TISSNET often ask questions on social issues and its causes.Unemployment is one them.Let’s see what actually unemployment and its various types and causes.
Unemployment occurs when a person who is actively searching for employment and ready to accept work at current wage rate and still unable to find work. It is used as a measure of the health of the economy. It has been a burning problem of modern societies, whether developed or undeveloped. It is measured in terms of unemployment rate = no. of unemployed/ total labour force
- Temporary phenomenon
- Workers temporarily out of work while changing jobs Strikes and lockouts. It is due to difficulties in getting workers and vacancies together.
- Where workers are employed on a day-to-day basis
- Occurring due to short-term contracts, which are terminable any time.
- Some industries and occupation in which production activities are seasonal in nature.
- Agro-based industrial activities like sugar mills etc.
- Offer employment only for a certain period of time in a year
- Can find in any country, causes wastage of resources
- Due to structural changes in the economy, it taken place
- Decline in demand for production lead to reduction in its manpower requirements
- E.g. improvement of transportation in Towns, tongas become out dated and tonga operators become unemployed, therefore, they need to search jobs in any other industry.
- It arise as a result of technological improvement
- Due to improvement in machinery, production methods, some workers are replaced by Machines e.g. due to the arrival of computers, typewriters lost their jobs.
- Trade cycles, recessionary and depressionary phases
- Deflationary period, demands decline, production decreased and need to reduced workers
- Unemployment caused by insufficiency of effective demand
- Short term phenomenon
- Increasing total expenditure and pushing up the level of effective demand, can reduced this kind of unemployment
- Unemployment tends to be a long-term feature of a country it is called chronic unemployment.
- Underdeveloped country Vicious circle of poverty High population growth Backward or primitive technology
- Low capital formation, are causes for this
- Situation of employment with surplus manpower, some workers have zero marginal productivity, removal of them will not affect the volume of total output
- Suppose, for one work four man work effectively, if there are six people involved with that work they are not contributing anything in additional production their marginal productivity is zero