Unemployment or joblessness occurs when people are without work and actively seeking work. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labour force. According to International Labour Organization report, more than 6% people globally are out of work of the world’s workforce.

Classical economics and New classical economics argue that market mechanisms are reliable means of resolving unemployment or joblessness. These theories argue against interventions imposed on the labour market from the outside, such as unionisation, bureaucratic work rules, minimum wage laws, taxes, and other regulations that they claim discourage the hiring of workers.

The main types of unemployment or joblessness include structural unemployment which focuses on structural problems in the economy and inefficiencies inherent in labour markets, including a mismatch between the supply and demand of labourers with necessary skill sets. Structural arguments emphasize causes and solutions related to disruptive technologies and globalization.

Must Read: Rural and Urban Unemployment in India

Types of and theories of unemployment or joblessness, including cyclical or Keynesian unemployment, frictional unemployment, structural unemployment and classical unemployment.

High and persistent unemployment, in which economic inequality increases, has a negative effect on subsequent long-run economic growth. Unemployment or joblessness can harm growth not only because it is a waste of resources, but also because it generates redistributive pressures and subsequent distortions, drives people to poverty, constrains liquidity limiting labour mobility, and erodes self-esteem promoting social dislocation, unrest, and conflict.

Unemployed individuals are unable to earn money to meet financial obligations. Failure to pay mortgage payments or to pay rent may lead to homelessness through foreclosure or eviction. Unemployment or joblessness increases susceptibility to malnutrition, illness, mental stress, and loss of self-esteem, leading to depression.

Don’t Miss: Adverse Sex Ratio: Cause and its Implications

There is a trade-off between economic efficiency and unemployment or joblessness: if the frictionally unemployed accepted the first job they were offered, they would be likely to be operating at below their skill level, reducing the economy’s efficiency.

Social welfare programs benefits include unemployment insurance, unemployment compensation, welfare and subsidies to aid in retraining. The main goal of these programs is to alleviate short-term hardships and, more importantly, to allow workers more time to search for a job.

High unemployment or joblessness can also cause social problems such as crime; if people have less disposable income than before, it is very likely that crime levels within the economy will increase.

Also, Read:

Poverty: Concept and its Variants

Poverty Alleviation Programs in India

Disinvestment, which is the dilution of the government’s stake in public sector units, is a policy pursued by the government for bridging the fiscal deficit, raising capital for expansion and growth, repayment of debt and also funding the government’s social welfare programs.

A comprehensive policy on public sector was set out in the Industrial Policy Statement of July 24, 1991 – the year when the country had to tide over an unprecedented economic crisis reflected in its internal and external finances. The steps adumbrated included a review of public sector investments to focus on strategic and essential infrastructure enterprises and new procedures to tackle chronically sick and loss-making units.

The Department of Disinvestment was set up as a separate department in December, 1999 and was later renamed as Ministry of Disinvestment from September, 2001. From May, 2004, the Department of Disinvestment became one of the Departments under the Ministry of Finance.

Disinvestment was conceived in the context not only of the acute financial stringency of the Government of India, which had to continually provide budgetary support to loss-making units, but also of the failure of public sector as a whole to provide a reasonable rate of return on the total investments.

The progress of disinvestment in India has been very slow, considering the strides in privatisation that developing countries in the East and South East Asia, Latin America and Central and Eastern Europe have made by transfer of productive assets to private investors, especially in infrastructure (power, telecommunications, oil and minerals) and financial services.

Disinvestment is good about India because of following reasons-.

• Government will generate funds spontaneously if needed.
• It will help poor in long run because government do disinvestment only in the hope of generating good returns which will be used for the improvement of the country in upcoming budgets.
• As private owners will run the business it will be helpful for the infrastructure also as India’s infrastructure is very much depends on private companies.
• New technology will be used which will reduce the wastage of resources, presently which is not there in government comp.

Disinvestment in PSUs would be a necessary boon in the present day fiscal deficit crisis which will also eventually suck excess liquidity from the economy thus check inflation. Further, the country can also meet the CAD if partially opened to FDIs thus support the depreciating Rupee. This will also help in good corporate governance and answer ability to stakeholders at large.

Economics is the science which studies human behaviour and aims at meeting maximum objectives with the help of limited resources. It is the art and science which deals with the economic problems of the people living in a society.

Economics, as applied to industrial undertaking has two main divisions:

1. Micro Economics
2. Macro Economics

Microeconomics can be defined as, “the branch of economics where the unit of study is a firm or an individual.” It is the main concept and a numerical tool for economics concerning industries. The Micro-Economics deals with smaller units of the economy like the behaviour of the individual customer, plant, or industrial undertaking.

Macro Economics deals with the whole economy and studies the growth of national income and the economic environment as a whole. It plays an important role in forecasting and other factors relating to marketing.

Economics is a subject of interest to the engineers, as they are to deal with the economic problems related to increasing the production, reducing the efforts, increasing the wealth, improving the living standard, reduction in the cost of products etc.

Must Read: Elements of the State

Income

Income  (personal) is defined as those incomings which are in the form of money or payment in kind. Whereas income from the business is found by deducting the outgoings (expenditure on material, labour and other overheads etc.) from gross income. Income can be derived either from personal services or from the property.

National income is either

(i) the money value of all goods and services produced during a particular period, generally one year, or

(ii) the sum of all personal incomes derived from economic activity during this time.

Must Read: National Income of India

Investment

In business, investment is made on:

1. Land and buildings
2. Procurement of raw materials, tools, instruments etc.
3. Purchase and installation of machinery
4. Internal services like material handling devices, transport vehicles, light, water, gas, power etc.
5. Administrative and selling services.
6. Works related to productivity improvement, cost-reduction etc.
7. Payment of wages to the employees.
8. Other works related to running the business and its development.

You May Also Love to Read: A Company – Definition, Features, Types and Companies Act

Reserves

Reserves for working capital are very necessary for sound financial management. It ensures stability and financial soundness of enterprise. This helps, to cover credit, losses, to liquidate debts, to expand, for replacement of machinery, for taxes, to meet contingencies like fire, theft, strikes etc.

Reserves are of two types, namely revenue reserves and capital reserves. Revenue reserves are required to meet future commitments such as distribution of dividends, research and developments etc. Whereas capital reserves are made for increasing the capital.

Don’t Miss: Stock Exchange – An Organized Market for Purchase and Sale

Some more Important Elements of Economics are:

• Assets
• Liabilities
• Utility
• Market
• Money
• Trade Cycle
• Profit
• Price
• Cost
• Value
• Want
• Demand

Read Also: Special Economic Zone (SEZs)

Today we take money for granted. We use coins, bills, checks, and credit cards without giving them a second thought. We depend on our money to hold its value and to buy things for us when we need them. The history of money spans thousands of years from bartering and the first coins to credit cards and electronic money.

Bartering

The oldest way of doing business did not involve any money at all. People would trade goods. For example, if a person wanted a chicken, they would offer another good, perhaps a dozen apples in exchange. Once both parties agreed, they would make the trade. This form of trading was difficult and inefficient.

Must Read: How Paper Money is Made?

Early Money

As advanced civilizations developed, people around the world began to use the money. Different regions used different types of items as history of money includes cowry shells, salt, cattle, beads, grains, and durable metals. Over time, many societies began to use metals such as gold and silver for money. Metals were durable and could be weighed to verify their value.

The First Coins

Between 600 and 700 BC, larger cities and civilizations began to use coins made from medal. Early coins were made of all sizes and shapes. Some coins had holes in the center so they could be carried on a string. Eventually, coins were minted by the local ruler or king. These coins were more precisely made and had a stamp on them saying that they were backed by the king. These coins allowed for easier commerce as they didn’t have to be constantly weighed.

Also Read: How Coins are made?

The First Paper Money

Paper money was first invented around 600 AD in China. However, it wasn’t commonly used as money in China until around 1000 AD. It took a lot longer before paper money was first used in Europe. Banks began to issue banknotes in the 1600s in Europe. At first, a banknote was really just a promise that the bank would give the bearer a certain amount of coins. Eventually, the banknotes began to be used as history of money.

First U.S. Money

The first U.S. paper money was Continental Currency which was printed to help finance the Revolutionary War. After the war, the Continental became worthless and coins continued to be the main form of money. During the Civil War, coins became scarce and the government began to print paper money again. This money was printed with green ink on one side and became known as greenbacks. At first, people still didn’t like using paper money, but then the government said they would back the money with gold and paper money became more commonly used.

Have a Look at: How Banks Work?

Credit Cards

Credit cards were first issued in the 1950s and 1960s. In 1958, Bank of America issued a card that would later become Visa. A number of other banks launched a rival card, MasterCard, in 1966. Credit cards have since become one of the most common forms of payment.

Interesting Facts About the History of Money

• The term “credit card” was first used in the 1888 science fiction novel Looking Backward.
• The first minted coins are thought to have been made in Ancient Turkey in the Kingdom of Lydia around 600 BC.
• Some early Chinese paper money is said to have had the warning “all counterfeiters will be decapitated” printed on it.
• In Ancient Japan, wealth was measured using the koku, which was a unit of rice equal to what one man would eat in a year.

Also, Read:

Facts About Indian Currency

Currency Notes & Coins

Valuable facts about Money

All economies are going through a constant cycle of changes. This cycle can be described by a series of stages. You’ve probably heard people say things like “the economy is booming” or “we are in a recession.” These are some of the various stages of the economic cycle. It is sometimes called the business cycle.

Must Read: Economics

Stages of the Economic Cycle

We will describe four of the basic stages of the economic cycle below:

• Expansion
• Slowdown
• Recession and
• Recovery

Also Read: Elements of Economics

Expansion

The expansion is a time of strong economic growth. People tend to be the most optimistic during the expansion stage. Some economists called the expansion stage the “boom” stage. Indicators of the expansion stage include:

• New businesses opening and people investing in the stock market
• Wages increasing allowing people to make more money
• Lots of new jobs are created and unemployment drops
• Overall consumer confidence is high

Have a Look at: Method of Measuring National Income

Slowdown

At some point, the rapid growth of the expansion stage has to come to an end. When the economy starts to slow, but is still growing, this is called the slowdown stage. Sometimes economists call a slowdown a “downturn” in the economy. Indicators of an economic slowdown include:

• Interest rates on loans rise
• Prices on goods may rise causing a higher rate of inflation
• Stock market prices drop
• Consumers begin to worry, causing them to save more and spend less
• Businesses stop hiring new employees

Must Read: Economics: The Basics

Recession

A recession is when the economy stops growing. Economists define a recession as two-quarters in a row where the GDP (Gross Domestic Product) gets smaller. A lot of times a recession is started by some sort of major negative event. It could be something like a number of banks failing, a stock market crash, or even a terrorist attack (like in the 2001 9-11 attack). Indicators of an economic recession include:

• Increase in companies going bankrupt
• Increase in people losing their jobs and unemployment
• Inflation slows down because people aren’t spending their money
• A decline in consumer confidence
• A rise in the government deficit

You May Also Read: National Income

Recovery

When the economy starts to come out of a recession and begins to improve, this is called the recovery stage. Indicators of an economic recovery include:

• Unemployment rates start to improve
• An increase in new job openings
• People start to increase their spending
• Low-interest rates
• Companies begin to make better profits

How long does each stage of the cycle last?

There is no set time on how long each stage will last. Sometimes countries languish for years in a very slow recovery. Sometimes they experience a quick expansion and then immediately enter into a slowdown. In some cases, an economic cycle can skip the recession stage altogether and just enter into a long slowdown state. Economists call this a “soft landing.”

Also, Read:

Economic Survey of India 2015-16

Fiscal Policy

Monetary Policy