Open unemployment

Also called: Visible unemployment · Topic: Employment, Unemployment and Informalisation · NCERT: Class 10, Ch 2 "Sectors of the Indian Economy"; Class 11, Ch 6 "Employment: Growth, Informalisation and Other Issues"

Meaning

Open unemployment is unemployment you can see. A person has no work at all, is able and willing to work at the usual wage, and is clearly looking for work but cannot find it. It is also called visible unemployment.

• It matters because this is the kind of unemployment that surveys actually count in the Unemployment Rate (UR).
• Formula: UR = Unemployed ÷ Labour force × 100, where Labour force = Employed + Unemployed [2].

Explanation

Who counts as openly unemployed

• NSO definition (official). A person is unemployed when:
• they are not working because there is no work, not because they chose to stay home;
• and they seek work through employment exchanges, middlemen, friends or relatives, or by applying to employers;

• or they are available for work at the prevailing conditions and pay, meaning the usual wage and terms in the area.

• Economists' definition. A person is unemployed if they cannot get work for even one hour in half a day.

• Not unemployed: a student, a homemaker or a person who does not want a job. They are outside the labour force, not openly unemployed.

What it looks like

• Reading job advertisements in newspapers.
• Asking friends and contacts for work.
• Standing at labour points (labour chowks) to be hired for a day.
• Registering at employment exchanges (government offices that list job-seekers and vacancies).
• Fig. 6.5 (Class 11) shows unemployed mill workers waiting for casual jobs.
• Why it is "open": the person is idle, so anyone can see and count them. Disguised unemployment is different: there, people look busy but add nothing to output.

Worked example: measuring it

• A village has 1,000 people aged 15+. 580 work, 20 are seeking work, and 400 are students, homemakers or retired people.
• Labour force = 580 + 20 = 600.
• LFPR (Labour Force Participation Rate, the share of people who are working or looking for work) = 600 ÷ 1,000 = 60%.
• WPR (Worker Population Ratio, the share of people who are working) = 580 ÷ 1,000 = 58%.
• UR = 20 ÷ 600 = 3.3%.
• Trap: the denominator is the labour force (600), not the whole population (1,000).

What makes measured open unemployment rise or fall

• Reference period:
• Usual Status (ps+ss) looks back over the last 365 days. A person who worked 30 days or more as a side activity (subsidiary status) is counted as employed [2].
• Current Weekly Status (CWS) looks back over the last 7 days [2].

• So CWS catches short idle spells that the 365-day window hides, and CWS UR is higher.

• Seasonal idleness: between harvest and the next sowing, farm workers have no work.

• Usual status may count them as employed, because they had 30+ days of work in the year.

• CWS may catch them in an idle week.

• Education: educated people can afford to wait for regular or government jobs, so they stay openly unemployed longer.

• Poverty: the poor have no savings and no unemployment allowance, so they cannot stay openly unemployed for long. They take any work, which lowers open UR.

In India

• Who measures it: the Periodic Labour Force Survey (PLFS), run by the National Sample Survey Office (NSSO) under MoSPI, launched in April 2017 [2].

• PLFS 2023-24 covered July 2023 to June 2024, with 1,01,920 households and 3,19,773 persons aged 15+ [2].

• Latest figures (PLFS 2023-24, age 15+) [2]:

Indicator	2017-18	2023-24
UR, usual status (ps+ss), all	6.0%	3.2%
UR ps+ss, rural / urban	5.3% / 7.7%	2.5% / 5.1%
UR ps+ss, urban female	10.8%	7.1%
UR, CWS, all	8.7%	4.9%

• Mostly an urban problem. Open unemployment shows up clearly in the urban UR of 5.1% (ps+ss, 2023-24), about double the rural 2.5% [2].
• In villages, people fall back on family farms.

• So rural joblessness is hidden as disguised unemployment instead of showing up as open unemployment.

• Seasonal effect in villages: rural CWS UR (4.2%) is higher than rural ps+ss UR (2.5%) in 2023-24, because the 7-day window catches idle weeks [2].

• Mostly an educated problem.
• Youth UR in 2022 was 29.1% for graduates, 18.4% for those with secondary or higher education, and only 3.4% for youths who cannot read and write [4].
• Graduate youth UR was about nine times the rate for illiterate youth [4].
• Educated young women face higher UR than educated young men [4].

• Causes: skill mismatch (colleges do not teach what employers need) [4], and queuing, where educated people wait for scarce regular or government jobs.

• Youth (15-29 years): youth UR (usual status) was 10.2% in PLFS 2023-24 [3]. The government states this is lower than global levels [3].

• Long-run trend: it rose from 5.7% (2000) to 17.5% (2019), then fell to 12.1% (2022) and about 10% (2023) [4][5].

Don't confuse with

• Disguised unemployment: people appear employed, but more of them work on a task than it needs, so their marginal product is zero. It is hidden and common on family farms. Open unemployment is visible, because the person has no work at all.
• Underemployment: the person has some work, but less or poorer work than they could do. Victor (Class 11) works 2 hours a day. He is employed under CWS but underemployed, not openly unemployed.
• Outside the labour force: students, homemakers and retired people who are not seeking work are not unemployed. They are left out of the UR denominator.
• Seasonal unemployment: idleness tied to the farm calendar. It becomes open unemployment only during the idle spell when the person looks for work, and usual status may still count them as employed.

Prelims Hooks

• UR = Unemployed ÷ Labour force × 100. The denominator is the labour force, not the total population [2].
• PLFS was launched by NSSO (MoSPI) in April 2017. UR in 2023-24 was 3.2% (ps+ss) and 4.9% (CWS), down from 6.0% and 8.7% in 2017-18 [2].
• Usual status uses a 365-day period, and subsidiary status needs 30+ days of work. CWS uses the last 7 days. CWS UR is higher than usual-status UR [2].
• Urban UR (5.1%) is about double rural UR (2.5%) in 2023-24, because rural joblessness is hidden as disguised unemployment [2].
• Trap: in India, UR rises with education. Graduate youth UR was 29.1% against 3.4% for illiterate youth in 2022 [4]. The India Employment Report 2024 is by the ILO with IHD, not the Government of India [4][5].
• Trap: a person working 2 hours a day is employed under CWS. They are underemployed, not openly unemployed.

Mains Points

• Low open UR does not mean good jobs.
• The poor "cannot remain completely unemployed for very long". They have no savings and no allowance, so they take unpleasant or dangerous work.
• So UR is only 3.2% (2023-24) [2], yet nearly 82% of the workforce is in the informal sector and nearly 90% is informally employed, with no written contract or social security [4].

• Exam angle: read UR together with underemployment, the informal share and wages. Never use UR alone to judge labour welfare.

• Educated open unemployment is a mismatch problem.

• Graduate youth UR was 29.1% (2022) [4], and about one in three youths was NEET (Not in Employment, Education or Training), mostly women [4].

• Remedies: vocational training and apprenticeships, labour-intensive manufacturing, and more jobs for women to raise female LFPR.

• Hidden and open unemployment swap places.

• Lockdown in 2020 → urban informal jobs were lost → migrants went back to their villages.
• Back home they joined family farms, so disguised unemployment rose. The shift of workers out of farming reversed in 2019-22 [4].
• Result: measured open UR can look lower while job quality falls [4]. This links to MGNREGA as a safety net and to urban employment schemes (GS-II and GS-III).

Related concepts

• Unemployment
• Disguised unemployment
• Underemployment
• Seasonal unemployment
• Educated unemployment
• Youth unemployment
• Rural-urban migration
• Circular migration
• Distress migration
• Reverse migration

Read more

• Unemployment in India: definitions, forms and migration