A Business Encyclopedia

Chronic Unemployment

Definition: The Chronic Unemployment means prolonged unemployment in the economy. In other words, chronic unemployment is caused due to the long-term unemployment persisting in the economy.

Often, the underdeveloped economies suffer from the chronic unemployment because of one of the following major reasons:

  • Slower Economic Growth: The economy in its slow growth is characterized by less production, less selling and less demand for the manpower.
  • Rapid Population Growth: The increased population is one of the major cause of unemployment. More population leads to an increase in the labor force that ultimately leads to more unemployment because of fewer job opportunities.
  • Seasonal Agriculture: In the developing countries, like India, agriculture provides the seasonal employment such as the demand for the workers during the cultivation, harvesting, and sowing period is more than the other months in a year.
  • Fall in the cottage industries: In India, the majority of the population resides in rural areas where the major occupation is agriculture, and those who do not have land are engaged in cottage industries. But due to the change in the industrialization process and with more industries coming up with the advanced production methods there is a great fall in the cottage industries. And with the closure of these several artisans are left unemployed.
  • Immobility of Workforce: This problem is very much prevalent in the developing countries where people are more likely to reside in the places where their family is located and refuse to go to the regions where the jobs are available. This leads to an increase in the unemployment.
  • Defective Education System: Still the education system in the underdeveloped economies is in its growing stage where studies are degree oriented and less job oriented. When it comes to knowledge, it is more theoretical than practical. People find it difficult to apply their learnings in the job and land up remaining unemployed.

Thus, these reasons contribute towards the prolong ness of unemployment in any economy and therefore, the government should take all the necessary actions such as control population, encourage small scale and cottage industries, improve the education system, etc. to lower the unemployment levels and save the economy from such chronic disease.

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