MEDS 042: Block-4 (Unit 03) – Urban Unemployment

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 UNIT 3: URBAN UNEMPLOYMENT

3.1 Introduction

Urban unemployment refers to the lack of gainful employment opportunities in towns and cities. As urban areas experience rapid population growth and industrialisation, they also face increasing pressure to generate adequate employment. The urban job market often becomes saturated, especially for unskilled and semi-skilled labour, leading to various forms of unemployment. Addressing urban unemployment is crucial for sustainable urban development and social stability.

3.2 Unemployment: Types, Measurement and Causes

Types of Unemployment

·         Open Unemployment: People willing to work at prevailing wages but unable to find jobs.

·         Disguised Unemployment: More people engaged in a job than actually required.

·         Seasonal Unemployment: Employment only available during specific seasons (less common in urban areas).

·         Structural Unemployment: Mismatch between skills and available jobs.

·         Frictional Unemployment: Temporary unemployment during job transitions.

·         Educated Unemployment: Unemployment among degree holders unable to find jobs matching their qualifications.

·         Underemployment: People working in jobs below their skill level or part-time involuntarily.

Measurement of Unemployment in India

·         Usual Status (US): Based on employment status over the reference year.

·         Current Weekly Status (CWS): Employment status during the last 7 days.

·         Current Daily Status (CDS): Employment status on each day of the reference week.

Causes of Unemployment

·         Rapid population growth

·         Rural-urban migration without proportional job growth

·         Slow industrialisation and automation

·         Skill mismatch and inadequate education/training

·         Informal sector saturation

·         Urban bias in job availability

3.3 Unemployment in Urban Areas

Urban unemployment arises due to a faster rate of migration than job creation. Urban areas attract people seeking better opportunities, but the formal sector often fails to absorb this influx. Key concerns include:

·         Rise of informal jobs lacking security and benefits

·         Unemployment among youth, especially educated youth

·         High unemployment rates in metropolitan cities

·         Urban slums becoming repositories of the underemployed

Data from surveys like the Periodic Labour Force Survey (PLFS) reveal that unemployment rates in urban India are generally higher than in rural areas, particularly for youth and women.

3.4 Growth in Urban Employment/Unemployment

Urban employment has evolved through sectors:

·         Primary Sector: Negligible in cities.

·         Secondary Sector: Includes construction, manufacturing, which saw decline during industrial slowdowns.

·         Tertiary Sector: Growth in services, IT, finance, hospitality—main contributor to urban employment.

However, the rise in contractual jobs, gig economy, and platform-based employment (e.g., food delivery, ride-hailing) often brings flexibility without job security.

Trends

·         Increasing share of self-employment and casual labour

·         Rise of part-time and precarious employment

·         Urban female labour force participation remains low

·         Informal sector remains the largest employer in urban India

3.5 Policies and Programmes to Reduce Unemployment in India

National Policies

·         National Employment Policy (proposed): Focus on productive and decent employment.

·         Skill India Mission: Enhancing employability through training and certification.

·         National Career Service (NCS): Online job matching and career counselling.

Key Government Programmes

·         Deen Dayal Antyodaya Yojana – National Urban Livelihood Mission (DAY-NULM): Promotes self-employment and skills for urban poor.

·         Make in India: Boosting manufacturing sector employment.

·         Startup India: Supporting entrepreneurs and job creation.

·         Atmanirbhar Bharat Rojgar Yojana: Incentives for employers for new employment creation.

·         PM-DAKSH: Targeted skill development of marginalised groups.

3.6 Let Us Sum Up

Urban unemployment is a complex issue driven by rapid urbanisation, skill mismatches, and structural weaknesses in job creation. While the services sector shows promise, it must be complemented by policy support, skill enhancement, and inclusive job creation to reduce the urban employment gap. Strengthening the informal sector, supporting entrepreneurship, and empowering women in urban labour markets are critical for tackling the urban unemployment challenge.

3.7 Keywords

·         Urban Unemployment: Joblessness among people living in urban areas.

·         Open Unemployment: Individuals actively seeking jobs but unable to find any.

·         Disguised Unemployment: More workers than needed, contributing little to productivity.

·         Educated Unemployment: Unemployment among graduates due to skill-job mismatch.

·         Skill Mismatch: Incompatibility between worker skills and job requirements.

·         Informal Sector: Unregulated sector with no formal job contracts or benefits.

·         Gig Economy: Short-term, freelance, or contract-based jobs often via digital platforms.

·         DAY-NULM: Programme for urban poor to gain skill-based employment or self-employment.

·         PLFS: Periodic Labour Force Survey, official source of employment statistics in India.

·         Startup India: Government initiative to support new enterprises and generate jobs.

 

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