Covid-19 has resulted in job losses across the world. Unemployment levels hit new highs in many countries. But what exactly is unemployment? How is it calculated? And did you know, there are various types of it as well? Let’s demystify it all.
Crux of the Matter
People who are able and willing to work but cannot find one are generally called unemployed. Moreover, the labor force is made up of the employed and the unemployed and people who are not a part of the workforce – generally children and elderly.
Unemployment Rate (%) is calculated as (Persons unemployed x 100)/Total Workforce.
Where To Look For Credible and Accurate Data? We often see, unemployment data published by various institutions such as National Sample Survey Office (NSSO), National Statistical Commission (NSC), Labour Bureau, Employees’ Provident Fund Organization (EPFO), and etc. But we might think how do common people know that the data is accurate and trustworthy? To find out the answer, we need to understand the methods of collection of data and its analysis.
Every five years, the Indian government publishes the unemployment data. The data is published by the NSSO. In India, people are largely occupied in the informal job segment. An informal sector means the country’s economy that is not recognized as part of normal income sources. Data of EPFO neglects the informal sector. It will only contain data of companies having more than 20 employees. Whereas, NSSO conducts household surveys to include every social, economic, jobs, sectors, and demographic class across 1 lakh houses in the country. Moreover, NSSO comes under the Ministry of Statistics and Program Implementation. Until 2011-12 NSSO published data every 5 years and it took 2 years to collect and analyze data.
In 2005, the government established an independent institution National Statistical Commission (NSC) to keep a check on the working of NSSO. An independent institution means, an institution with no interference from the government.
The Controversy Of 2019 Unemployment Data Periodic Labour Force Survey of the NSSO data showed the unemployment rate in the country in FY18 was 5.3% in rural India and 7.8% in urban India, resulting in an overall unemployment rate of 6.1%, reportedly highest in 45 years. However, the mentioned data was not published by the government but it got leaked. The controversy arose when two independent officials from NSC resigned stating that the government is not publishing the data even though the NSC has approved it. NSC consists of 7 positions out of which 3 positions were already empty, 2 independent officials left, leaving 2 members who were already members of the government. However, the government had said then that the data was yet to be approved and leaked data was not a final report.
Types Of Unemployment
Open – A person willing and able to work finds no jobs in the market.
Disguised – More people are working than needed – e.g. On a farm 10 workers are employed where 7 are required.
Seasonal – Unemployment due to loss of seasonal job – e.g. Farm labourers during off-season.
Technological – Changes in the techniques of production lead to unemployment – e.g. 10 workers are fired as 2 machines are doing equivalent work.
Underemployment – People employed contribute less than their capacity – e.g. a post-graduate doing work for which degree is not needed.
Casual – When an employee working on a day-to-day or contract basis has to leave once the contract ends – e.g. migrant labourers.
Frictional – When workers are jobless and looking for a job whether they leave or are fired.
Structural – Due to structural changes in the economy or technology – e.g. workers laid off due to AI.
Cyclical – Temporary unemployment caused due to change in the business cycle or economic cycle – e.g. unemployment due to recession.
Curiopedia
‘The General Theory of Employment, Interest and Money’ of 1936 is the last book by the English economist John Maynard Keynes. It created a profound shift in economic thought, giving macroeconomics a central place in economic theory and contributing much of its terminology – the “Keynesian Revolution”. Cyclical unemployment is also called Keynesian unemployment.
Unemployment benefits are payments made by authorized bodies to unemployed people. The first modern unemployment benefit scheme was introduced in the United Kingdom with the National Insurance Act 1911, under the Liberal Party government of H. H. Asquith.
Employees’ State Insurance is a self-financing social security and health insurance scheme for Indian workers. The fund is managed by the Employees’ State Insurance Corporation (ESIC) according to rules and regulations stipulated in the ESI Act 1948.
Curated Coverage
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