Global Economy : 7 Major Reasons of Unemployment Worldwide

When someone is actively looking for work and is considered to be employable, they are said to be unemployed. People in the labour who are employed but do not have suitable jobs are included in this group. Unemployment is one of the key indicators of a nation’s economic health and is typically expressed as the unemployment rate, which is calculated by dividing the number of jobless persons by the number of people in the labour force.

In this article we will highlight seven major reasons that have led to the mass unemployment worldwide,

1. Loss of small scale industries

Cottage and small-scale enterprises are no longer as economically appealing as they once were due to industrial progress since they no longer providing the economies of scale that come from large-scale mass manufacturing of commodities. The want for items that are mass-produced at low prices frequently outweighs the need for goods that are handcrafted by people with extremely specific skill and knowledge. As a result, the cottage and small-scale industries have drastically decreased, which has led to an increase in unemployment among artisans.

2. Job Specialisation

The capitalist economy has led to a rise in highly specialised employment, but India’s educational system does not offer the proper preparation or specialisation for these positions. As a result, a lot of people who want to work but lack the necessary abilities can’t find employment.

3. Lack of essential skills

According to a study, lack of future skills keeps 43% of educated youth in India from finding employment. Even after completing their education, millions of students in our nation lack practical experience and solid knowledge.

4. Population Growth

India has seen a huge increase in population over the previous 50 years. With a total population of more than 1.3 billion, only China is more populous than the United States. India’s population is anticipated to surpass China’s by 2024, and it is projected to maintain that position for the rest of the twenty-first century. A bigger percentage of the population is unemployed as a result of the country’s economy’s incapacity to keep up with the rapidly increasing population.

5. Lack of physical capital

All economic activity must be supported by physical capital. A farmer needs a tractor, a plough, and other tools; a businessperson needs land, tools, minerals, etc.; and the service sector needs state-of-the-art equipment, buildings, tools, etc. All of the capital is physical. The needs of a growing population have outpaced India’s capital stock’s capacity.

6. Extreme dependency on agriculture

Despite its decreasing GDP contribution, India’s primary sector continues to employ the bulk of its workforce. Due to this, the economic difference between urban and rural communities has widened and unemployment has been covered up. The majority of individuals are vulnerable to seasonal unemployment because agriculture is a seasonally dependent business.

7. Ineffective economic planning

The administration’s stated five-year goals didn’t significantly aid in the growth of the labour force. The premise was that as the economy expands, there will surely be enough jobs generated. The scenario, however, doesn’t exactly work out as planned, and gaps between the necessary number of jobs created and the actual numbers generated have persisted.