Unemployment – Unemployment in India: Indian Economy


What is the meaning of Unemployment? Unemployment simply means a situation when able and willing people are not getting jobs as per their own capabilities.


1. Structural Unemployment

  • This type of unemployment is associated with economic structure of the country, i.e., productive capacity is inadequate to create a sufficient number of jobs. Rapidly growing population causes this.
  • This type of unemployment is of long run nature. Indian unemployment is basically related to this category of unemployment.

2. Under Employment

  • Those laborers are under-employed who obtain work but their efficiency and capability are not utilized at their optimum and as a result they contribute in the production up to a limited level.
  • A country having this type of unemployment fails to exploit the efficiencies of its laborers.

3. Open Unemployment

  • When the laborers live without any work and they don’t find any work to do, they come under the category of open unemployment. Educated unemployed and unskilled labor unemployment are included in open unemployment
  • The migration from rural to urban areas in search of work is very often found in India which is an example of open unemployment.

4. Disguised Unemployment

  • .If a person does not contribute anything in the production process or in other words, if he can be removed from the work without affecting the productivity adversely, he will be treated as disgustedly unemployed. The marginal productivity of such unemployed person is zero.
  • Agriculture sector of underdeveloped/developing economies possesses this type of unemployment at a large scale.

5. Frictional Unemployment

  • The unemployment generated due to change in market conditions (change in demand and supply conditions) is called frictional unemployment.
  • Agriculture is the main occupation in India. The supply conditions still depend upon weather’s mood and similarly demand conditions depend upon availability of resources.
  • Any change arising either of any or both creates a diversion from the equilibrium which results in frictional unemployment.

6. Seasonal Unemployment

  • It appears due to a change in demand based on seasonal variations. Laborers do not get work round the year.
  • They get employed in the peak season of agricultural activities and become unemployed when these activities are over.
  • Indian agriculture ensures employment for only 7-8 months and labourers remain unemployed in the remaining period.
  • This temporary type of employment gives birth to seasonal unemployment.


  • The share of a agriculture in total employment has come down from 61.67 per cent in 1993-94 to 58.54.per cent in 1999-2000, and further to 52.0 percent in 2008-09. With the declining share of agriculture in GDP, the scope for absorbing substantial additional labour force in agriculture appears limited. While construction and services, particularly transport, storage and communication, contributed in maintaining employment growth in the economy, employment growth in manufacturing fell short of its potential.
  • As per the survey carried out by the National Sample Survey Organization in the year 1999.2000, the total employment in both organized and unorganized sectors in the country was of the order of 39.7 crore, i.e., around 2.8 crore in the organized sector and the balance 36.9 crore in the unorganized sector. Out of 36.9 crore workers in the unorganized sector, there are 23.7 crore workers employed in agricultural sector, about 1.7 crore in construction work, 4.1 crore in manufacturing, 3.7 crore in trade and 3.7 crore in transport, communication and services. The Census 2001 has estimated the number of workers in the country as 40.2 crore, out of which 31.3 crore are main workers and 8.9 crore are marginal workers.


The Approach paper to the Eleventh Plan targets generation of additional employment opportunities n services and manufacturing, in particular, labor intensive manufacturing sectors such as food  processing, leather products, footwear and textiles, and in service sectors such as tourism and construction. It calls for elimination of distorting fiscal incentives which foster capital intensity; infrastructure investment removal of distortions that hinder competition, prevent entry and discourage

graduation from unorganized to organized status; and greater emphasis on vocational  training and skill development to improve employ-ability of youth. As Village and Small Scale Enterprises (VSE) will have to provide most of the new employment during the Eleventh Plan, the Approach Paper also calls for redressing the problems faced by VSE units and home based workers, particularly women, such as non-availability of timely and adequate credit, unreliable or absence of power supply, requirement of permission from a number of government agencies and burden of multiple  inspections.


Women constitute aa significant part of the workforce of India but they lag behind men in terms of level and quality of employment. The Census of India (2001) has registered 25.60 percent of female population as workers numbering 127.22 million in absolute terms out of a total female population of 496 mllion. The majority of women workers are employed in the rural areas. Amongst rural women workers, 87 percent are employed in agriculture as laborers and cultivators, Amongst the women workers in the urban areas, 80 percent are employed in unorganized sectors like household industries, petty trades and services building and construction, etc. The employment of women in the organized sector (both public and private sectors) as on Mar 31, 2002, was about 4.935 million. This constitutes of 17.8 percent of the total organized sector employment in the country. The distribution of women employees in major industries reveals that community, social and personal services sectors continued to absorb the majority of women employees.


The problem of child labor is a major social concern. the number of working children in the country declined from 2 percent of the total population and 6 percent of the total workforce in 1981 to 1.34 percent of the population and 3.59 total workłorce in 1991. According to the census 2001 figures, there are 1.25 crore working children in the age group of 5-14 as compared to the total child population of 25.2 crore, of which 1.07 crore working children are in the age group of 10-14. Children continue to be employed in the unorganized and Nome-based industries and domestic services. The state with the highest child labor population in the country is Andhra Pradesh. Other states having a child labor population of more than a million are Madhya Pradesh, Maharashtra and Uttar Pradesh.

Government has adopted two schemes namely National Child labor Project Scheme (NCLP) and Grant-in-aid to voluntary organizations for taking up action oriented PrOgrams in the field of rehabilitation of child labour.

Unemployment - Unemployment in India

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