Unemployment

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• Unemployment occurs when a person who is actively searching for employment and ready to accept work at current wage rate and still unable to find work.

• It is used as a measure of the health of the economy.

• It has been a burning problem of modern societies, whether developed or undeveloped.

• It is measured in terms of unemployment rate = no. of unemployed/ total labour force

Types:

Voluntary unemployment:

Frictional Unemployment:

• Temporary phenomenon,

• Workers temporarily out of work while changing jobs

• Strikes and lockouts

• It is due to difficulties in getting workers and vacancies together.

Casual unemployment:

• Where workers are employed on a day-to-day basis

• Occurring due to short-term contracts, which are terminable any time

Seasonal unemployment:

• Some industries and occupation in which production activities are seasonal in nature

• Agro-based industrial activities like sugar mills etc.

• Offer employment only for a certain period of time in a year

• Can find in any country, causes wastage of resources,

Structural unemployment:

• Due to structural changes in the economy, it taken place

• Decline in demand for production lead to reduction in its manpower requirements

• E.g. improvement of transportation in Towns, tongas become out dated and tonga operators become unemployed, therefore, they need to search jobs in any other industry

Technological unemployment:

• It arise as a result of technological improvement

• Due to improvement in machinery, production methods, some workers are replaced by Machines

• e.g. due to the arrival of computers, typewriters lost their jobs.

Cyclical unemployment:

• Trade cycles, recessionary and depressionary phases

• Deflationary period, demands decline, production decreased and need to reduced workers

• Unemployment caused by insufficiency of effective demand

• Short term phenomenon

• Increasing total expenditure and pushing up the level of effective demand, can reduced this kind of unemployment

Chronic unemployment:

• Unemployment tends to be a long-term feature of a country it is called chronic unemployment.

• Underdeveloped country

• Vicious circle of poverty

• High population growth

• Backward or primitive technology

• Low capital formation, are causes for this

Disguised unemployment:

• Situation of employment with surplus manpower, some workers have zero marginal productivity, removal of them will not affect the volume of total output

• Suppose, for one work four man work effectively, if there are six people involved with that work they are not contributing anything in additional production

• Their marginal productivity is zero

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