# **3. Unemployment**

Defining unemployment can be a particular challenge, as the conventional subdivision of the economically active population between employed and unemployed does not capture the large number of those falling in neither of these categories. In many instances it is difficult to determnine the size of the labor force because of the prevalence of subsistence activities in the rural areas and the informal sector labor force comprising the self-employed, casual and unpaid workers in the urban areas. Basically, three broad categories of unemployed can be distinguished. First, there are the unemployed per se. those out of a job and actively looking for work. Second, there are the underemployed, those who are working voluntarily less than full-time, or those who are working long hours but earning less than the minimum living standards income. Third there are the "discouraged" unemployed, who are unemployed but not actively looking for work. In our analysis, we define the unemployeds as those who are between 15-64 years of age and are actively looking for work; and the discouraged workers as those not actively searching for work.

We see on the basis of GLSS data, that the overall unemployment rate for active persons has decreased slightly from 1.9 to 1.5 percent. The unemployment rates for the inactive persons, though of higher order has also declined from 14% to 8%. A close inspection of the data reveals that unemployment rates tend to decrease with age. Eventhough the total unemployment rates have declined the composition of the unemployed have changed with more younger people (age 15-24 yrs) in the category (Table 9). Overall, young people's stock of unemployed is about 25% higher than their share of labor force. Also most of the unemployed are females compared to males, eventhough the female labor force participation rates have increased dramatically over the years. The unemployment rates also vary by educational levels, and tend to decrease with education. In 1992, over 54% of the unemployed only had middle school level education and 16% had secondary education, while only 10% of the unemployed had primary schooling. It appears that those who are educated but not having acquired specific skills are disadvantaged in the labor market. This would suggest a mis-match between their training and job expectations and the characteristics of the jobs available in the economy. On the other hand, unemployment among the illiterates is the lowest of all (0.8 % in 1992), and open employment seem to increase with education level. A possible explanation for this could be that in the context of general shortage of jobs, unskilled workers with low expectations are better prepared to accept available jobs in the informal sector which are low paid and less secure. This points to the issue of the relevancy of the current educational system which raises the student expectations without providing the skills that are in demand in the economy. The incidence of unemployment also seems to be a urban phenomenon. In 1992, more than 80% of the unemployed belonged to the urban areas up from 75% in 1987. However, this needs to be interpreted with caution, because in rural areas many workers may be just engaged in farming as a part-time worker since he/she has nothing else to do. Eventhough the worker is not working fulltime he/she can be classified as employed as per our definition. As a result the unemployment rates may be artificially low in the rural areas than in urban areas.