to the National Income of the country
• Employment: All those who are engaged in an economic activity in whatever capacity are called employed or Workers
• Full Employment: Situation under which all those who are willing &able to work at the prevailing wage rates are employed according to their skills
• Under-Employment: Situation under which persons are working less than they are willing to work or they do not get wages according to their skills.
• Unemployment: Situation when a part of population is seeking job but is unable to get employed due to lack of work.
• Types of Unemployment
1. Functional/Frictional Unemployment: Refers to temporary unemployment during the interval period when people change from one job to another.
2. Structural Unemployment: Refers to unemployment due to mismatch between available &required skill set in the economy.
Result of structural changes in the economy.
• Frictional & Structural unemployment are unavoidable in most economies & together are referred as Natural Rate of Unemployment or minimum unemployment rate acceptable even under full employment situation.
3. Cyclical Unemployment: Caused due to business cycles. When economic boom is followed by a slowdown, production falls
&industries retrench employees to cut costs, causing cyclical unemployment.
4. Seasonal Unemployment: Caused due to seasonal nature of agricultural production leading to about 75% of land remaining unused for 3 to 4 months in India.
5. Disguised Unemployment: Refers to the situation of employing surplus labourers whose Marginal Productivity=0. It means that even if they are removed from agricultural activity, production will not decline.
Employment & Unemployment Indicators
• Labour Force (LF): Part of population which is willing and able to work.
• LF=
