UNEMPLOYMENT AND FULL EMPLOYMENT
The world, man by himself hardly produces anything. Even the primitive man needed some elementary tools like the bow and the arrow to engage in hunting or the earning of his livelihood. With the growth of technology and specialiation, he needs much more capital with which to engage in the productive activity. All the seinstruments of production constitute community’s stock of capital. Now, if the worki ngforce grows faster than the stock of capital of a country, the entire addition of the labourforce cannot be absorbed in productive employment-bccause not enough of in trum cntsof production are there to employ them. The resulting unemployment is known as the structural, long-term or Marxian unemployment.
Seasonal unemployment arises because of the seasonal character of a particular productive activity so that people become unemployed during the slack ,o,cmon. Indian agriculture is a seasonal occupation so that the fanners have not sufficient work to doduring the slack season. Other examples of seasonal industry are the ice factories, the rice mills, the sugar factories, etc. The solution has to be found in re-arranging the process of ,. production. and, where this is not possible, complementary and subsidiary job have to be created for the people suffering from seasonal unemployment.
Frictional unemployment cxivts when men arc temporarily out of work bccauve of the lack of perfect mobility on the part of the labour. In a growing and dynamic economy. in which some industries are declining and others arc rising and in which people arc free 10 work wherever they will, some volume or frictional unemployment is bound to exist. This is so because itit takes so e time for the unemployed labour to learn new trades or to shirt to new places. where thereis a demand for labour. Thus. fl actual unemployment cut exists when there i~ unsatisfied demand [nr labour, but the unemployed workers arc either not fit Cor the jobs in qucsuon or arc not in the right place to meet this demand. In II WOIkcp, .uc only temporarily unemployed. the bcmg immobility of labour. the seasonal work, ‘ honu gcs of materials, breakdowns in machinery and equipment, ignorance or the job seeker s. etc. We cannot conceive of frictional unemployment,unless there is unsatisfied demand for labour somewhere in the economy. If. in a country, the total demand for labour fall. short of the total supply of labour, then the cuu: c IS not frictional but some other. SOllie action can he .takcn to minimize the harmful consequencesof by offering quick retraining facilities to the unemployed, providing labour exchanges. and by arranging adequate social security measures to help the unemployed during the transition and by regulating, in an orderly manner, the pace of technological change spuc or some frictional unemployment, we can say there is employment WISh to work arc able to get work.
unemployment increases. SOIllC people arc thrown out of employment altogcthc, and others arc only partially employed. Advanced capitalist countries have been suffering from time to time from this type of uncmploymcnt. This type of unemployment arises not because of ‘100 little’ capital as in thc case of structural uncmployment, hut because of ‘too much’ capital for a short while in relation to demand fur goods and <crviccs. In others words, this type of “employment is due to the fact that the total effective demand of the community is not sufficient to absorb the entire production or goods that can be produced with lite availahle stock uf capital. In a free private enterprise economy. production takes place in rcspon-c to thc profit motive. When businessmen cannot sell their entire output, their profit expectations arc not fulfilled so that their reaction in the next period is tll reduce their output. Now, factors or production earn their incomes because of their participation in the process of production and. whcn entreprene urs decide to reduce their production. some factors of production becomebecome unemployed. Since employment is the major source of incomes fur a great majority of people, a fall in employment signifies a rail in their incomes also.lcasurcs or Keynesian We know that the Keynesian unemployment is due to the deficiency of effect ive dcnuuul. We can, therefore, remove this type or nemployment y boosting up the level of effective demand. This canbe done by r.using the rate of invcsuucnt or shifting the consumption function 10 the left. To increase the rate of invc tmcnt, the government can adopt the following mea ure : (i) 111e govcnJmentlllay decide to induce the private investors to Invest more. Fur this reason. the govcrumcut may pursue a cheap money policy or lowering the rate of interest. We know that ordinarily, the lower the rate or interest. the higher will be the level of private mvc uncut.