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Rising Employment Crisis in India

India in its 72­­­­­­­nd year of independence has the fastest growing economy in the world, surpassing China. Despite India boasting a growing economy and supporting a favorable demographic dividend, much of the youth of the nation remains unemployed. Unemployment occurs when a person who is actively searching for employment is unable to find work.

Types of Unemployment

Its major types are:

  1. Frictional Unemployment– When changing demand patterns in an economy dislocate existing production patterns to the extent that labor becomes redundant.
  2. Structural Unemployment– Long-term unemployment caused by the decline of certain industries and changes in production process.
  3. Cyclical Unemployment– Unemployment due to deficiency of demand or purchasing power.
  4. Seasonal Unemployment– Due to seasonal pattern of demand and the consequent seasonal nature of activities in some industries.
  5. Disguised Unemployment– When more labor is working on a particular project then required, the extra population that seems to be working is in reality unemployed as they do not add up to the output.

Current Crisis

There are currently approximately 31 million unemployed Indians looking for jobs in India, whereas the number of jobs created in 2018 was limited to an estimated 6,000,000. The unemployment rate in February 2018 was as high as 6.06%. However, this rate is expected to be nearly 3.50% (based on average expected unemployment). The highest unemployment rate, which is nearly 15%, can be found in the states of Haryana, J&K, and Tripura. The rates went as low as 3.4% in July 2017, but unemployment has been rising since then.

Consequences of Unemployment

Unemployment has severe effects on the unemployed individual and the economy overall. Unemployment affects the unemployed individual and their family, not only in respect to income, but also in respect to health and mortality. Family dependency on the young members of the family also increases with time. Unemployment also affects the confidence level of the individual to a great extent. If the unemployment period is prolonged, the unemployed individual may indulge in criminal activities due to the need for money and unstable mind.

With a rise in unemployment rate, the expenses of the government increase in order to provide unemployment benefits to an individual. Unemployment also leads to social division among the population, between families where both the parents are working professionals and one in which only one of the parents has a dignified job status. With high levels of unemployment, the aggregate demand in the economy also falls due to lack of disposable income with the individuals. Unrest among the youth can lead to protest and hunger strikes, which are unproductive for any growing economy. An economy also cannot reach its potential growth if the unemployed population keeps rising.


One major reason why the youth of India remains unemployed is the lack of required skills among the educated youth. With changing times, the industry’s demand for skills is also evolving. Thus, focus must be on skill development and making quality education affordable to the large population. Due to rise in technology, working professionals should be trained to make optimal use of the advancement in technology. Globalization has also lead to wider reach for the industrial and service sector, which necessitates a need for soft skill development among the graduates. Setting up agriculture-based industries in rural areas will help to control migration of rural population to urban areas. Relaxing laws for setting up industries will help in generating employment and the GDP as well. More and more incentives must be given to foreign or native investors to set up industries through the relaxing of FDI norms or through special economic zones. A fully employed economy does not mean zero unemployment, but an acceptable level of unemployment above 0%. Once the labor force of an economy is fully employed, output can grow at a fast pace and the economy will be able to reach its optimal level.

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Disclaimer: The views and opinions expressed in this article are those of the author and/or student and do not necessarily reflect the official policy or position of United 4 Social Change Inc., its board members, or officers.

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