BCom Unemployment in India Notes Study Material

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BCom Unemployment in India Notes Study Material

INTRODUCTION

Unemployment is a big problem in India. Unemployment is not a temporary phenomenon, it is a chronic problem which defects the economic development of the country. In common parlance, anyone who is not gainfully employed in one activity or other is called unemployed. But as per economists, only those persons are considered unemployed who offer their services for jobs but do not get a job.

In the words of the Bhagwati Committee on Unemployment, “Unemployment and underemployment are the biggest challenges of the day and we are sitting on a volcano.” Thus, it requires for its solution the application of long-term measures to correct the defects in the economic structure. (BCom Unemployment in India Notes Study Material)

MEANING AND DEFINITIONS OF UNEMPLOYMENT

Unemployment means a situation characterised by the existence of able or efficient persons who are willing to work but are not able to get a meaningful or gainful job which ultimately results in huge wastage of manpower resources. In other words, unemployment deals with a situation where people are unable to get gainful employment opportunities for their survival.

According to Pigou, “A man is unemployed only when he is both without a job or not employed and also desires to be employed.”

The International Labour Organisation (ILO) focused on the poverty approach to the employment problems and says that “Unemployment is concerned with those persons who have abnormally low earnings as unemployed.”

India is a developing economy, and the nature of unemployment, therefore, sharply differs from the one that prevails in industrially advanced countries. Lord Keynes diagnosed unemployment in advance to be the result of a deficiency of effective demand. It implied that in such economies machines became idle and demand for labour falls because the demand for the products of industry is no longer there.

Thus, Keynesian remedies for unemployment concentrated on measures to keep the level of effective demand sufficiently high. But the unemployment problem in India is not the result of a deficiency of effective demand but the result of a shortage of capital equipment and other complementary resources accompanied by the high rate of growth in population.

TYPES OF UNEMPLOYMENT

The main types of unemployment are as follows:

1. Structural Unemployment: It is also called open unemployment. Under this situation, a large labour force does not get employment opportunities because they do not have the right skills or live in places where the top opportunity does not exist. Is it notable that under this situation workers are willing to work and able to work but they do not get employment due to the non-availability of complementary resources, especially capital? There are some other causes, especially in regard to technological change mentioned below:

(a) An acceleration of the overall rate of productivity change.

(b) An increased concentration of a selected group of industries.

(c) Qualitative demand of labour force.

2. Frictional Unemployment: Under frictional unemployment, there are changes of unfilled vacancies in the same occupation and the same places because it takes time to match job requirements and the skills of Job seekers appropriately. It exists because people move and should be encouraged to move from low productivity places to high productivity places.
3. Disguised Unemployment: Disguised unemployment refers to the situation where opportunities are not open for everyone and remain concealed. Disguised employment is a common feature in agriculture-based economies. Under this, it seems that everyone is employed but in really sufficient full-time work is not available for all. In the Indian agricultural structure, there is a number of workers engaged in agri-activities but it is much more than actually required to accomplish. (BCom Unemployment in India Notes Study Material)
4. Seasonal Unemployment: Under this situation, workers do not get jobs for a whole year. They get jobs for some months in a calendar year when seasonal activities are done. Seasonal unemployment occurs in such activities as construction, agriculture, woollen garments, canning and tourist trade.
5. Unemployment due to Demand Deficiency: Under this situation, t is not enough aggregate demand to provide work for the whole labour force if they are trained or not. It is known as cyclical unemployment. It indicates that as a whole there are fewer job vacancies in the economy due to a lack of demand forces.
6. Industrial Unemployment: Industrial unemployment is a situation under which our industrial sector fails to adjust the labour force because of the huge migration of labour from rural areas to urban areas in search of employment. The two main causes of industrial unemployment are uneconomical agriculture and the slow growth of small and cottage industries in rural areas.

UNEMPLOYMENT IN INDIA AND ITS CAUSES

Our country India is continuously facing the prevalence of chronic underemployment or disguised unemployment in the rural sector and the existence of urban unemployment among the educated classes. A large number of workers are forced to remain jobless both in rural and urban areas.

The Committee of Experts on Unemployment under the chairmanship of B. Bhagwati in its report submitted to the Government in May 1973, observed: that on the basis of data, the likely number of unemployed in 1971 may be reasonably taken at 18.7 million including 9 million who are without any job and 9.7 million who work for less than 14 hours per week. Out of this 16.1 million (86 per cent in total) unemployed are in the rural areas and 2.6 million in the urban areas.

When we try to see unemployment conditions from 1980 to 2012 in respect of rural and urban employment. It is revealed that unemployment rates are traditionally higher in urban areas than in rural areas.

It is also revealed that the unemployment rate of 10.3 per cent in 1977-78 in urban areas was much higher than the rural unemployment rate which was 7.7 per cent (CDS basis). There was a significant fall in the rural unemployment rate in 1987-88 to 5.3 per cent, but the urban unemployment rate was of the order of 9.4 per cent, significantly higher. (BCom Unemployment in India Notes Study Material)

After 1993-94, in the period of liberalisation rural unemployment rate again increased to 8.28 per cent while urban unemployment also marginally increased to 8.28 per cent during 1993-94 to 2004-05. Till 1993-94 a gradual and continuous decline in urban unemployment indicates towards greater attention was being given to urban areas in the development process, but the increase in unemployment rates in the rural areas may be due to the neglect of rural areas in the post-reform period.

There are so many factors which are directly or indirectly responsible for the unemployment problem in India. Among those factors some main factors are explained below:

(A) General Factors

General factors include macro-level factors like population, development, employment policy, education poverty etc.

1. Rapid Growth in Population: India is still facing demographic pressure since 1951. Our various planning periods witnessed a high rate of growth in the labour force at an annual average growth rate of 2.2% to 2.8% (Approx.). Thus, against the continuous increase in the labour force the generation of fewer employment opportunities, caused the unemployment problem.
2. Slow Rate of Economical Development: Since dependence, our economy has witnessed sluggish economic growth. The size of employment direct depends upon the level of development. India is still trying to achieve higher GDP growth in a planned manner. But, due to poor implementation of the planning process employment level is below. (BCom Unemployment in India Notes Study Material)
3. Poverty: Poverty and unemployment both are closely related to each other. It may be said that a person is poor because he is unemployed and unemployed because he is poor. Under-developed countries and developing countries are in the grip of the vicious circle of poverty and that directly affect employment opportunities and employment pattern. (BCom Unemployment in India Notes Study Material)
4. Lack of National Employment Policy: In India except for a few scheme projects, there is no proper policy specifically to remove unemployment. Under different planning periods, our policymakers have no serious effort for manpower planning. Thus, the problem of unemployment is increasing year by year.

(B) Factors Related to Rural Unemployment

1. Backward Agriculture: In India, the progress of the agriculture sector has been low due to the lack of modern agricultural programmes and poor mechanization. Our 70% of the population is dependent upon agriculture which is still facing disguised unemployment problems due to seasonal work and less availability of job opportunities. (BCom Unemployment in India Notes Study Material)
2. Migration of Labour: To check the migration of labour from rural to urban areas is a big challenge in front of our Government. Workers tend to go back to villages after earning money by working in industrial units located in the urban industrial zone. After some time, at the end of peak season, their employers start retrenchment for this type of temporary labour. Thus, they again become unemployed and bound to come back to rural areas.
3. The decline of Cottage and Small Industries: Third main reason for rural unemployment is the decline of the cottage and small industries. Our traditional handicraft and village industries provide employment and livelihood in rural areas. At present, the Government of India try to promote these industries through various schemes but a large number of the labour force in the rural area are still unemployed.
4. Lack of Capital Formation: Capital formation directly is concerned with savings and investment. In India, mainly in rural areas, the rate of savings and investment has been very low. Thus, capital formation is low. The slow rate of capital formation is a big challenge for cottage and small industries and it hampers employment.

(C) Factors Related to Urban Unemployment

1. Insufficient Industrial Development: Our country has large manpower. There has been a lack of proper technology, scarcity of industrial raw materials, less power supply, transport bottlenecks and industrial unrest etc. Due to this our industrial sector do not work to its full capacity and could not absorb enough labour by generating sufficient employment opportunity.
2. Capital Intensive Technique: The adoption of industrialization and capital-intensive techniques replace the labour force with machines. Indian industrial sector continuously working towards modernisation, market manipulation, automation and mechanization and trying to replace human labour with machines. Thus, these types of machine-intensive techniques create unemployment.
3. Defective Educational System: Our educational system is defective regarding the engagement of the human labour force. No effort has been made to develop the educational system in keeping pace with the manpower requirements of the country. Since independence efforts are being made to focus on technical and professional education but these facilities are not adequate. There is an urgent requirement to go for professional and technical education to solve the problem of unemployment.
4. Regional Disparities: Our country is continuously facing a problem of regional imbalances. Regional imbalances also encourage unemployment. Some regions have sufficient resources but they are unable to use these resources and some regions are still facing blackness of resources and are crying for resources to ensure their economic development. Under these situations, they are unable to generate employment opportunities as per current requirements. (BCom Unemployment in India Notes Study Material)
5. Caste System and Personal Bias: In our country, people belong to a large number of castes. At the time of recruitment, our recruiters have personal bias and they do not give chance to suitable and deserving candidates. Thus, a large number of the educated population to get unemployed.
6. Lack of Technical Education Facilities and Training: Our education system is purely based on academic knowledge. At present time, the requirement is that it must be job-oriented through technical training and guidance. An effective awareness programme is to be initiated to spread these facilities for employment generation towards socio-economic development.

REMEDIAL MEASURES TO ERADICATE UNEMPLOYMENT IN INDIA

The following measures are to be taken to solve the problem of unemployment:

(A) General Measures

1. Population Control: Through population stabilisation, we can check the unemployment problem. Population growth should be controlled for adequate employment opportunities. It is, therefore, require that adequate measures should be taken to promote family planning.
2. Enlargement of Employment Opportunities: The enlargement of employment opportunities can create employment through the expansion of the industrial sector and service sector. In recent years Government of India has taken initiative to promote and enlarge the scope of the service sector in the country. (BCom Unemployment in India Notes Study Material)
3. Increase in Capital Formation: Increasing the level of capital formation will improve industrial development in the country. Capital formation ensures the establishment of new production units and service units in the country. It generates more employment opportunities for socio-economic development.
4. To Promote Small and Cottage Industries: For better employment opportunities in rural areas Government should be encouraged Micro and Small Enterprises. Regarding this, Governments should be provided financial facilities, infrastructural facilities, raw materials, technical training etc. These industries enable the provision of larger employment opportunities to people, especially in rural areas.
5. Adoption of Labour-Intensive Techniques: India has a big population with a mass unemployed labour force. So that, through the adoption of labour-intensive techniques we can absorb more labour in such areas as heavy industries, and petrochemicals. power generation, mines, oil industries, infrastructural development etc. (BCom Unemployment in India Notes Study Material)
6. Decentralisation Policy: Our Central or State Governments should try to establish balanced growth of rural and urban areas. It is advisable to encourage the setting up of industries in rural areas and small towns to provide larger employment opportunities.
7. Education regarding Skill Formation and Training: Our education should be imparted on skill formation and technical training. It should be marked as job-oriented to remove of the unemployment problem in the economy.

(B) Government Measures

To eliminate the unemployment problem Govt. has introduced a number of schemes in rural and urban areas from time to time on the basis of the recommendation of the “Bhagwati Committee” set up in 1972. These schemes are:

1. NREP: The National Rural Employment Programme was introduced by Govt. of India in Oct. 1980. The main purpose was to provide employment opportunities in lean agricultural seasons through productive activities in rural areas. During the seventh planning period, there was a provision of 3,092 and it generated 1,477 million man days.
2. TRYSEM: The Scheme of Training Rural Youth for Self-employment (TRYSEM) was introduced in 1979. The main objective of this scheme was to train about 2 lakhs rural youth every year at the rate of 40 youth per work in the country to remove of unemployment mainly in rural areas. A family whose annual income was below 3,500, is eligible for selection of this scheme.
3. RLEGP: The Rural Landless Employment Guarantee Programme (RLEGP) was launched in August 1983. The main objective of this plan was to promote and expand employment opportunities for rural landless labour for strengthening the rural infrastructure.
4. IRDP: The Integrated Rural Development Programme was introduced on 2nd October 1980. Under this scheme, a person who belongs below the poverty line is financed by Banks and the Government. An amount of 3,316 crores was spent in the plan by way of loans.
5. JRY: During 1989-90 the NREP and RLEGP were merged and a new scheme was introduced as Jawahar Rozgar Yojana to generate additional employment by taking up productive works in rural areas. Under this scheme, a loan of Rs.25,000 was given to those candidates who were educated unemployed youth and belonged to families with income not exceeding Rs.10,000 per annum.
6. PMRY: The Prime Minister’s Rozgar Yojana (PMRY) was introduced in 1993 during the Eleventh five-year plan. This scheme aimed at providing self-employment to more than a million educated unemployed youth by providing financial assistance.
7. SGSY: The ‘Swarnjayanti Gram Swarozgar Yojana’ was introduced in April 1999. The basic aim of this scheme was to help rural people in self-employment by organising them into the ‘Self Help Group’ (SHG). Under this scheme bank loans and subsidies will be provided for starting small enterprises in rural areas.
8. Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA): The NREGA was enacted to reinforce the commitment toward livelihood security in rural areas. The act was notified on 7th September 2005 and on 2nd October 2010. The name of the scheme was changed to MNREGA on the birthday of Mahatma Gandhi. This programme is providing short-term employment for unskilled workers in rural areas to generate infrastructural activities like Road, Kharanja, Pond, Tree planting etc.

The main objective of the MNREGA is to enhance livelihood security in rural areas by guaranteeing 100 days of wage employment in a financial year to a rural household. (BCom Unemployment in India Notes Study Material)

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