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India’s falling jobless rate

Date: 05 January 2022 Tags: Miscellaneous

Issue

The unemployment rate in India reached a four-month high of 7.9 percent in December 2021, according to data from Centre for Monitoring Indian Economy (CMIE).

 

Background

The rates have shown a declining trend after economic activities were suspended due to Covid-19 restrictions in many states.

 

Details

  • The rates had stood at 7 per cent in November last year and 9.1 per cent in December 2020.

  • The urban unemployment rate rose to 9.3 per cent in December while the rural unemployment rate increased to 7.3 per cent from 6.4 per cent.

 

Unemployment risks

  • Urban unemployment had reached a double-digit rate to around 10.09 per cent in mid-December.

  • Decline in urban employment will show the impact on better-paying organised sector’s jobs. The fresh restrictions are further going to impact the rates.

 

Different types of unemployment

  • Disguised Unemployment

It refers to a situation of employment with surplus manpower in which some workers have zero marginal productivity. Here, more people are doing work than actually required.

 

  • Seasonal Unemployment

This type of unemployment occurs during certain seasons of the year. People involved in such type of activities may remain unemployed during the off-season.

 

  • Cyclical Unemployment

This type of unemployment occurs due to down swing in business activities. It occurs in regular cycles and is usually a shot-run phenomenon.

 

  • Educated Unemployment

  • This type of unemployment occurs because individual’s qualification does not match the job.

  • Faulty education system, mass output, lack of employable skills and dwindling formal salaried jobs are mainly responsible for this phenomenon.

 

  • Structural Unemployment

This type of unemployment occurs due to drastic changes in the economic structure of a country.

 

  • Frictional Unemployment

Frictional unemployment is caused due to improper adjustment between supply of labour and demand for labour.

 

Factors affecting unemployment

  • Lack of employable skills

  • Increase in population to job ratio

  • Lack of industrialization

  • Economic recession

  • Faulty government policies