The rate of unemployment has been on the rise in the recent past. With the coronavirus pandemic, businesses have been forced to downscale and have hence been left with no choice but to let go of some employees. Other businesses have been forced to shut down operations. Although unemployment is unfortunately common, various factors can lead to this. For instance, businesses with boom and low seasons may hire and fire employees during different seasons. In this article, we are going to look at two types of unemployment, disguised and seasonal unemployment.
What does Disguised Unemployment mean?
This is unemployment that occurs when a part of the labour force is left redundant due to zero work productivity or is let go off work. As such, this type of unemployment does not affect aggregate production in an economy. Disguised unemployment includes people who perform below their capabilities, people whose income-generating activities barely benefit them or the economy as well as those with a capability of undertaking more labour activities.
It is common in developed and developing countries where labour force surplus is generated by large populations. It is also common in informal labour segments such as agricultural markets. While it is a type of unemployment, it is not counted as part of unemployment in official unemployment statistics.
Types of disguised unemployment include:
- Disability and illness- Although the disabled and sick may not function actively, they can successfully contribute to economic growth.
- Underemployment- These include people who work part-time. It also includes those who accept work that is below their skill set.
- Those who are no longer looking for work- A person who is not actively looking for work is not classified among the unemployed.
What does Seasonal Unemployment mean?
This is a type of unemployment that occurs when people are unemployed when the demand for labour is lower than usual, usually at certain times of the year. For instance, some businesses such as resorts tend to hire more people during the holiday seasons as the demand is higher. During the low holiday seasons, some workers may be rendered unemployed.
Governments adjust unemployment statistics with seasons. As such, seasonal unemployment rates affect a country’s unemployment figures.
Although seasonal unemployment is mostly unavoidable, it can be solved through the creation of jobs in the off-season as well as economic diversification, especially in the tourism sector. Also, governments can set up regulations that mandate employers to use funds gained in the peak season to pay workers throughout the year.
Similarities between Disguised and Seasonal Unemployment
- Both lead to loss of revenue generation in an economy
Differences between Disguised and Seasonal Unemployment
Definition
Disguised unemployment refers to unemployment that occurs when a part of the labour force is left redundant due to zero work productivity or is let go off work. On the other hand, seasonal unemployment refers to a type of unemployment that occurs when people are unemployed when the demand for labour is lower than usual, usually at certain times of the year.
Sectors
While disguised unemployment is common in the agricultural sector, seasonal unemployment is common in the agro-based sectors.
Example
An example of disguised unemployment is an instance where work is carried out by five people while only 3 are required. In this case, the two extra persons are in a disguised unemployment status. On the other hand, an example of seasonal unemployment occurs in the tourism sector where people are laid off during the low season and hired during the peak season.
Disguised vs. Seasonal Unemployment: Comparison Table
Summary of Disguised vs. Seasonal Unemployment
Disguised unemployment refers to unemployment that occurs when a part of the labour force is left redundant due to zero work productivity or is let go off work. It is common in the agricultural sector. On the other hand, seasonal unemployment refers to a type of unemployment that occurs when people are unemployed when the demand for labour is lower than usual, usually at certain times of the year. It is common in the agro-based sectors. Despite the differences, both lead to the loss of income and economic productivity.