Disguised and seasonal unemployment are two main types of unemployment that arise due to different reasons. A high unemployment level is not a healthy indication of an economy; thus many governments adopt a number of policies to maintain unemployment at a low level. The difference between disguised and seasonal unemployment is that disguised unemployment occurs when surplus labor is employed out of which some employees have zero or almost zero marginal productivity whereas seasonal unemployment occurs when individuals are unemployed at certain times of the year because they are employed in industries that do not produce goods or services all year round.
CONTENTS
1. Overview and Key Difference
2. What is Disguised Unemployment
3. What is Seasonal Unemployment
4. Side by Side Comparison – Disguised vs Seasonal Unemployment
5. Summary
What is Disguised Unemployment?
Disguised unemployment occurs when surplus labor is employed, out of which some employees have zero or almost zero marginal productivity. As such, this type of unemployment does not affect the aggregate output. Disguised unemployment is also called ‘hidden unemployment.’ Disguised unemployment is generally not counted in official unemployment statistics within the national economy.
E.g. XYZ is a small family business operated by six members of the same family. However, the business can actually be managed by four members; thus, even if two members withdraw themselves from the business, there will be no effect on the aggregate output.
The following two types of employees make up the major part of disguised unemployment.
- Employees working well below their capabilities
This is referred to as ‘underemployment’ and occurs when individuals do not utilize all their skills and education in their jobs. In underemployment, there is a mismatch between the availability of job opportunities and the availability of skills and education levels.
- Employees that are not currently looking for a job but are able to perform work of value
Disguised unemployment exists frequently in developing countries whose large populations create a surplus in the labor force.
Figure 01: Example for Disguised unemployment – An agricultural field requires 6 laborers, but 8 laborers are working in this field; thus the surplus of 2 laborers can be termed as disguised unemployment.
What is Seasonal Unemployment?
Seasonal unemployment occurs when individuals are unemployed at certain times of the year because they are employed in industries that do not produce goods or services all year round. A number of industries such as agriculture, leisure, and tourism, retailing are affected by seasonal employment. In general, the effects of seasonal unemployment is considered when calculating the national unemployment rates. Given below are the ways in which the effects of seasonal employment is experienced.
Due to Change in the Seasons
Since the majority of the countries on earth are affected by seasonal changes, a number of occupations are affected by such seasonal changes.
E.g.
- Landscaping (art and craft of growing plants) businesses in winter
- Ski instructors in summer
- Due to festive times
Certain products and services are available in festive times; thus, their production and distribution are limited or nonexistent in other times of the year. Further, industries such as retail businesses also experience an increase in sales during festive times where they have to employ seasonal staff.
E.g. Christmas decorations and greeting cards
Due to the Nature of the Occupation or Regulatory Requirements
Many organizations finalize accounting information and prepare financial statements for the accounting year end in December or March. During these months, some firms hire extra staff. Professionals who work in a specific season often charge fees for their services, which may be equivalent to an annual income.
Figure 02: Services available for different seasons
What is the difference between Disguised Unemployment And Seasonal Unemployment?
Disguised Unemployment vs Seasonal Unemployment |
|
| Disguised unemployment occurs when surplus labor is employed out of which some employees have zero or almost zero marginal productivity. | Seasonal unemployment occurs when individuals are unemployed at certain times of the year because they are employed in industries that do not produce goods or services all year round. |
| Molecular Type | |
| Disguised unemployment does not affect aggregate output. | Aggregate output is affected by seasonal unemployment. |
| Main Cause | |
| The main cause of disguised unemployment is the surplus of labor. | Seasonal changes are the main cause of seasonal unemployment. |
| Inclusion in National Unemployment Statistics | |
| Disguised unemployment is not included in national unemployment statistics. | National unemployment statistics is usually adjusted for seasonal unemployment. |
Summary – Disguised vs Seasonal Unemployment
The difference between disguised and seasonal unemployment can be understood by the reasons for their occurrence. Disguised unemployment mainly occurs as result of excess manpower in the labor force while seasonal unemployment is caused by seasonal variations. While it is difficult to minimize the effects of seasonal unemployment, negative effects of disguised unemployment can be controlled by long-term policies.
Reference:
1. “What do you understand by disguised unemployment? Explain with an example each from the urban and rural areas. Tution Teacher. N.p., 13 Mar. 2014. Web. 15 May 2017. <http://www.tutionteacher.in/what-do-you-understand-by-disguised-unemployment-explain-with-an-example-each-from-the-urban-and-rural-areas/>.
2. “Disguised Unemployment.” Investopedia. N.p., 10 Oct. 2010. Web. 15 May 2017. <http://www.investopedia.com/terms/d/disguised-unemployment.asp>.
3. “AS Macro Key Term: Seasonal Unemployment | tutor2u Economics.” Tutor2u. N.p., n.d. Web. 15 May 2017. <https://www.tutor2u.net/economics/blog/as-macro-key-term-seasonal-unemployment>.
4. “Seasonal Unemployment: Definition & Examples.” Study.com. Study.com, n.d. Web. 15 May 2017. <http://study.com/academy/lesson/seasonal-unemployment-definition-examples-quiz.html>.
Image Courtesy:
1. “Cambodian farmers planting rice” By Brad Collis (CC BY 2.0) via Commons Wikimedia