Types, causes, impact and solutions

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Unemployment crisis in India

Unemployment Crisis in India:

Amidst all the problems that exist in India unemployment crisis is at the topmost position. A report by Centre for Monitoring Indian Economy (CMIE) reveals India’s unexpected increased unemployment rate to 24% in April 2020, then decreasing to 9.1% in December 2020 and 6% in January 2021. This impacted as many as around 90 lakh people losing jobs during the worldwide COVID-19 lockdown. The number of unemployed people might have decreased over the period, but unemployment still remains an unsolved problem in India.

Before jumping onto the solutions to the above problem, let’s understand its types, causes and equal impact on the country’s economy.  

Types of unemployment crisis in India:

  1. Disguised Unemployment is when organizations hire employees more than they need.
  2. Structural Unemployment is when employees’ skill set mismatch with their job roles due to unavailability of jobs in the market. 
  3. Seasonal Unemployment is when people do not have work during certain seasons of the year, like laborers in India rarely earn through daily wage jobs throughout the year.
  4. Vulnerable Unemployment is when people are employed but informally- without proper documentation, job contracts and their employment is not even recorded and so they don’t contribute to India’s GDP. 
  5. Technological Unemployment is when people lose their jobs due to technological advancements. Eg:- manual processes replaced by digital and automation.  
  6. Cyclical Unemployment is when a huge number of employees are removed from the organization during recessions. 
  7. Frictional Unemployment is when people are unemployed for a short period while searching for a new job or switching between jobs. The reason for this type of unemployment is not a shortage of jobs, instead the employees themselves quit their jobs in search of better job opportunities.

Major Causes and impact of unemployment crisis in India:

  • Large population– India has crossed 1,389,456,823 population already with only $1,877 (nominal; 2020 est.) $6,284 (PPP; 2020 est.) per capita income 
  • Low or no educational levels– As per NSO’s report, India’s average literacy rate is 77.7%. The sad part is, almost 2 million graduates and half a million postgraduates are still unemployed in India.
  • Low employment skills– Around 47% graduates in India are not suitable for any kind of job role. 
  • Job opportunity & skills mismatch– According to a report, 48% of urban youth face the problem of landing a suitable job, 38% of those who are employed are dissatisfied with their current job. 
  • Societal responsibilities for women– Only 19.9% of educated women in India are employed, as many of them are graduates but have to get married right after their graduation, others quit jobs due to family responsibilities or pregnancy and maternity gap. 

Solutions to unemployment crisis in India:

  1. Education 

For every problem in the world, Education stands as the strongest solution. Education is the basic right of any citizen and it should be provided with minimum fees. Right from equal educational facilities, to skill-based and computer knowledge, Education system can and should be improved. 

  1. Career guidance 

Job seekers who are educated but could not figure the right career path should consult a career guidance expert. Every industry has numerous career opportunities but Indian workers lack complete awareness about the same. A career guidance expert can help job seekers understand the industry know-how, zero down on the best career option and choose the right career path for them.

  1. Skill-based training 

Every job role requires a specific skill set and every job seeker should get trained at those skills. Many EdTech startups provide career guidance with industry, job or company-specific training to hone the organizational skills. These skills training sessions also include resume building training, interview preparations through mock interviews and everything that can help job seekers become employable.

  1. Job referrals 

Many job seekers fail to find the right place to work. Job referrals in top companies can help job seekers prepare and crack interviews accordingly. To eradicate unemployment, it is important for job seekers to find the right company and get placed with a deserved salary. This will minimize the frictional unemployment crisis in India. 

Unemployment can also be eradicated if every fresher graduate is given an opportunity to work in the companies. Additionally, if job seekers receive the right career guidance, get trained and employable, then every top company would want to hire them. Education, career guidance, skill-based training can together solve the unemployment crisis in India.

Also read: Why should companies hire freshers?

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