Chapter 1 (T-3, Unemployment)[12-19/06/25]

Question 1

Define - Unemployment

Answer 1

Unemployment is a situation in which all those who are ‘able’ and ‘willing’ are not able to get work.

Question 2

Define:
1] Work
2] Able
3] Willing
4] Working age population
5] Labour Force
6] Worker population ratio and difference between labour and worker.

Question 3

What is demographic divident. What is the median age in India.

Answer 3

Expected benifit because of various labour force charecteristics.
Median Working Age 29years.

Question 4

Unemployment is measured through?

Answer 4

PLFS

Question 5

Approches to calculate Unemployment

Answer 5

1. US Approch - PS&SS
2. CWS Approch

Question 6

Headline Rate of Unemployment

Answer 6

US - PS&SS.

Question 7

List 8 types of Unemployment

Answer 7

1. Structural
2. Seasonal
3. Frictional
4. Volunatry
5. Underemployment
6. Disguised
7. Wage rate
8. Cyclical

Question 8

Explain: What is Demand, What constitutes demand?
Law of Demand.

Answer 8

1. Ability and Willingness
2. Only the quanity being actually purchased or asked for.
3. Assuming all other factors, except price as constant, Demand is inversely proportional to supply. (Make chart and show relation)

Question 9

Explain: What is Supply, What constitutes Supply?
Law of Supply.

Answer 9

1. Ability and Willingness of producers.
2. Quantity being actually produced.
3. Assuming all other factors, except price as constant, Priceis directly proportional to supply.

Question 10

What is Price?

Answer 10

Value at which the good is exchanged between the two willing entities.

Question 11

Market

Answer 11

Place for exchange of goods.

Question 12

What is Classical or Wage-rate Unemployment.

Answer 12

Unemployment attributed to the wage of labour(not majdoor) prevaling in the market. Demand of Labour is inversely proportional to its wage.

Question 13

What is permanent Situtation of Unemployment.

Answer 13

When there is a mis-match between Supply and Demand of Labour in the L Market and the mis-match is continuous and persistent.

It is attributed to two main reasons:
1. Govt Mandates - Minimum wages.
2. Strong Labour Unions.

Question 14

Types of Wage:

Answer 14

1. Minimum Wage - Statutory Wage or Floor wage.
2. Living Wage - Least Wage.
3. Fair Wage - Negotiated Wage.

Question 15

What is Cyclical Unemployment.

Answer 15

Cyclical unemployment is the unemployment that occurs due to a fall in the demand for goods and services during periods of economic downturn or recession. (NCERT)

Question 16

What is Natural Rate of Unemployment or the Background Rate of Unemployment.

Answer 16

The minimum level of UE an economy witnesses even at an stable growth phase.

Question 17

Development Of Unemployment in India

Only Theory.

Answer 17

India has been witnessing a fall in ‘UR’ and rise of ‘LFPR’.

Question 18

Unemployment Data

US(PS+SS) Approch

Answer 18

• 2017-18 – 6.0
• 2020-21 – 4.2
• 2023-24 – 3.2

Useful in AW(Low Test Score Eco-1)

Question 19

LFPR Data

Answer 19

• 2017-18 – 49
• 2020-21 – 55.2
• 2023-24 – 60.1

PLFS

Question 20

Critically analyse fall in Unemployment Rate & rise of Labour Force.

Answer 20

1. The rise of LF though rising it is still less than our competition(China, US) and the benifit of Demographic Divident will not be reaped until we have an skilled LF.
2. The fall in UE is largely attributed to increase in agricultural labour and increase in self-employment.

Question 21

Unemplyment
(Long-term Analysis)

Answer 21

1. Economic growth lower than the potential.(Structural weakness, Institutional lacunas, weak policy implementation, uneven growth and unskilled LF)
2. Jobless growth
   (Employment Elasticity has been falling)

Make the CHART from notes.

EE = Employment growth % Economic growth

Which is increase in employment per unit of growth.

Question 22

Critically analyze the ‘Jobless growth’ of India.

Answer 22

• JG would imply less job creation, hence rising UE. But, the long-term average UE remains at 5-6%, hence it would be misleading to call the growth JLess.
• Data revels that the job creation is always same or more the increase in Labour force. But, more employement generation is necessary.

Question 23

Types Of Workers

Answer 23

1. Formal Worker
2. Informal Worker
3. Contractual Worker
4. Unorganized Worker

Question 24

What is an Formal Worker

Answer 24

“Formal workers are those who are employed under a legally recognized employer-employee relationship, typically through an employment contract or other formal arrangement. They are entitled to social security and welfare benefits under various labour laws such as the EPF Act and the ESI Act”.

Acts are important.

Question 25

What is an Unorganized Woker

Answer 25

According to Unorganized sector social-security act, 2008 "Unorganized workers are home-based, self-employed, wage worker in unorganzied sector or a worker in organzied sector not subject to various labour laws". [*Maternity Benifit Act, 1961; EPF, ESIA act*]. | PLFS 2022-23 [Informal Worker = 85-90%] ## Footnote Important.

Question 26

A comprehensive reform initiative regarding labour laws was taken in 2015, which was finally compiled into codes in 2021, ***Background & Need for Labour Law Reforms***

Answer 26

India had a complex web of 40+ central labour laws and over 100 state laws, many of which were: 1. Outdated (some dating back to colonial times) 2.Overlapping or contradictory 3.Difficult to comply with, especially for small businesses 4.Unfavourable to both employers (due to rigidities) and workers (due to exclusion) > ⚖️ Labour law rationalisation was recommended by multiple committees, including the *Second National Commission on Labour (2002).*

Question 27

Key aspects of 2021 refroms.

Answer 27

Organized into 4 codes: 1. Code on Wages - Universal Minimum wage 2. Code on Social Security - Fixed Term employment 3. Code on Safety Security - Gig&platform workers as new category. 4. Code on industrial relations - Single licencing | Not yet enforced. (passed in parliament)