helped reduce the official measures of unemployment to a level not seen for over twenty-five years.The chart above shows the level of real national output (GDP) and total employment in the economy since 1980. · · · · Real Wage Keynesian Structural Frictional . Indeed by the summer of 2001. But a period of sustained economic growth (as experienced by the UK from 1993-2001) has led to a significant increase in employment levels. In both of the last two recessions (1980-81 and 1990-92).
The UK economy has developed a flexible labour market model similar to that of the United States during the last fifteen years. output and employment and rising. A National Minimum Wage has also been introduced. but they may need to fall if an industry experiences recession which puts jobs at threat. although some new legislation has been introduced to give workers the right to achieve union recognition. . The Labour Party under Tony Blair has not reversed these reforms since coming to office. A number of options are available. Keynesian Unemployment Policies to reduce Keynesian demand-deficient unemployment need to raise the level of aggregate demand for goods and services in the economy.Real Wage Unemployment Prescriptions for reducing real wage unemployment normally focus around the strategy of making each labour market more flexible so that pay conditions become more adaptable to changing demand and supply conditions. Real wages should rise when demand. Trade Union reforms were a centre-piece of the Conservative Government's strategy to improve the performance of the labour market.
Lower interest rates A relaxation of monetary policy through lower interest rates encourages the demand for credit. new hospitals or other major infrastructural projects). Lower Taxation A reduction in direct taxation increases consumers' disposable income and should boost household spending. Remember that interest rates are not set by the government. .Increased Government Expenditure The Government can raise the level of its own spending. The government could raise current expenditure (for example raising pay levels in education and the health service) or expand spending on capital projects which add to the stock of capital (for example spending on new roads. reduces saving and increases consumers' real 'effective' disposable incomes. There are variable time lags between the government reflating the economy using fiscal and or monetary policy and the final effect on output and employment in specific industries. as the marginal cost of investment will fall. Remember the importance of time lags! Government policies to stimulate increased aggregate demand for domestic output take time to have their effect. The effect may be greater if taxes are cut for people on lower than average incomes. all of which will boost consumption and demand. Depreciation of the exchange rate A lower value for the pound should lead to a rise in the orders of exports from UK firms and to a reduction of import penetration by making exports cheaper and imports more expensive. These tax-payers are likely to spend a greater percentage of their disposable income. This "fiscal pump-priming" directly increases aggregate demand and can have a multiplier effect on equilibrium national income. The Bank of England now sets interest rates each month at the meetings of the Monetary Policy Committee. Sustained economic growth provides a platform for more jobs to be created in the economy. It may also encourage firms to invest.
. Investment in worker training Spending on training schemes to re-skill the unemployed through investment in vocational education or guaranteed work experience for unemployed "outsiders" in the labour market.Structural Unemployment There are a number of different approaches that can be adopted to help alleviate structural unemployment. These are sometimes known as active labour market policies. this does not solve the problem of occupational immobility. Regional policy incentives Gives grants and subsidies to firms to locate in areas of high unemployment. The first involves direct government action to match jobs to the unemployed. However. Often regional policy requires extra retraining schemes to give workers the relevant skills to allow them to take up new jobs.
encourage them to find work more quickly. Frictional Unemployment Lower real values of unemployment benefit and improved job information The implementation of the Job Seeker's Allowance in 1996 ensures that workers are actively seeking work as the payment of benefit is dependent on them proving this at fortnightly interviews.Improving geographical mobility of labour The government could provide grants or low cost housing to encourage workers to move to other regions where there are jobs. search times between jobs could be reduced even further as workers would have to quickly take on new positions before their financial situations deteriorated. Better information on job vacancies in the labour market can help to reduce job search. The Labour Government is introducing a 10% starting rate of tax to encourage more low income groups back into work. Some economists argue that intervention slows the natural reallocation of resources to high growth areas and only makes the problem worse. Complementary reforms to the benefits system to reduce the problem of the poverty trap may also be needed. However. . therefore. Most analysts believe that tax cuts on their own are insufficient to reduce frictional unemployment. Market solution . Cuts in direct taxes The government could reduce direct taxes for the low paid to increase the post tax wage and. The problem with this policy is that people are inherently immobile as they are often bound by family and social ties. or limited the duration of a claim. In areas of above average unemployment it may make some sense to allow wage levels to fall to attract new capital into an area. if the government reduced the real value of unemployment benefits.no need for government to get involved! One approach is to simply leave the problem of structural unemployment to the market.