ARTICLE: 9 Different Types of Unemployment in the Economy

WHAT IS UNEMPLOYMENT?

Unemployment is a state that occurs when a person is not working at all and not earning anything. The one who is not able to look for any potential work so that he can earn a livelihood is considered to be unemployed. The rate of unemployment is used to measure the health of the economy to know where it stands and how much growth does it need. To calculate the rate of unemployment, we have to divide the number of unemployed people with the number of people in labour.

This article summarises the major types of unemployment in the economy. You can also have a look at the article types of inflation for the better understanding of the concepts. The unemployment problem also gives rise to the problem of demand and supply in the economy. For the complete information, read the law of diminishing marginal in easy to get language.

  • The natural unemployment

Even if we talk about the healthiest economy, there will be some level of unemployment there. The natural unemployment there are two types of unemployment, i.e. structural and frictional.

  • Structural unemployment

It occurs due to the changes in the structure of the economy. The cause of structural unemployment is due to the fall in demand for the production of some particular industry. Therefore, it causes the reduction in the labour force and their requirements. We can take the example of workers working in the industries, due to advancement in technology the need for the labour has reduced. Thus, the people have to find new work because their task is easily done in less time by the machinery and that also with more perfection.

  • Frictional unemployment

It is a temporary kind of unemployment. If the employees are on strike, then there will be frictional unemployment in the economy. It causes the change in location or movement of unemployed labourers in the economy causing frictional unemployment in the economy.

  • The voluntary unemployment

There are people in every economy who are not willing to work. They might or might not be capable of doing the job, but they do not want to put any efforts in it. There are people who are not interested in looking for the job. Thus, they give rise to the voluntary unemployment in the economy. There are numerous jobs available as per their potential and qualification, but they do not take the acceptance of those offers. We can also refer to the voluntary unemployment as the wastage of human resources. But we cannot call it a severe problem.

  • The casual unemployment

In the economy, there is not only the state of permanent employment, but there are numerous employees that are not a temporary basis. They often work on contract basis, and they can be terminated at any time. Therefore, in this type of unemployment people are willing to work but do not get work for long-term. We can take the example of teachers in the colleges that are on an ad-hoc basis. They will work till they have signed the contract, after the expiry of the contract they are fired, or it depends on the employer whether they want to extend their contract or not.

  • Disguised unemployment

Disguised unemployment is that which is still hidden, and we cannot recognise it as it is not recorded anywhere. We have discussed all the unemployment types that are open, and they do have some solution. But disguised unemployment refers to that situation, where we have an excess of the labour force, but they do not have any marginal productivity. For example, if there is a farm and ten people are working on that farm but there is a requirement of only five people on that farm. The rest five will be considered as disguised unemployment.

  • The chronic unemployment

Chronic unemployment is that situation where the economy is suffering from unemployment state for a long time. There are many underdeveloped countries that are considered to have the situation of chronic unemployment in the economy. It can be due to various reasons such as less developed resources, or the resources are not developed properly, and the population growth is high.

  • Unemployment due to the technology

This is the type of unemployment that takes place because of the improvement in the technology. The technology is replacing the human in various tasks, and the people are becoming unemployed in the economy. This situation is referred to as technological unemployment. In many industries, people have introduced machinery with the latest technology for saving time and getting perfect work out of it. But on the other hand, it has reduced the value of human beings, and people are losing their jobs.

  • The seasonal unemployment

Seasonal unemployment is a state that occurs for the people who are engaged in the seasonal works such as the task of agriculture is also seasonal. The farmers are unemployed for rest of the time, and there are industries like rice mills and sugar mills that are into action only for some time during a year, and it has no activity for the rest of the year. Thus, the people employed in this kind of industries and seasonally unemployed.

Thus, these were some of the basic types of unemployment that are prevalent in almost all types of economies.