Unemployment – The Employment Problem: Basic Issues, Causes, Effects & Measures
Unemployment is a major economic and social problem faced by
developing as well as developed countries. It refers to the situation in which
people who are willing and able to work at the prevailing wage rate cannot find
jobs.
Understanding unemployment requires studying causes, effects,
and possible solutions, along with analyzing the current and future
labour force trends.
2. Basic Issues Related to Employment Problem
2.1 High Population Growth
- Rapid
population growth increases the labour force faster than the creation of
jobs.
- This
mismatch leads to a large unemployed and underemployed population.
2.2 Slow Economic Growth
- When
GDP grows slowly, businesses do not expand, and fewer new jobs are
created.
2.3 Structural Imbalances
- Skills
demanded by industry do not match the skills possessed by workers.
- Example:
Technology requires IT skills, but labour force mostly has traditional
skills.
2.4 Lack of Industrialization
- Excessive
dependence on agriculture creates disguised unemployment.
- Industrial
and services sectors are not expanding at sufficient speed.
2.5 Political Instability & Poor Governance
- Creates
uncertainty for investors.
- Businesses
hesitate to invest, reducing employment opportunities.
2.6 Energy Crisis & Infrastructure Problems
- Power
shortages slow production in industries.
- Industries
reduce shifts or close, resulting in layoffs.
3. Causes of Unemployment
3.1 Demographic Causes
- High
birth rate
- Youth
bulge (more young workers entering workforce)
3.2 Economic Causes
- Slow
industrial growth
- Insufficient
investment
- Closure
of industries
- Lack
of credit for small businesses
3.3 Technological Causes
- Automation
reduces demand for manual and unskilled labour.
3.4 Social Causes
- Preference
for government jobs
- Cultural
restrictions on female participation
- Lack
of mobility (people not willing to migrate for jobs)
3.5 Educational Causes
- Outdated
curriculum
- Lack
of technical and vocational training
- Mismatch
of degrees with market needs
3.6 Seasonal & Cyclical Causes
- Agriculture-based
economies face seasonal unemployment.
- Economic
recession globally affects employment.
4. Effects of Unemployment
4.1 Economic Effects
- Decrease
in national income
- Low
savings and investment
- High
dependency ratio
- Rise
in poverty
4.2 Social Effects
- Increase
in crime, drug abuse, and social unrest
- Decline
in living standards
- Psychological
stress, depression, frustration
4.3 Political Effects
- Public
dissatisfaction
- Weakening
of democracy
- Protests
and political instability
5. Present Labour Force Situation
5.1 Labour Force Definition
Labour force includes all persons aged 15 and above who are:
- Employed,
or
- Unemployed
but actively looking for work.
5.2 Present Scenario (General Overview for Developing
Countries)
- A
large youth population (age 15–29)
- Gender
gap in employment (fewer women working)
- Informal
sector dominates jobs (low wages, no job security)
- Skill
mismatch: low employability of graduates
- Rural
unemployment higher than urban areas
5.3 Labour Force Participation Rate (LFPR) Issues
- Low
overall participation
- Women’s
participation is significantly lower
- Large
number of discouraged workers not counted in LFPR
6. Projected Labour Force Trends
6.1 Population Growth Impact
- Labour
force expected to rise due to high population growth.
6.2 Youth Bulge Will Continue
- More
young individuals entering the job market
- Need
for skill development and job creation
6.3 Shift Toward Technology
- Demand
for IT, AI, digital economy and technical skills will increase
- Unskilled
labour unemployment will rise if training is not provided
6.4 Urbanization
- Increased
migration from rural to urban areas
- Higher
pressure on urban job markets
6.5 Global Employment Patterns
- Outsourcing
and freelancing opportunities increasing
- Remote
jobs will rise
- Traditional
jobs may shrink
7. Suggested Measures to Overcome Unemployment
7.1 Short-Term Measures
7.1.1 Public Works Programs
- Government
can create jobs through infrastructure development projects (roads,
buildings, dams).
7.1.2 Skill Development Programs
- Short
vocational courses
- IT
and digital literacy programs
- Training
in entrepreneurship
7.1.3 Support for Small & Medium Enterprises (SMEs)
- Provide
easy loans
- Tax
relief
- Encourage
self-employment
7.2 Long-Term Measures
7.2.1 Education Reforms
- Align
curriculum with industry needs
- Promote
technical education
- Make
vocational training compulsory at college level
7.2.2 Industrialization and Modernization
- Set
up new industries in rural areas
- Promote
export-oriented industries
- Adopt
modern energy-efficient technologies
7.2.3 Encourage Entrepreneurship
- Create
start-up incubators
- Support
youth start-ups
- Provide
business training and mentoring
7.2.4 Women Empowerment
- Provide
safe workplaces
- Flexible
working hours
- Encourage
female entrepreneurship
7.2.5 Agriculture Reforms
- Introduce
modern farming methods
- Crop
diversification
- Agro-based
industries to create rural jobs
7.2.6 Improve Governance & Political Stability
- Transparent
policies
- Investor-friendly
environment
- Reduce
corruption to attract foreign and domestic investment
8. Conclusion
Unemployment is a multifaceted issue involving economic,
social, political, and demographic factors. Effective measures require a
combination of:
- Better
education and skills,
- Strong
industries,
- Encouraging
entrepreneurship,
- Political
stability, and
- Proactive
government policies.
Projected labour force trends show that more jobs will be
needed in future, especially for the youth. Proper planning and timely reforms
are essential for sustainable economic development.
