Unemployment- Types and Causes

This article on Unemployment- Types and Causes


What is Unemployment?

Unemployment is a distress situation when a person is able and willing to work but unable to get it. Unemployment, according to the OECD ( Organisation for Economic Co-operation and Development), is a person above a specified age not being in paid employment or self-employment but currently available for work during the reference period. It is the most serious problem prevailing in the current world.

Types of Unemployment- 

  • Disguised Unemployment-

It is a situation where more number of persons employed than actually needed. In this condition,  a person is working less than their full potential. Even, if some are withdrawn, the volume of production will not be affected. Under this type of unemployment, workers have zero marginal productivity. 

Such kind of unemployment is more prevalent in the agricultural sector where overcrowding of workers due to rapid growth of population can be seen.

  • Seasonal Unemployment-

Such kind of unemployment usually occurs when works are available during certain seasons of the year. People engaged in such kinds of activities are unemployed for the rest of the months. Examples of seasonal unemployment are labourers in agriculture, Ice-factory, Salt pans, Marriage ceremony, the Tourism sector, etc.

  • Cyclical Unemployment-

It is caused during the boom and bust cycle of an economy. During the boom period, more jobs are available due to greater demand for goods and services. This leads to an increase in the employment of workers to suck excess demand in the economy. Whereas, during the depression phase workers are laid off on a mass scale due to low demand and income of the people.

  • Frictional Unemployment-

It is a time phase when a person is out of one job and is searching for another job. During this transition time, a person is deemed as frictionally unemployed.

  • Underemployed or Educated Unemployment-

This is a kind of unemployment when a person is in spite of having a high educational background he is not gainfully employed. He may be employed in such kind of job where lesser qualifications are required. For example, a Post-Graduate person is working as a clerk.

  • Technological Unemployment-

Technological Unemployment occurs when capital-intensive technology replaced labour-intensive techniques. Advanced modern technology is able to do mass production with fewer labourers. This created a serious threat to the earning of people and redundant them unemployed. According to an estimate ” By 2025, machines will do more work than humans”.

  • Open or Structural Unemployment-

Such kind of unemployment occurs when a person’s qualification is insufficient according to the nature of the job. For example, there is a demand for computer proficiency job but the person has not the skill or knowledge of computer. 

  • Causal  Unemployment-

When a person is employed on a contract basis in the form of brick kilns workers, gig workers, freelancers, artisans, labelling and packing, scavengers, Loaders and unloaders, etc.

  • Chronic  Unemployment-

Chronic unemployment occurs due to rapid growth of population, mass poverty and inadequate level of economic development, etc. 

  • Voluntary and Involuntary Unemployment-

Voluntary unemployment occurs when a person is out of a job due to his own choice whereas involuntary unemployment happens due to a lack of available jobs in spite of a person’s willingness to work.

Causes of Unemployment-

There are many causes of unemployment. The greatest cause is the overpopulation of the country. The proportion of the country is increasing but the jobs are not available in that proportion. So a large number of people remain unemployed. 

Another cause of unemployment is our defective system of education which is bookish. It should be job oriented.  Every young man of today is after a white-collar job. Machines are also responsible for the problem of unemployment. The Machines are labour-saving devices. These machines throw thousands of persons out of work. Gandhi Ji warned the people against industrialisation, “India needs not mass production but production by the masses”. Abject poverty is also the main cause of unemployment.

How to Solve the Problem of Unemployment?

  • There should be a check on the rapid growth of the population.  The program of family planning should be made more popular in rural areas. All efforts should be made in this direction
  • The system of education should be changed. Importance should be given to technical and vocational education. There must be a focus on skill development among youths.
  • Government should create more jobs for the educated unemployed and should encourage policies of self-employment.
  • Cottage and handloom industries should be developed.
  • We should lessen the use of labour-saving machines in order to ensure a maximum number of labour force participation.
  • Banks should advance loans to youth to set up small industries. This will help in job creation.

Steps taken by the Indian Government to promote employment-

Integrated rural development programme (IRDP)  was launched in 1980 to create full employment opportunities in rural areas,  Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) was launched in 2005 to provide employment to unskilled rural labourers,  Pradhan Mantri Kaushal Vikas Yojana (PMKVY)  launched in 2015 with an objective provide skill training among youths for a better livelihood,  stand up India scheme launched in 2016 aims to facilitate bank loans to SC, ST and women borrowers.


By providing jobs among the masses we can ensure a better livelihood and holistic welfare of our country. It helps in pulling out of poor from absolute poverty, enhanced their living stranded.

” True test of democracy is full employment and social security.” – Dr Radha Krishnan

Thank you everyone for reading this article on Unemployment- Types and Causes. I hope you find some useful knowledge from this article. Please share it with your friends and let me know your feedback in the comment section.

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