What is disguised unemployment? Definition and Inclusion

What is disguised unemployment? 

Disguised unemployment is an economic term used to describe a portion of the labour force involved in unnecessary work with very low productivity. Disguised unemployment does not affect the total output of an economy.

Breakdown

Individuals who do not work to their full potential and capabilities, who perform tasks that do not provide much productivity value, or individuals who are unemployed and actively lacking opportunities to work despite having the potential to increase productivity not looking for, can be seen as a contributor to disguised unemployment.

What is disguised unemployment? – Definition

Disguised unemployment is very common in third world countries, which are still developing and with huge population numbers, which is known as labour surplus.

Understanding Disguised Unemployment Disguised unemployment is very common in third world countries, which are still developing and with large populations. This is known as labour surplus.

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It is very challenging to identify disguised unemployment. However, it can be illustrated by the following:

• It is usually associated with small family businesses or self-employed individuals with more employees than necessary.
• It is also known as informal agricultural labor market.
• Marginal productivity is very low. This is different from seasonal unemployment.

Difference

Disguised unemployment can be seen as the part of the population that is not efficiently employed and is not included in the total number of employed or unemployed. Individuals who do not work to their full potential and capabilities, who perform tasks that do not provide much productivity value, or individuals who are unemployed and actively seeking work opportunities despite having the potential to increase productivity.

Not looking for, are involved in disguised unemployment. Also, one way of looking at disguised unemployment could be the idea that people are not efficiently employed. Such individuals may have important strengths and skills that are missed when performing tasks below their skills.

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What is Inclusion of disguised unemployment?

• Since disguised unemployment can be seen as unproductive employment, it includes:
• Individuals who are employed on a part-time basis but with the abilities and skills to perform and be productive at a full-time employment level.
• Individuals who accept jobs with requirements that fall short of their skills and abilities. An example might be a person with a college or university degree taking a job as a tailor because of his inability to find a job more suitable for his qualifications.
• Persons with illness or disability, but who can do some work, also fall under disguised unemployment. This is because they may be able to work in some jobs but are generally not included in a country’s national unemployment statistics.
• Individuals whose jobs became redundant and were persuaded to take early retirement.
• Persons doing work that is unproductive in terms of overall output.
• Individuals who are not looking for employment. They are generally not considered unemployed. Many countries only include job seekers in their unemployment statistics.