Unemployment (What is it?)
- Unemployment refers to a situation where people who are willing and able to work at the prevailing conditions do not have work.
- It is an important indicator of labour-market health and utilisation of human resources.
Major Types of Unemployment
- Disguised Unemployment: More workers are engaged than actually required; removing some workers does not significantly reduce output. Commonly associated with agriculture.
- Seasonal Unemployment: Employment is available only during certain periods of the year, often seen in agriculture and seasonal industries.
- Structural Unemployment: A mismatch exists between workers’ skills and the skills demanded by available jobs.
- Frictional Unemployment: Temporary unemployment arising when workers move between jobs or enter the labour market.
- Cyclical Unemployment: Results from a downturn in economic activity and falling aggregate demand.
Key Features — Why is it Important?
- Low unemployment does not necessarily mean quality employment.
- Underemployment, low wages, informality and insecure work can coexist with employment.
- Youth and educated unemployment can indicate a mismatch between education and labour-market demand.
- Persistent unemployment represents underutilised human capital and lost potential output.
Related Concepts
1. Labour Force: Includes people who are working or seeking/available for work, according to the statistical definition being used.
2. Labour Force Participation Rate (LFPR): Measures the proportion of the relevant population participating in the labour force.
3. Worker Population Ratio (WPR): Measures the proportion of the population that is employed.
4. Unemployment Rate (UR): Generally measures the proportion of the labour force that is unemployed.
Conclusion
The real employment challenge is not merely creating jobs, but creating productive, decent, secure and adequately paid employment.
| This Concept has been discussed in the following article: Beyond Examination Reform: From Job Seekers to Job Creators |