A look at the types of unemployment

  19-Oct-2020 11:14:40

Unemployment GDP primary sector secondary sector tertiary sector

Unemployment occurs when a person who is actively searching for employment is unable to find work. This results in lower economic output. Unemployment statistics are often used as a measure of the health of the economy. Unemployment is measured by the unemployment rate i.e. the number of unemployed people divided by the number of people in the labor force. High rates of unemployment are the origin of economic distress and instability. Unemployment data are collected and published by government agencies like NSSO (national sample survey organization).

Unemployment occurs when a person who is actively searching for employment is unable to find work. This results in lower economic output. Unemployment statistics are often used as Unemployment exists in all sectors i.e. in the Primary, Secondary, Tertiary, Quaternary and Quinary sectors. Primary sector includes Mining(coal/iron), Mineral Extraction(oil), Forestry, Fishing and Agriculture(crops/livestock). The secondary sector includes manufacturing (finished or usable product) and construction. The tertiary sector includes jobs related to attention, advice, access, experience, and affective labor. The quaternary sector is knowledge-based like IT, media, and research. The Quinary sector focuses on the creation, re-arrangement, and interpretation of new and existing ideas. The unemployment rate in India was 9.21% from 2018 till 2020 but reached an exorbitant rate of 23.55% in April 2020. It dropped to 7.43% in July and then further increased to 8.35% in August.


The primary sector is mainly facing Disguised Unemployment i.e. when a part of the labor force is either left without work or is working in a redundant manner such that the worker productivity is essentially zero. This kind of unemployment doesn’t affect the aggregate economic output. Disguised Unemployment is not counted in official unemployment statistics within the national economy. There are three kinds of Disguised Unemployment which are broadly Underemployment i.e. people working jobs beneath their skill set, Unutilized workers who are ill and disabled, and job seekers who are demoralized by their inability to find work and stop looking for it.

Statistics: The rural unemployment rate increased to a soaring high of 7.65% in august against 6.66% that has been recorded in July. Among all the states in India, Haryana was the worst hit with an enormous rate of 33.5% in August. it was followed by Tripura (27.9%). Karnataka and Odisha were the better off states with unemployment rates of 0.5% and 1.4% respectively in August.

Government Initiatives :

  • The government has taken out schemes to employ people in the primary sector like the Integrated Rural Development Program (IRDP) which intends to create full employment opportunities in rural areas.

  • National Rural Employment Program which creates employment opportunities of the order of 300 million to 400 million man-days every year during the lean agricultural season.

  • Minimum Wages Act, the central government has revised the minimum wages which are now higher than before so that workers could get paid more than earlier.

  • Aajeevika- National Rural Livelihoods program, it was launched by the Ministry of Rural Development and has set out with an agenda to cover 7 crore rural poor households across 600 districts through self-managed self-help groups (SHGs). the poor would also be facilitated to achieve increased access to their rights, entitlements, and public services, diversified risk, and better social indicators of empowerment.

  • Separate Provident fund legislation exists for workers employed in and Tea Plantations

Examples of different countries: In Vietnam, according to the statistics of the Ministry of Labour, Invalids, and Social Affairs, from 1990 to 2003, they recovered a land area of 697.41ha to serve the purpose of establishing industrial parks. They lost a lot of land for non-agricultural needs. Following that, there were 2498756 unemployed rural laborers and people of the 35 or more who lost their jobs. To overcome this, they started the practice of creating sustainable jobs like fish farming, apiculture, and agro-processing and raising of livestock which helped in the reduction of unemployment and created jobs. A new unemployment insurance system was also scheduled to come into force in which employees had to pay 1% of their income and the same amount the government paid. The fund collected aimed to pay the workers which were laid off. In India to reduce unemployment in rural areas, similar techniques of non-farming activities should be promoted so that people who are facing joblessness can earn their livelihood. The government should also come up with schemes in 5-year plans which educate and train people on how to pursue non-farming activities.


The secondary sector faces Technological Unemployment which means unemployment is caused by technical progress; the skills of particular types of workers are made redundant because of changes in the methods of production, usually by substituting machines for manual services. Frictional unemployment is also abundant in the secondary sector. When old industries contract and die out, new industries come up. In such a situation workers must move from industry to industry, leaving those which are decaying and joining those which are leading the way to better opportunities. The time for which the workers don’t get work is a period of unemployment, called frictional unemployment.

Statistics: During corona months i.e. from March till July which was partial lockdown many factories, industries, and construction houses were shut which created a lot of unemployment. Manufacturing production decreased in April at -66.6%, reviving to -38.45% in May, -16% in June, and -11.1% in July.

Government initiatives :

  • The government introduced Training Youth for Self-Employment which provides training to five lac youths per year, so they may become self-employed

  • The government also introduced Prime Minister Rozgar Yojana (PMRY) which aims to provide easy subsidized financial assistance to the unemployed but educated youth. The purpose of this scheme is to start something of their own in manufacturing and business.

  • Start-up India was an initiative by the government of India which aims at promoting and encouraging entrepreneurial spirit amongst its citizens.

  • The Employee's Compensation Act requires payment of compensation to the workman or his family in cases of employment-related injuries resulted in death or disability.

  • Sampoorna Rojgar Yojana.-The primary objective of the Scheme is to provide skilled and local employment and thereby improve skills levels in all rural and urban areas. The scheme is open to all rural and urban unemployed educated youth who require employment and desire to do manual and skilled work in and around his locality/village/habitat. The beneficiary gets fixed based payment of wages and incentives based on performance.

Examples of different countries: The U.S. recession in 2008, many firms closed down or bankrupt led to 2.6 million laborers being unemployed, the employment rate rose to 7.2% in the U.S. on October 3, 2008, Obama led congress established the Troubled assets relief program, which allowed the U.S. Treasury to bail out troubled banks. The treasury secretary lent 115$ billion to banks by purchasing preferred stocks. On February 19, 2009, congress passed the American recovery and reinvestment act. The $787 billion economic stimulus plan ended the recession. It granted tax cuts, money for new projects including, health care education and infrastructure initiatives. For increasing unemployment, our government has had a similar approach in providing economic packages for the needy to establish small businesses and return the money in small amounts without interest. The government has also created 80,000 new jobs for teachers and for those who’ve lost them during corona months.


The tertiary sector is mainly facing Structural unemployment and Educated unemployment which forms the component of open unemployment. It happens when a country is unable to provide jobs to all job seekers because the resources available are limited. India’s unemployment is structural. It is associated with the inadequacy of productive capacity to create jobs for all those who are willing. Educated unemployment is regarding the non-availability of jobs among the educated i.e. matriculate and graduates. Open unemployment is when those willing to work and able to work have no work. This problem also arises in the educated sector wherein have a willingness to work.

Statistics: The urban unemployment slinked to 9.83% in August as against 9.15% in July. According to the data released by the Centre for Monitoring Indian Economy (CMIE), one in every 10 people cannot find work.

Government initiatives :

  • National Career Service Portal was launched as a one-stop platform for both job providers and seekers. It also has guidance on self-employment and entrepreneurship.

  • Sankalp scheme envisages setting up of Trainers and Assessors with self-sustainable models.

  • A special scheme for women i.e State Assisted Scheme Of Provident Fund in the Unorganised Sector seeks to enforce labor laws and facilitate the worker's fundamental rights at their workplace.

By - Sukriti Sanawar