Meaning and Types of Unemployment


Introduction to Unemployment

Unemployment is defined as the non availability of jobs (works) for people able and willing to work at the existing wage rate. It is a problem to both developed and developing countries. It creates problems like poverty, inequality, robbery, prostitution, theft, crime, etc. Therefore, solving unemployment problem or creating employment opportunities has been major objective in all economics of the world.

People who are either unfit for work due to mental and physical reason or don't want to work, for example, sadhus are excluded from the category of unemployed.

Here, again if there is engagement in some occupation does not necessarily mean absence of unemployment.

People, who are partially employed or  engaged in inferior jobs, thought they can do better jobs are not adequately employment. It is called the state of underemployment which is equally harmful for the prosperity of the country.

Unemployment can be both voluntary and involuntary. Voluntary unemployment is defined as the situation in which people are unemployed because of their choice or they are not working due to laziness or they are not interested to work. On the other hand, involuntary unemployment is defined as the situation in which people are willing to work at the existing wage rate but they are not able to get the work.

Types Of Unemployment

1. Open unemployment:  It is defined as the situation in which some workers do not have any work to do. They want to work at existing wage rate but they have to remain unemployed in absence of work.

2. Underemployment: It is defined as the situation in which employed persons are working but less then they are really capable of it. In this situation people have to do the job which are under their capability or require less capabilities then they are actually able of.

3. Disguised Unemployment: It is the type of unemployment where too many persons are involved in a work or persons are more than actually required. This type of unemployment problem is found in agriculture sector of developing countries. Due to lack of employment opportunities outside agricultural sector, all members of family are found to be engaged in farming even if it is not necessary.

4. Cyclical unemployment: It is defined as the type of unemployment that results due to operation of trade cycle or business cycle. When there is downward movement in business or overall economic activities, aggregate demand for employees decreases which increases unemployment and vice versa.

5. Seasonal Unemployment: It is defined as the situation in which people are out of job and looking for a job during off-season. For example, farm labours in agricultural sector are unemployed expect planting and harvesting season.

6. Frictional Unemployment: It is define as the situation in which people are looking for new or better job and employers are looking for right workers. it is also called search unemployment because it occurs when people leave job and searching for new job. This is short term in nature. This type of unemployment is found in developed countries.

7. Structural unemployment: It is defined as the situation which occur due to the change in structure of the economy. For example, in developing countries like Nepal, Bangladesh, Bhutan, etc. people are unemployed due to underdeveloped structure of the economy. Structural unemployment can also accur due to introduction of new technology in the production process like robots, CMC assembly machines, etc. which replaces man.

8. Educated Unemployment: It is the situation of unavailability of work among educated people. This is the problem of both developed and developing countries. In this unemployment people may be openly unemployed or under employed.


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