4 Main Types of Unemployment that Prevail in the Less Developed Countries

The reference here is to the period of summers and rains during which activities in the primary sector come to a lull. The sufferers are the landless workers in agriculture, as in India.

The phenomenon is not uncommon even in other sectors of the LDCs. Quite a few manufacturing industries experience this type of unemployment due to non­availability of certain inputs in certain seasons.

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This is true particularly in respect of industries depending on perishable raw materials available only in certain seasons. Moreover, some activities are seasonal. Those suited to such activities or engaged in them by choice, are seasonally employed. They suffer joblessness in the rest of the seasons.

(ii) Underemployment:

A large number of workers in LDCs, either work below their full capability, or at wages below the market rate of wage. In the former case, they work as part-time workers, failing to avail gainful employment certain hours every day or certain days every week or certain weeks every month or certain months every year.

In the latter case, they fail to avail of wages matching their productive potential. An individual with postgraduate degree in marketing management working at a salesman’s salary provides an example of under­employment.

(iii) Structural unemployment:

This type of unemployment is caused by backwardness of economic structure of the less developed countries. Due to this, the LDCs fail to generate sufficient job opportunities to match the rate of growth of the labour force in the country.

In other words, the rate of creation of new job opportunities is much below the rate of growth of labour-force. In such countries, the rate of resource utilization is very low due to lack of capital and technology on one hand and due to high growth of population on the other.

Apart from leading to high growth of labour force, a high population also leads to heavier social costs necessitating misallocation of productive resources. This further affects growth of employment opportunities aggravating the situation of structural unemployment even further.

(iv) Disguised unemployment:

Employment of people without contributing anything to the total product, is referred to as disguised unemployment. As the term suggests, what appears as employment is, in reality, unemployment in disguise.

For example, suppose 10 workers produce 100 tonnes of wheat on a piece of land. To increase the produce, suppose two more workers are employed. If output remains unaffected, the marginal product of the two is zero.

A worker is said to be in disguised unemployment if its MP = 0. The two are, thus, disguisedly unemployed. In countries like India, magnitude of disguised unemployment is very high in public sector and agriculture.