Throw some light on the types of unemployment that exists in a developing economy like India.

The unemployment refers to the situation where individuals who are willing and available for work are unable to find employment.

Various Types:

  1. Open unemployment
    • Willing to work, available but unable to find.
  2. Disguised Unemployment
    • Though seemingly employed but labour productivity and contribution is close to nil.
    • g. Agriculture sector in India employs 47% workforce but contribute only 17% to GDP.
  3. Cyclical Unemployment
    • Caused due to business cycles like recession, boom, and depression.
    • g. Covid-19 pandemic saw unemployment rise to over 20%.
  4. Seasonal unemployment
    • When during lean seasons in industry/ sector workers are laid off.
    • g. Agriculture, leather, etc.
  5. Frictional Unemployment
    • When individual shifts job, remains unemployed in transition period.
  6. Structural unemployment
    • Due to nature of growth such as capital intensive, need for specialised skills.
    • g. Service sector contributes 56% to GDP but employs merely 27%.
  7. Educational unemployment
    • When educated individuals are unable to find jobs.
    • India adds additional 10 lakh labour force every year, mostly graduates.

Rising unemployment has emerged as major challenge due to increasing poverty, food insecurity and demographic disaster. Need of the hour is to invest in human capital formation (National Skill Mission), tailor made policies given nature of employment (e.g. develop skills in industrial revolution 4.0) and promote ease of doing business.


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