how is unemployment in India meassured?
Answers
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The early literature on unemployment in India attempted to measure such unemployment through measures that were defined with respect to low productivity or low incomes. Unemployment is measured through labour force surveys which elicit the `activity' status of the respondent for a given reference period.
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Measurement of Unemployment in India: Dantwala Committee Approach:
Let us now first discuss the approaches to measure open unemployment and underemployment in India.
On the basis of time and willingness criteria open unemployment and underemployment have been estimated using the following three approaches which were recommended by an expert committee headed by Prof. M L. Dantwala:
(i) Usual Status Approach:
This approach records only those persons as unemployed who had no gainful work for a major time during the 365 days preceding the date of survey and are seeking or are available for work. Thus, the estimates of unemployment obtained on the basis of usual status approach are expected to capture long-term open unemployment.
(ii) Weekly Status Approach:
In this approach current activity status relating to the weed preceding the date of survey is recorded and those persons are classified as unemployed who did not have gainful work even for an hour on any day in the preceding week and were seeking or were available for work.
The persons who may be employed on usual status approach may however become intermittently unemployed during some seasons or parts of the year. Thus, unlike the usual status approach, weekly status approach would capture not only open chronic unemployment but also seasonal unemployment. Besides, this approach provides weekly average rate of unemployment.
(iii) Daily Status Approach:
The weekly status approach records a person employed even if he works only for an hour on any day of the whole week. It is thus clear that the weekly status approach would tend to underestimate unemployment in the economy because it does not appear to be proper to treat all those who have been unemployed for the whole week except an hour as employed.
Indeed, the demand for labour in farming and non-fanning households often fluctuates over a small period within a week. Hence the need for the use of daily status approach to measure the magnitude of unemployment and underemployment in India.
In the daily status approach current activity status of a person with regard to whether employed or unemployed or outside labour force is recorded for each day in reference week. Further, for estimating employment and unemployment, half-day has been adopted as a unit of measurement.
A person who works for 4 hours or more up to 8 hours on a day is recorded as employed for the full day and one who works for an hour or more but less than 4 hours on a day is recorded as employed for half-day. Accordingly, persons having no gainful work even for one hour on a day are described as unemployed for full day provided that they are either seeking or are available for work.
Thus, the daily status approach would capture not only the unemployed days of those persons who are usually unemployed but also the unemployed days of those who are recorded as employed on weekly status basis.
Hence daily status concept of unemployment is more inclusive than those of usual status and weekly status approaches and would yield an average number of unemployed person-days per day in the year indicating the magnitude of both open unemployment and underemployment. They are also referred to as person-years unemployed so as to distinguish them from persons unemployed.
The estimates of unemployment on the basis of above three approaches are presented in Table 12.1. It may be observed from this table that according to NSS 1999-2000 round, 2.8 per cent of labour force were unemployed on usual status basis and 4.4 per cent of labour force were unemployed on weekly status basis and 7.3 per cent of labour force on current daily status (CDS) basis.
In 2004-05 (60th Round) unemployment rate further increased. On current weekly status basis, unemployment rate went up to 4.6 per cent in the rural areas and 6.4 per cent in the urban areas and 3.08 for India as a whole. On current daily status basis, in 2004-05 rate of unemployment rose to 8.2 per cent in rural areas and to 8.3 per cent in the urban areas and 8.2 per cent in case of All India.