Tuesday, 5 July 2011

What are the causes of unemployment in the less developed countries and also suggest the measures to remove unemployment

Causes of Unemployment :-
In the advanced countries rate of unemployment is low while in the less developing countries rate of unemployment is very high. In the less developing countries disguised unemployment is also found.

1. Lack of Capital :-
The less developing countries are facing the problem of capital shortage. While for the development of any country there is need of a huge amount of capital. When new projects buildings and factories are constructed a large number of people are engaged in these projects. So lack of capital is the major cause of unemployment.

2. Overpopulation :-
In the developing countries, the rate of population growth is 3% per annum while the natural resources are limited and they can not meet the increasing demand of job.

3. Seasonal Variations :-
There are many industries which produce the goods seasonally like ice factory. These work only few months and remain close in the remaining period. So a large number of people who are engaged with these industries becomes unemployed. Due to inventions, new goods replacing the old commodities. So the people who are engaged with old industries are unemployed.

4. Lack of Effective Demand :-
According to Keynes when aggregate supply increases than the aggregate demand the unemployment prevails,. So he stresses that the rate of consumption may not fall.

5. Lack of Skill :-
In the less developing countries, majority of the people is uneducated and they have no any skill about any particular job. So they cannot get the job.

6. Poor Performance of Agriculture Sector :-
Under developed countries depends upon the agriculture sector and production of agriculture depends upon nature. Second problem is this that there is subdivision of land.Farmers have very small holdings neither they can sell it nor they can cultivate it.


1. Increase in Capital Formation :-
Government should establish the labour intensive industries to increase the rate of employment.

2. Incentive for Private Sector :-
Government should provide the liberal concessions and tax holiday to the private investors, to increase the rate of employment.

3. Establishment of Small Scale Industries :-
In the rural areas small scene industry should be established to remove the disguise unemployment.

4. Technical Training Centers :-
Technical and commercial centers should be established to provide training and skill to the public. It will be very useful in curtailing the unemployment.

5. Control on Population :-
There should be an effective check on the population growth. Family planning programme should be introduced and population should be reduced according the size of natural resources.

6. Increase in Effective Demand :-
Government should increase the rate of investment by establishing the various industries to increase the rate of employment.

7. Employment Exchange Offices :-
The offices should be established to provide the proper information about the employment to the public.

8. Monetary and Fiscal Policy :-
Monetary and fiscal policy should framed in such a manner that there should be maximum chances of employment to public.


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