Unemployment In India.docx

UNEMPLOYMENT IN INDIA

Abstract: This paper examines the cause of unemployment in India in current market scenario. It also discusses the various government policy initiatives taken to curb unemployment and its impact. Government is rightly concerned about creating jobs for youth and rising levels of youth unemployment because of not only direct economic costs but also social issues related problems like as poverty, acid attacks, violence against women on her working place, drugs, labour force, inadequate education planning, inappropriate education system, new-liberal economic policy, various causes of poor placements. This paper also suggests some measure to overcome of these burning problems of unemployment. The paper also suggests and recommends some points to overcome of this current situation of unemployment prevailing in India.

Importance of study: 1. To examine the current scenario of unemployment in India. 2. To analyze the government initiatives for reducing unemployment. 3. To suggest ways to reduce unemployment.

Research Questions: 1) What are the ways to reduce unemployment? 2) What are the causes of unemployment in India? 3) What are the types of unemployment in India? 4) What are the concepts to measure unemployment? 5) What are the consequences of unemployment in India?

Introduction Unemployment is a complex phenomenon. In ordinary sense, it denotes a situation when a person is not gainfully employed in a productive activity and thereby does not work. The 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 force1. During the period of recession, an economy usually experiences a very high unemployment rate. In India, unemployment remains a subject of concern since it was first recognized in 1950s. During that period; the Government of India had only few initiatives of employment generation until the first Five Year Plan was drafted in the year 1950-1951. This plan laid the foundation for overall and sectorial development in a medium term prospective for achieving the goal of employment growth and increasing the labour force. For the first time, in the Seventh Five Year Plan (1985-1990), employment was placed at the core of development strategy. In the Ninth Five Year Plan (1997-2002), employment was identified as one of the three important dimensions of state policy with others being quality of life and regional balance. The Eleventh Five Year Plan (2007- 2012) mainly focused on ‘inclusive’ growth and conceived employment as the key element of the same. Thus unemployment has received great importance in the development agenda of India since Independence. Despite these initiatives, the present unemployment rate in our country is at 4.9%.In India, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. The unemployment rate for the year 2013-14 in rural India is 4.7% whereas in the share of urban India is 5.5% which is comparatively higher. The proportion of male and female workforce in rural India is 4.2% and 6.2% respectively while it is 3.9% and 12.4% respectively in Urban India. It is interesting to note that rural females are more employed than their urban counterpart whereas urban males lead their rural counterpart. The overall unemployment rate among male is 4.1% and 7.7% in female across the country. (Ministry of Labour and Employment Bureau 2013-14). Various strategies and proposals have been implemented to generate employment. Many employment programmes and policies have been

1

T.K. Jain & V.K. Ohiri, Indian Economic Development, at 154 (8th ed. 2010).

introduced and undertaken to boost self-employment and help unemployed engage in public works. It is believed that India’s economic growth can be accelerated if human resources are purposefully and efficiently allocated.

CONCEPTS RELATED TO THE MEASUREMENT OF EMPLOYED AND UNEMPLOYED: A. Labor Supply: It refers to the supply of labor at different levels of wages. It can increase or decrease even if the number of workers remains constant. This is because the supply of labors is measured in terms of man-days, and one man-day is referred to as 8 hours of work. B. Labor force: It refers to the number of persons actually working or willing to work. It has nothing to do with wage rate. It is also measured in terms of man days. The size of labor force may increase or decrease only when the number of persons actually working or willing to work increases or decreases. In other words it can be said that labor force is measurement of potential labor force. C. Work Force: It refers to the number of persons actually working and does not consider those who are willing to work. It is the measurement of actual labor force. Further, the difference between the labor force and work force gives us the number of persons unemployed at a given time. D. Participation Rate: It refers to the percentage of population actually participating in the production activity. It is measured as the ratio between the work force and total population of the country.2

2

Surbhi Arora, Economics for Law Students, at 238 (2nd ed. 2014)

Causes of Unemployment in India

The Indian economy suffers from the problem of unemployment over the years. The main causes of ever-increasing unemployment in India are as follows: 

Slow Economic Growth:

In India, the growth rate of the economy is very slow and it fails to provide enough employment opportunities of the rising population. The availability of labor is much more than the availability of employment opportunities.19 

Rapid Population Growth:

The expansion of population has directly added to the unemployment problem by adding to the labor force. This has reduced the savings and investment resulting in a slow growth of job opportunities. 20 

Increase in Labour force:

Since Independence, death rate has rapidly and the country has entered the second stage of demographic transition. Over the years, mortality rate has declined rapidly without a corresponding fall and birth rate and the country has thus registered an unprecedented population growth. This was naturally followed by an equally large expansion in labour force. In India context social factors affecting the labour supply are as much important as demographic factors. Since independence, education among women has changed their attitude towards employment. Many of them now compete with men for jobs in labour market. The economy has however, failed to respond to these challenges and the net result is continuous increase in unemployment backlog. 

Seasonal Occupation:

Agriculture is the primary occupation in India and provides employment to a major portion of the population; but its seasonal character does not provide work to the farmer all the year

round. The number of disguised unemployment is nearly 15% of the total working population. 

Decline of Cottage Industries:

In rural India, cottage industries are the only means of employment particularly of the landless people. They depend directly on various cottage industries for their livelihood. But, now-a-days, these are adversely affected by the industrialization process. Actually, it is found that they cannot compete with modern factories in quality as well as production. As a result this village industry suffers serious loss and gradually closes down. Owing to this, the people who work in there remain unemployed. 

Defective education system:

The modern day education is very defective and is confined within the walls of class room only. The present educational system is not job oriented, it is degree oriented. It is defective on the ground that it is more general than vocational and technical. Thus, the people who get general education are unable to get any work. It leads to unemployment as well as underemployment. 

Inadequate Employment Planning:

The employment planning of the government is not adequate in comparison to the population growth. As a consequence, a great difference is visible between the job opportunities and population growth. On the other hand it is a very difficult task on the part of Government to provide adequate job facilities to all the people. Besides this, the government has not taken any adequate step in this direction. The faulty employment planning of the Government expedites this problem to a great extent. In five years plan low priority has been given to employment. As a result the problem of unemployment is increasing day by day3.

3

Causes of Unemployment in India, Education Research and Development Organization, Available at https://www.erdoclasses.com/causes-of-unemployment-in-India.php

CONSEQUENCES OF UNEMPLOYMENT IN INDIA:

Unemployment is considered to be the most threatening problem which India is facing today. It is not only viewed as an economic issue because it also has social, moral and political consequences. A. Economic Consequences: When the man power resources of the country are not utilized due to unemployment, it is a permanent loss for the society. The total quantity of goods and services which could have been produced during the period of unemployment is lost forever by the society. When manpower is not utilized properly there is a loss of human capital. The resources invested in the education, training and skill formation of man power gets wasted when the people don’t get work. B. Political Consequences: Continued unemployment and economic insecurity leads to discontentment, frustration and resentment against the existing socio-economic system. The situation of lawlessness might prevail in such conditions. The unemployed people become easy target of radicalism. The Naxalite Movement is a result of large scale unemployment and its economic miseries. C. Moral Consequences: Unemployment even leads to moral degeneration. A person with an empty stomach is likely to develop various types of moral vices. Unemployment breeds corruption, dishonestly, gambling etc. D. Social Consequences: Unemployment lowers the quality of life in the economy. Further, the employees are able to exploit the workers by giving them lower wages and make them work for longer hours.

Types of Unemployment in India

1. Open Unemployment Open unemployment is a situation where in a large section of the labour force does not get a job that may yield them regular income. This type of unemployment can be seen and counted in terms of the number of unemployed persons. The labour force expands at a faster rate than the growth rate of economy. Therefore all people do not get jobs. 2. Disguised Unemployment. It is a situation in which more people are doing work than actually required. Even if some are withdrawn, production does not suffer. In other words it refers to a situation of employment with surplus manpower in which some workers have zero marginal productivity. So their removal will not affect the volume of total production. Overcrowding in agriculture due to rapid growth of population and lack of alternative job opportunities may be cited as the main reasons for disguised unemployment in India. 3. Seasonal Unemployment It is unemployment that occurs during certain seasons of the year. In some industries and occupations like agriculture, holiday resorts, ice factories etc., production activities take place only in some seasons. So they offer employment for only a certain period of time in a year. People engaged in such type of activities may remain unemployed during the offseason. 4. Cyclical Unemployment It is caused by trade cycles at regular intervals. Generally capitalist economies are subject to trade cycles. The down swing in business activities results in unemployment. Cyclical unemployment is normally a shot-run phenomenon. 5. Educated Unemployment Among the educated people, apart from open unemployment, many are underemployed because their qualification does not match the job. Faulty education system, mass output, preference for white collar jobs, lack of employable skills and dwindling formal salaried jobs are mainly responsible for unemployment among educated youths in India. Educated unemployment may be either open or underemployment. 6. Technological Unemployment It is the result of certain changes in the techniques of production which may not warrant much labour. Modern technology being capital intensive requires fewer labourers and contributes to this kind of unemployment.

7. Structural Unemployment This type of unemployment arises due to drastic changes in the economic structure of a country. These changes may affect either the supply of a factor or demand for a factor of production. Structural employment is a natural outcome of economic development and technological advancement and innovation that are taking place rapidly all over the world in every sphere. 8. Underemployment It is a situation in which people employed contribute less than their capacity to production. In this type of unemployment people are not gainfully employed. They may be employed either on part-time basis, or undertake a job for which lesser qualification is required. For example a Post Graduate may work as a clerk for which only S.S.L.C. is enough.

GOVERNMENT INITIATIVES AND POLICY MEASURES Government of India has taken several policy measures to fight the problem of Unemployment. Some of the measures are as follows:Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): It was enacted by the Central Government in 2005, aimed at improving living standards of the rural poor and providing social security to them by giving the adult members of every household at least one hundred days of guaranteed wage employment of unskilled manual work in a financial year. The Act succeeded in generating employment in more than 300 districts since it was launched. In the financial year 2013-14, 3, 81, 26,455 households provided employment. Besides all these achievements there are many issues faced by the government which are related to this scheme. In April 2011, the Central and the State Level revised the policy and concluded that the budget of Rs.40,000 crore could have been utilized more efficiently with effective planning for curbing unemployment. Schedule one of this Act focuses on conservation of natural resources but evidences showed the destruction of natural resources in some areas where contracting was allowed and machinery were involved. To add on to it, the lack of adequate administration and technical knowhow at Block and Gram Panchayat has adversely affected the preparation of plan, security, appropriate monitoring and measurement of work. With proper

implementation of this policy, the rate of employment generation could have been higher as compared to the four fold increase in the budget for this scheme since 2005. National Skill Development Mission : It was initiated after the Twelfth Five Year Plan emphasized on bridging the skill deficit needed for jobs. This programme aims to skill 500 million people by the year 2022. The Prime Minister’s National Council of Skill Development was set up as an apex organization to frame policies, give directions and provide vocational training in schools. To promote skill development in rural areas, Apprenticeship Training Scheme (ATP), Vocational Training Providers (VTP) and many other programmes were undertaken. Government has also decided to transform Public Employment Exchanges into Career Centers to provide guidance and career counselling to young people. National Multi-Skill programme called Skill India has been launched which focuses mainly on entrepreneurial skill development. The skill challenge becomes acute for India considering that the country has a large portion of its population below 25 years of age. Currently a major proportion of this population is not productively engaged in economic activities due to a ‘skills versus jobs requirement’ mismatch which leads to economically inactive working age group people affecting the economy and increasing unemployment. Swarna Jayanti Shahari Rozgar Yojana: (SJSRY) was launched in 1997 for urban poverty alleviation. The target population is the urban poor living below the poverty line. The key objective of the Scheme is to provide gainful employment to the urban unemployed through the setting up of self-employment ventures or provision of wage employment. Studies show that the training programmes for beneficiaries were organized by NGOs and other institutions which were not recommended in the SJSRY guidelines. Thus it is evident that this policy has been unable to generate the required level of employment due to several drawbacks.

The Rural Landless Employment Guarantee Programme: It was started on 15th August 1983, with the objective of expanding employment opportunities for rural landless the programme aimed at providing guarantee of employment to atleast one member of landless household for about 100 days a year. Thought, the programme was to be fully financed by the central Govt, the implementation of the programme was entrusted to the states.

Conclusion

India is a fast growing economy. There has been enormous improvement in the unemployment scenario since the time it was recognized as a challenge. The government is implementing various measures for increasing the employment rate and has succeeded to a great extent. Participation of women and the marginalized groups speaks about the success of the policy measures. The wide spread skill development programmes have gained popularity across the nation. With better enforcement of the strategies mentioned above, the employment level can be significantly improved.

References 1. Asian Development Bank, Emerging Asia: Trends and Challenges. Oxford University Press. 1996. 2. Brahmananda PR. 50 Years of the Free Indian Economy, Indian Economic Association Trust for Research and Development, New Delhi. 1997. 3. Centre for Monitoring the Indian Economy (CMIE). Basic Statistics Relating to the Indian Economy. Bombay: Table 13.4, 1994. 4. Census of India. Report on Post-Enumeration Check. Paper 1 of New Delhi. 1991, 1994. 5. India. Ministry of Human Resource Development, Department of Youth Affairs and Sports, National Youth Policy. New Delhi. undated.