Unemployment and Full Employment
This is the’ problem that underdeveloped countries like India arc facing today Since our tuck of capital has not been growing at a rate fnsl enough to keep pace with the growth of populus ou, the country’s capacity to offer productive employment to the new entrants to the labour market has been severely limited. This manifests ilelf in two v-uysfirstly, the prevalence of large-scale unemployment in the urban areas as evidenced by the statistics of employment exchanges; secondly, it manifests itself in the form of growing numbers engaged in agriculture, resulting in disguised unemployment. It is common knowledge that with minor changes in organisation nd with existing techniques, our Nature of Unemployment ;11 Under- agriculture can be looked after by a much smaller underdeveloped Countries ber of persons than arc actually engaged in it. If alter- Bulk of ,thc unemployment in under-developed native employment opportunities were available, these countries is of a different nature from that in advanced people could be removed fro agriculture, where their marginal productivity is very low (if not zero or and developed countries. majur part uf the uncut- negative), tn occupations with higher marginal proploymentin developed countries is of cyclical nature ductivity, and the national income of the country would which is due to deficiency of aggregate effective derise. Since employment opportunities in the non-agmand. But 11i 0st Of the unemployment in under-devol- agricultural sector arc not growing rapidly, the new oped countries is not cyclical. Instead, it is a long- trams to the working force arc compelled to remain in term problem. The major cause of unemployment and agriculture ..has got to assume a special role in speeding up the rate of economic development. The other line of attack has got tu be on the rate of population growth. Malthusian theory may nut be valid so far as advanced countries are concerned, but it is trl!e of under-developed countries. If population grows at a rapid rate, then, to maintain the people even at their existing levels, large amounts of capital are needed. This capital could otherwise have been used to raise the amount of capital
available per man and hence raise the living standards stat a faster rate. l lcncc, it becomes absolutely necessary to check rapid population growth.standard is to Ihal a country have, alter a minimum n llowauce b madl’ l’ur seasonal ami I’rictional Full employment refers to such a slate of economy that all productive resources of a community- land, labour, capital and enterprise-at c fully employed. In other words, when none-of the productive resources arc lying idle or arc under-employed. Full employment may also be defined as an amount of employment beyond which further increase in cffectives demand docs nut increase output and employment but results in inflation, In this sense, -employed countries may be supposed to be in a stale of full employment because increase in demand creates an inflationary pressure owing 10 the Iact that, on account of deficiency of capital equipment, the supply of output is inelastic.