By Categories: Economy


  1. India’s unemployment rate dropped to 6.43% in September due to an increase in labour participation in the rural and urban areas according to data from the Centre for Monitoring Indian Economy (CMIE)
  2. In August, unemployment had surged to a one-year high of 8.3% as employment sequentially fell by 2 million to 394.6 million.
  3. The almost-8 million increase in labour participation is a sign that the economy is doing well.


The term unemployment refers to a state in which an individual actively seeks employment but is unsuccessful.

Discerning unemployment

  • The higher the country’s unemployment rate, its economic growth is less productive.
  • Even without employment, people still maintain a steady consumption of resources. These resources are merely used up without viable beneficial feedback to the country’s economy.
  • As a result, there is a proportional decline in the fundamental economic growth. A constantly high unemployment rate is a significant indicator of financial distress in a country and may have social and political ramifications leading to a degeneration of internal structure.

Implications of low unemployment rate

  1. On the other hand, a low unemployment rate signals maximum use of available labor in an economy, higher wage growth, and an overall increase in living standards.
  2. An ideal state for the economy of a country is to have maximum output from its potential workforce.
  3. However, a meager unemployment rate is an alert toward an overheating economy, causing inflation and unfavorable situations for employers needing extra labor.
  4. Unemployment is broadly divided into two categories by economists—voluntary and involuntary.

What can be the causes of unemployment?

There are many different aspects of the socio-economic system that can be blamed for the cause of unemployment.

According to Karl Marx, unemployment is a symptom of the capitalist system. He argued that businesspeople required a larger number of unemployed populations to make them eager enslaved people and work for a lesser wage.

Types of unemployment

What are the other different reasons for unemployment that affects India?

How is employment a problem?

  • Unemployment is a problem because it gives birth to poverty, from individual to national level.
  • Poverty leads to many other cascading problems. It also drives people towards focusing less on getting educated and living well and more on getting money. 
  • The issue will further lead to exploitation and lesser wages.

What measures can be taken to alleviate unemployment?

  • Frictional and cyclical unemployment can be remedied by increasing the number of jobs.
  • Steps can be taken to encourage businesses to hire more people at a better pay rate and promote growth.
  • Structural employment requires more work and a better long-term solution.
  • Changes should be done from the base level to lower the structural employment rate. 
  • Changes require skill training and education. More encouragement towards different fields can help create more jobs and allow the backward part of the economy to flourish more.


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