1
“UNEMPLOYMENT IN INDIA”
PROJECT REPORT ON SEMINAR
SUBMITTED IN THE DEPARTMENT OF COMMERCE
IN FULFILMENT OF REQUIREMENT OF
M.COM DEGREE
Submitted By:
Under The Supervision Of:
Ranjeet Kaur
Dr. Pawan Kumar
5403
Associated Prof.
M.Com-I
JUNE 2021
PATEL MEMORIAL NATIONAL COLLEGE, RAJPURA
2
INDEX
CONTENT
 Introduction





Literary Survey
Objectives Of Study
Scope Of The Study
Research Methodology
Types Of Unemployment
o Disguised
o Seasonal
o Structural
o Cyclic
o Technological
o Frictional
 Causes Of The Unemployment
o Educational
o Individual
o Market
o Services & Qualities
o Spatial
 Impacts Of Unemployment On Economy
 Remedies To The Problem
o Demand Solutions
o Supply Solutions
 Measures Taken By Government
 Observations & Findings
 Conclusion
 Reference
PAGE NO.
03
03
04
04
04
05
05
05
05
06
06
06
07
07
07
08
08
08
09
10
10
11
12
15
16
17
3
INTRODUCTION
This era is witnessing a huge development and growth in economic development as well as
many other fields. Development is concept of process that concerns all levels and fields of
life. The embodiment of this process depends on several factors that vary in importance from
one situation to another, and from one country to another. Despite this economic
development, there is a phenomenon of unemployment witnessed by the individual and
society. Unemployment is defined as people who do not have a job. Its statistics are probably
one of the most closely monitored indicators of the work market. Unemployment occurs
when a person who is actively searching for employment is unable to find work.
Unemployment is one of the key indicators of the economy.
1.
LITERARY SURVEY
Unemployment is recognised as one of the most challenging social problems currently. In the
last two decades and more recently with the global recession high levels of unemployment have
become an established feature of the social and economic landscape, with young people aged
15 to 24 years among those hardest hit by unemployment. The absence of employment,
therefore, can mean that many people do not have vital human needs met such as an
opportunity to exercise control, to use and develop skills and have contact with others. The
research literature shows a strong association between unemployment and ill health. Some
illness is caused by unemployment whilst other health problems are exacerbated by
unemployment ( Smith, 1987; Mathers & Schofield,1998). An Australian summary of the
health and unemployment literature by Mathers and Schofield (1998) identified that
unemployment has detrimental effects on mental health, physical health and health related
behaviours.
4
OBJECTIVES OF STUDY





To find the reasons for unemployment in India.
To study various measures of raising employment
To study the effects of unemployment on economy.
To Study the Issues associated with India’s employment.
To Analyse Problems and give their solutions related to unemployment in India.
SCOPE OF THE STUDY
You can complete small-scale or short-term studies while in receipt of unemployment
benefits. If your studies are more extensive, you should transfer onto a study grant (unless
such studies consist of employability training or so-called and self-directed studies).
If your studies have been interrupted and you think that graduation or the completion of
another educational qualification would improve your employment prospects, ask the TEOffice about self-directed studies. Should the TE Office approve payment of unemployment
benefits for the duration of a period of self-directed study, the unemployment benefits can be
paid for a maximum of 2 years. You may also receive an increased earnings-related
allowance during your self-study period.
RESEARCH METHODLOGY
This study is of analytical nature and makes use of secondary data. The required& relevant
secondary data are collected from various publications of Government of India, census data,
from the data of Five Year Plans, relevant books on the topic of research, seminar write-ups,
journal, magazines, newspapers, and bulletins and various other websites. The time series
data and the relevant data have been collected for the period 1950 to 2017
Both quantitative and/or qualitative methodologies have been used in unemployment
research. During the last 15 years however, quantitative methods have dominated. It is argued
that strictly quantitative studies on their own may no longer advance knowledge in this field.
Therefore, to deepen the understanding in this important research area, qualitative techniques
need to be reintegrated into unemployment research. An example of this is the author's study
of employment commitment and mental health of 532 long-term unemployed people. The
instruments used were the General Health Questionnaire-12, the Rosenberg Self-esteem
Scale, a questionnaire and an in-depth self-selection interview. This procedure was repeated
with 99 people in a follow-up study one year later. The results of the quantitative data
collection method on employment commitment are compared with results obtained by the
qualitative method and are discussed with reference to the benefits of incorporating a
qualitative component into an otherwise quantitative methodology.
5
TYPES OF UNEMPLOYMENT
 Disguised unemployment
 Disguised unemployment is unemployment that does not affect aggregate
economic output.
 It occurs when productivity is low and too many workers are filling too
few jobs.
 It can refer to any part of the population that is not employed at full
capacity.
 Seasonal Unemployment

You might also hear of seasonal unemployment as another type of unemployment. As
its name suggests, seasonal unemployment results from regular changes in the season.
Workers affected by seasonal unemployment include resort workers, ski instructors,
and ice cream vendors. It could also include people who harvest crops. Construction
workers are laid off in the winter in most parts of the country. School employees can
also be considered seasonal workers.
 Structural Unemployment
 Structural unemployment is long-lasting unemployment that comes
about due to shifts in an economy.
 This type of unemployment happens because though jobs are available,
there’s a mismatch between what companies need and what available
workers offer.
6
 Cyclic Unemployment



Cyclical unemployment is caused by the contraction phase of the business cycle.
That's when the demand for goods and services falls dramatically. It forces businesses
to lay off large numbers of workers to cut costs.
Cyclical unemployment creates more unemployment. The laid-off workers have less
money to buy the goods and services they need. That further lowers demand.
In the form of expansive monetary policy and fiscal policy, government intervention
is required to stop the downward spiral. After the stock market crash of 1929, the
government did not step in right away. This delay led to the Great Depression, which
lasted 10 years and led to a 25% unemployment rate.
 Frictional Unemployment




Frictional unemployment occurs when workers leave their old jobs but haven't yet
found new ones.
Most of the time, workers leave voluntarily, either because they need to move or have
saved enough money to allow them to look for a better job.
Frictional unemployment also occurs when students are looking for that first job or
when mothers are returning to the workforce. It also happens when workers are fired
or, in some cases, laid off due to business-specific reasons, such as a plant closure.
Frictional unemployment is short-term and a natural part of the job search process. In
fact, frictional unemployment is good for the economy, as it allows workers to move
to jobs where they can be more productive.
 Technological unemployment

Technological unemployment is the loss of jobs caused by technological change. It is
a key type of structural unemployment.
 Technological change typically includes the introduction of labour-saving
"mechanical-muscle" machines or more efficient "mechanical-mind" processes
(automation), and humans' role in these processes are minimized. Just as horses were
gradually made obsolete as transport by the automobile and as labourer by the tractor,
humans' jobs have also been affected throughout modern history.
 That technological change can cause short-term job losses is widely accepted. The
view that it can lead to lasting increases in unemployment has long been
controversial.
 Participants in the technological unemployment debates can be broadly divided into
optimists and pessimists.
i.
Optimists agree that innovation may be disruptive to jobs in the short term, yet
hold that various compensation effects ensure there is never a long-term negative
impact on jobs.
ii. Whereas pessimists contend that at least in some circumstances, new technologies
can lead to a lasting decline in the total number of workers in employment.
7
CAUSES OF UNEMPLOYMENT
The literature discusses unemployment as being caused by many things. Figure shows the
dimensions of the unemployment problem.
 Educational Dimension
Regarding the educational dimension, one of the causes of unemployment is the field of
study. The student should know what the careers of their field of study are and what the
market needs in relation to their study. Without doing that, this will lead to market saturation
in some fields and a lack of skilled labour in others. For example, in South Africa, specific
majors of graduated students were Affected with the time to find employment, and therefore,
may cause unemployment problems. Consequently, it demonstrates that graduated students in
the areas of human resources, industrial psychology, labour relations management, public
administration, public management, and politics must wait a long time before finding a job
after graduation. In particular, the wait time is about 19 months for graduated students in the
fields of public management, public administration, and politics, compared to only 10.5
months in human resources, industrial psychology, and labour relations. On the other hand,
graduated students in the fields of accounting, math, education, and health have the shortest
average wait periods.
 Individual Dimension
In terms of individual dimensions, the studies showed that age was negatively related to
unemployment. Thus, young people between 21 and 25 years have the highest unemployment
rate. Therefore, for every one unit increase in age, unemployment is expected to be lower, for
example, by 0.2% in Pakistan. Thus, the unemployment rate for adults is less than for the
young. The reason behind this is the lack of acquired skills and experience in young people.
Moreover, gender is another cause of unemployment. It contributes to 39.5% of
unemployment in educated females, compared to only 25.8% of educated males in Iran.
Unemployment among females is also higher in urban than in rural areas. In addition, the
study pointed out that single people are more unemployed than married, because married
people often accept lower wages to do their liabilities after marriage. Furthermore,
8
demographic youth bulges and housing discrimination have played roles in unemployment,
especially among blacks in the central cities. Additionally, a lack of confidence and poor
English communication skills are considered other factors that lead to unemployment,
especially in countries that do not use English as a native language.
 Market Dimension
As for the market dimension, supply and demand are pointed out as other important factors
that affect unemployment . Consequently, an increasing number of universities graduates do
not match the jobs available. Moreover, the decrease in demanded skills causes an increase in
the unemployment rate, especially when this decrease is more than the increase in qualified
labour. In addition, the people who possess specific outdated qualifications and skills are also
unemployed as there is no demand for their expertise and they have not acquired new skills.
This resulted from an inability to predict future market demand and a fast response to change.
Finally, being excluded from the labour market for many years was cited as the biggest
barriers to work that is faced by long-term unemployment, as mentioned in study
 Services & Quality Of System Dimension
About the services and the quality of systems dimension, there are two likely factors that lead
to ineffective career guidance and counselling services, then leading to unemployment
problem. Those factors were the lacking of career guidance and counselling policy and the
lacking of career counsellors.
 Consequently, the governments should pay more attention towards career guidance
and counselling services, as they help students choosing the careers that match the
need of the market, and therefore reducing the probability of unemployment. Also, an
ineffective labour market information system leads to having no knowledge regarding
the works available, which then contribute to unemployment problem.
 Therefore, the governments should strength this system and disseminate information
about employers and the jobs status.
 In addition, a few studies pointed out that gaps in the employment policy may be
leading to unemployment. One of the challenges of employment was an imbalance
between the policies and reality such as the imbalance between the supply and
demand, new entrants in the labour market, freezing employment in the public sector,
and lacking the needs analysis.
 Spatial Dimensions
Apart from the services and the quality of systems dimension, the studies showed that
geographic mismatch is considered as one of the minor causes of unemployment. In
particular, it can reduce the unemployment rate only by 5.3%, and it did not increase since
the great recession. Therefore, if the governments want to reduce the unemployment rate to
the lower level, they have to solve other causes than this one.
9
IMPACTS OF UNEMPLOYMENT ON ECONOMY
The unemployment have the following effects on the economy:






The problem of unemployment gives rise to the problem of poverty.
The government suffers extra borrowing burden because unemployment causes a
decrease in the production and less consumption of goods and services by the people.
Unemployed persons can easily be enticed by antisocial elements. This makes them
lose faith in the democratic values of the country.
People unemployed for a long time may indulge in illegal and wrong activities for
earning money which increases crime in the country.
Unemployment affects the economy of the country as the workforce that could have
been gainfully employed to generate resources actually gets dependent on the
remaining working population, thus escalating socio-economic costs for the state. For
instance, a 1 % increase in unemployment reduces the GDP by 2 %.
It is often seen that unemployed people end up getting addicted to drugs and alcohol
or attempts suicide, leading to losses to the human resources of the country.
An economy with high unemployment is not using all of the resources, specifically labour,
available to it. Since it is operating below its production possibility frontier it could have
higher output if all of the workforce were usefully employed. However, there is a trade-off
between economic efficiency and unemployment: if all frictionally unemployed accepted the
first job that they were offered, they would be likely to be operating at below their skill level,
reducing the economy's efficiency
10
REMEDIES TO THE PROBLEM
 Societies try a number of different measures to get as many people as possible into
work, and various societies have experienced close to full employment for extended
periods, particularly during the post-World War II economic expansion The United
Kingdom in the 1950s and 1960s averaged 1.6% unemployment and in Australia, the
1945 White Paper on Full Employment in Australia established a government policy
of full employment, which lasted until the 1970s.
 However, mainstream economic discussions of full employment since the 1970s
suggest that attempts to reduce the level of unemployment below the natural rate of
unemployment will fail but result only in less output and more inflation.
 DEMAND SOLUTIONS

Increases in the demand for labour move the economy along the demand curve,
increasing wages and employment. The demand for labour in an economy is derived
from the demand for goods and services. As such, if the demand for goods and
services in the economy increases, the demand for labour will increase, increasing
employment and wages.

There are many ways to stimulate demand for goods and services. Increasing wages to
the working class (those more likely to spend the increased funds on goods and
services, rather than various types of savings or commodity purchases) is one theory
that is proposed. Increased wages are believed to be more effective in boosting
demand for goods and services than central banking strategies, which put the
increased money supply mostly into the hands of wealthy persons and institutions.
Monetarists suggest that increasing money supply in general increases short-term
demand. As for the long-term demand, the increased demand is negated by inflation.
A rise in fiscal expenditures is another strategy for boosting aggregate demand.

Providing aid to the unemployed is a strategy that is used to prevent cutbacks in
consumption of goods and services, which can lead to a vicious cycle of further job
losses and further decreases in consumption and demand. Many countries aid the
unemployed through social welfare programs. Such unemployment benefits
include unemployment insurance, unemployment compensation, welfare, and
subsidies to aid in retraining. The main goal of such programs is to alleviate shortterm hardships and, more importantly, to allow workers more time to search for a job.

A direct demand-side solution to unemployment is government-funded employment
of the able-bodied poor. This was notably implemented in Britain from the 17th
century until 1948 in the institution of the workhouse, which provided jobs for the
unemployed with harsh conditions and poor wages to dissuade their use. A modern
alternative is a job guarantee in which the government guarantees work at a living
wage.

Temporary measures can include public works programs such as the Works Progress
Administration Government-funded employment is not widely advocated as a
solution to unemployment except in times of crisis. That is attributed to the public
sector jobs' existence depending directly on the tax receipts from private sector
employment.
11

In the US, the unemployment insurance allowance is based solely on previous income
(not time worked, family size, etc.) and usually compensates for one third of previous
income. To qualify, people must reside in their respective state for at least a year and
work. The system was established by the Social Security Act of 1935. Although 90%
of citizens are covered by unemployment insurance, less than 40% apply for and
receive benefits However, the number applying for and receiving benefits increases
during recessions. For highly-seasonal industries, the system provides income to
workers during the off-season, thus encouraging them to stay attached to the industry.

According to classical economic theory, markets reach equilibrium where supply
equals demand; everyone who wants to sell at the market price can do so. Those who
do not want to sell at that price do not; in the labour market, this is classical
unemployment. Monetary policy and fiscal policy can both be used to increase shortterm growth in the economy, increasing the demand for labour and decreasing
unemployment.
 SUPPLY SOUTIONS

However, the labour market is not 100% efficient although it may be more efficient
than the bureaucracy. Some] argue that minimum wages and union activity keep
wages from falling, which means that too many people want to sell their labour at the
going price but cannot. That assumes perfect competition exists in the labour market,
specifically that no single entity is large enough to affect wage levels and that
employees are similar in ability.

Advocates of supply-side policies believe those policies can solve the problem by
making the labour market more flexible. These include removing the minimum wage
and reducing the power of unions. Supply-siders argue that their reforms increase
long-term growth by reducing labour costs. The increased supply of goods and
services requires more workers, increasing employment. It is argued that supply-side
policies, which include cutting taxes on businesses and reducing regulation, create
jobs, reduce unemployment, and decrease labour's share of national income. Other
supply-side policies include education to make workers more attractive to employers.
12
MEASURES TAKEN BY GOVERNMENT TO CONTROL
UNEMPLOYMENT
1 Integrated
Rural Development Programme (IRDP)
The Government of India introduced IRDP in 1978-79, intending to create full
employment opportunities in the rural areas. This program included agriculture,
forests, fisheries, animal husbandry, cottage industries, construction of canals, roads,
and so on. To provide employment, a sum of INR 312 crore was also spent in the
Seventh plan, which benefited 182 families.
2. Training for Self–Employment:
The program was launched on August 15th, 1979, and is called the National Scheme
of Training of Rural Youth for Self Employment (TRYSEM). Its main objective is to
reduce unemployment among the youth. Under this, during the seventh plan, around
11.6 lakh youth given training, which gave young men financial assistance from
banks, which varies from INR 3000 to INR 5000 to start any work. Composite Rural
Training and Technical Centres were set up to give training to 2.8 lakh rural youth
during 1995-96.
3. Jawahar
Rozgar Yojana:
This started on April 28th, 1989, intending to employ one member of every rural
family. The job is provided for around 50 to 100 days per year at a workplace, which
is nearby the place of residence. 30% of the employment generated is reserved for
women. The Central Government has the duty to finance around 80% of the program,
which reduces the burden of the state government to only 20%. National Rural
Landless Employment Guarantee Programmes were merged with the Jawahar Rozgar
Yojana in the year 1989.
4.
Nehru Rozgar Yojana (NRY):
The Yojana was started in the year 1989 and included three schemes under itself :

The first scheme provides a subsidy to urban poor so that they can set up microenterprises. Under this program, in the year 1995, 1.25 lakh families were benefitted.

The second scheme ensures arrangements for wage-employment to labourers in the
cities with less than 10 lakh population is by the means of providing Indian Economic
Development and Elementary Static facilities.

In the year 1995, under this scheme, 93 lakhs days of employment have been
provided. The third scheme provides urban poor with employment opportunities like
house repairing, etc.
13
5. The Swaran Jayanti Rozgar Yojana:
The plan, which started on 1st December, is meant for providing employment to
unemployed in urban areas. It aims at providing self or wage employment to
unemployed youth of urban areas. It works upon two plans:
a) Urban Self- Employment Programme
b) Urban Wage Employment Programme
75% of the expenditure is incurred by the Central Government, and the rest is upon
state governments. A sum of INR 125 crore was spent upon this during 1997-98.
6. Drought
Prone Area Programme:
This program was launched in 70 districts of 13 states, which were prone to drought.
It has proved fruitful in removing seasonal unemployment, and under the sixth plan,
the program has provided 17 crore and 70 lakh employment days. Under the seventh
plan, INR 474 crores were spent on this program.
7.
Prime Minister’s Integrated Urban Poverty Eradication Program
(PMIUPEP):
The program has been implemented in 1995-96 and aims to provide employment to
the poor in the urban area. It aims to cover 50 lakh urban poor from 345 towns. The
total expenditure of INR 800 crores is under the Central government, and the rest is
with the state’s government.
8. Pradhan Mantri Gram Sadak Yojana (PMGSY):
It is a nationwide plan for the country to provide good all-weather connectivity of
roads to unconnected villages. This was introduced in the year 2000 and aimed for the
following:
a) To provide roads to all villages with a population of 1000 people and above by the
year 2003
b) To also provide roads in hill states, desert areas, and tribal areas with a population
of 250 and above.
The scheme has changed the conditions of many villages which fall under the scheme.
14
9. National Rural Employment Guarantee Act:
This act was later named as Mahatma Gandhi National Rural Employment Guarantee
Act – MGNREGA. It aims to guarantee the Right to Work and was passed in
September 2005.
a) The main objective is to enhance the livelihood in the rural areas by providing 100
days of wage employment in a financial year to every household which has adult
members to do unskilled manual work.
b) Employment has to be provided within 5 km of the applicant’s residence.
c) The minimum wage has to be provided.
d) If the government fails to provide the employment, it has to pay unemployment
allowances as compensation.
10. Employment
Assurance Scheme:
The Employment Assurance Scheme (EAS) was launched in the year
1994 in 1752 blocks, which are backward in the country. Its main
objective was to provide 100 days of the unskilled manual job to the poor
in Rural areas.
Apart from the above 10, the Government of India has also launched
several other employment and educational schemes such as the NTR
Vidyonnathi Scheme for the empowerment of the country’s youth.
15
OBSERVATION AND FINDINGS
We have been exposed to various socio-economic problems that cause unemployment during
the course of this project. While the main root of this work is unemployment, we also have an
insight into the Indian economy, which we have hardly no idea about it earlier. It was a
wonderful experience studying one of our country's and world's serious contemporary
challenges. This project on unemployment has made us learn many new information
regarding the contemporary challenges in the world and made us to explore widely from the
roots and brought us knowledge on how the world is facing the problem and effects of this
problem.






By completing this project, I came to know that unemployment affects the countries
overall income.
. Through completing this project, I can understand that industrialization can affect
unemployment positively as well as negatively.
Lack of skills is also an important cause of unemployment.
The primary reason for unemployment is the lack of technical education and the
interest of youth towards white collared jobs.
Through doing this project gives me more awareness of effects, measures, causes, etc.
on unemployment
16
CONCLUSION
For any economy, unemployment is a serious problem. It creates negative effects for the
unemployed as they are unemployed and suffer from worse prospects of finding new jobs,
and those who are employed feel less secure in the future to maintain their jobs. However,
steps must be taken to increase productivity and improve living standards for the overall
development of the economy, government and individuals. Even the government has
proposed and started programs such as Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA), Mission Swarna Jayanti Shahari Rozgar Yojana (SJSRY),
Ministry of Micro, small and medium enterprises (MSME) and National Skill Development
to increase the employment rate has improved to better conditions providing quality
education and improvement, engaging workforce policies etc.
We should keep in mind that self-help is the best help. We must admit the bitter fact that no
government can provide jobs to all unemployed youth. More government measures cannot
solve such an enormous problem. Still, the government should adopt measures to create
opportunities for self-employment Promoting jobs for self may be preventing unemployment
from limiting.
17
REFERENCES :
 Wiley Online Library
 World development econo.com.
 Financial times magazine
 Fosters govt. rate.com.
 infoindianeconomy.com
 Economics Textbook
 Times of India (TOI)
 Financial pro weekly
*****