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Chapter: 11th Economics : Chapter 10 : Rural Economics

Rural Unemployment

Unemployment is a situation in which a person is actively searching for employment but unable to find work at the prevailing wage rate.

Rural Unemployment


Unemployment is a situation in which a person is actively searching for employment but unable to find work at the prevailing wage rate. It is a tragic waste of manpower and under utilisation of human resources. As long as there is unemployment, social problems cannot be stopped; and, economy cannot achieve development.


Peter Diamond, Dale Mortensen and Christopher Pissarides shared 2010 Economics Nobel prize for jobs study.Their model, called DMP model, helps us understand how regulation and economic policies affect unemployment, job vacancies and wages.


As on 4th October 2016, rural unemployment was 7.8 per cent which is less than urban unemployment (10.1 per cent) and all India unemployment rate (8,5 per cent). Rural unemployment in India are categorised into three classes: (i) Open Unemployment (ii) Concealed Unemployment or Under employment and (iii) Seasonal Unemployment. In Open Unemployment, unemployed persons are identified as they remain without work. This type of unemployment is found among agricultural labourers, rural artisans and literate persons. In Concealed Unemployment, it is difficult to identify who are under employed; for many are employed below their productive capacity and even if they are withdrawn from work the output will not diminish. It is also called Disguised Unemployment or Under employment. This type of unemployment is found among small and marginal farmers, livestock rearers and rural artisans. This kind of unemployment situation is more serious in villages than in urban areas. Disguised unemployment in rural India is 25 per cent to 30 per cent. In Seasonal Unemployment, employment occurs only on a particular season supported by natural circumstances and the remaining period of a year the rural people are unemployed or partially employed. In seasons like ploughing, sowing, weeding and harvesting there is scarcity of labour and in the rest of the yearthere is unemployment. It is pathetic to note that a farmer who cultivates one crop in a year usually goes without a job for almost 5 to 7 months and ultimately commit suicide.


According to the Agricultural Labour Enquiry Committee Report, “the extent of under employment is on the average, 82 days of unemployment in a year for 84 per cent of agricultural labours.”



1. Causes for Rural Unemployment


Causes for rural unemployment in India are discussed below:


1.        Absence of skill development and employment generation: Lack of Government initiatives to give required training and then to generate employment opportunities.


2.        Seasonal Nature of Agriculture: Agricultural operations are seasonal in nature and depend much on nature and rainfall. Therefore, the demand for labour becomes negligible during off-season. So, non-farm employment opportunities must be created.


3.        Lack of Subsidiary Occupation: Rural people are not able to start subsidiary occupations such as poultry, rope making, piggery etc. due to shortages of funds for investment and lack of proper marketing arrangements. This restricts the employment opportunity and rural family incomes. Government must arrange funds for these people. However, as now they pay huge interest to the local money lenders, for they are unable to get loans from formal sources.


4.        Mechanization of Agriculture: The landlords are the principal source of employment to the farm labour. Mechanization of agricultural operations like ploughing, irrigation, harvesting, threshing etc. reduces employment opportunities for the farm labour.


5.        Capital-Intensive Technology: The expanding private industrial sector is largely found in urban areas and not creating additional employment opportunities due to the application of capital intensive technologies. Government must establish firms to absorb surplus labour power.


6.        Defective System of Education: The present system of education has also aggravated the rural unemployment problem.Large number of degree-producing institutions has come in the recent years. Students also want to get degrees only, not any skill. Degrees should be awarded only on the basis of skills acquired. The unemployed youth should get sufficient facilities to update their skills.


2. Remedies for Rural Unemployment


In order to reduce rural unemployment in the country there is a need to take integrated and coordinated efforts from various levels. A few remedial measures are listed below:


1.        Subsidiary Occupation: To reduce the seasonal unemployment rural people should be encouraged to adopt subsidiary occupations. Loans should be granted and proper arrangements should be made for marketing their products.


2.        Rural Works Programme: Rural Works Programme such as construction and maintenance of roads, digging of drains, canals, etc should be planned during off-season to provide gainful employment to the unemployed.


3.        Irrigation Facilities: Since rainfall is uncertain irrigation facilities should be expanded to enable the farmers to adopt multiple cropping. The increased cropping intensity creates additional demand for labour.


4.        Rural Industrialization: To provide employment new industries should be set up in rural areas. This will open new fields of employment and also change the attitude of rural people towards work. For this, government has to do something. Private sector would not take up this responsibility.


5.        Technical Education: Employment oriented courses should be introduced in schools and colleges to enable the litrate youth to start their own units.


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11th Economics : Chapter 10 : Rural Economics : Rural Unemployment |

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