Definition of Unemployment

  • Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age not being in paid employment or self-employment but currently available for work during the reference period
  • Unemployment is measured by the unemployment rate, which is the number of people who are unemployed as a percentage of the labour force (the total number of people employed added to those unemployed).
  • The National Sample Survey Organization (NSSO),since its inception in 1950, does the measurement of employment / unemployment in India
    • In order to find out whether an individual is employed or unemployed it needs to be first determined whether h/she belongs to the ‘Labour Force’ or not, which in turn depends on the Activity Status of the individual during the chosen reference period
    • Activity Status refers to the activity situation in which the individual is found during the reference period with respect to his participation in economic or non-economic activities
    • The NSSO defines following three broad Activity Status
      1. Working (engaged in an economic activity) i.e. ‘Employed’
      2. Seeking or available for work i.e. ‘Unemployed’
  • Neither seeking nor available for work
  • All those individuals having a broad activity status as i) or ii) above are classified as being in the Labour Force and those having activity status iii) are classified as outside the Labour Force. Thus labour force constitutes of both employed and unemployed

Unemployment rate = (Unemployed  Workers / Total labor force) X 100
  • Further, Estimations of labour force, labour participation rate, unemployment rate, greater labour force, greater labour participation rate and greater unemployment rate – are all computed using the employment / unemployment status of persons of 15 years of age or more