Relationship between gdp and unemployment in india

relationship between gdp and unemployment in india

The correlation between unemployment and inflation is positive i.e. To examine the role of GDP in the economy of India. -. To examine the role of. There is a clear relationship between the two, and many economists have decline in the unemployment rate in the course of a year, real GDP. Military spending 36% and 23% of the world GDP, it is the world's economic and In this paper, we study the correlation between GDP and unemployment rate, economic growth performance Nigeria India innovation inflation exchange rate.


In fact, most countries in general and developed economies in particular, have had very low employment growth in recent years. According to ILO datamost of them saw an increase of less than one per cent per annum in their employment during the s. In the case of developing economies strictly comparable data are not available, but broad assessment places their average employment growth at around 1.

During the past decade,employment is estimated to have grown globally at about 1. The developing countries in East and South East Asia, and transition economies of Eastern Europe also saw very little growth in employment. But Latin America and Africa performed better.

Alarming need for balance between employment and GDP

South Asia maintained a steady growth of employment of 2. The countries in which economic growth was accompanied by an increase in productivity as well as in employment growth differentiate themselves by their contribution to the economic growth process. Unlike these countries, Slovakia, Slovenia, Czech R. The existence of a positive or negative, higher or lower employment elasticity of economic growth, can be explained by the type of economic growth extensive or intensivebut also as a result of the influence of some factors such as the institutions specific to the labour market, relative cost of labour, the micro and macroeconomic context, technological progress, working time including part-time work, the sectorial composition of employment, etc.

Long term employment growth in India has been about 2 per cent per annum but has declined to about 1. Services, which have been the major source of recent growth have particularly seen a sharp decline.

relationship between gdp and unemployment in india

The economies of developing and emerging markets have grown faster than industrialised countries in recent decades. This has been facilitated by deeper integration into global trade and a sharp rise in foreign direct investment. Trade and direct investment between developing and emerging markets themselves have also risen sharply in recent years.

Generally, recent studies show that between economic growth and employment there is a positive and strong relationship, meaning that economic growth generates new jobs, but of different intensity from one period to another and from one country to another.

relationship between gdp and unemployment in india

This reflects the different response of the labour market to the economic growth process. The relationship between economic growth and employment is one of the most debated issues in national strategies.

relationship between gdp and unemployment in india

In other words, economic growth should result from a suitable combination of employment growth and productivity growth. It implies that employment oriented growth in a country like India would have, of necessity, to be at a high rate. Also, economic growth alone is not sufficient to bring about a sustainable increase in all our well-being.

Social peace, self-determined living as well as a clean and healthy environment are crucial factors of development alongside material prosperity, and they can be endangered by unrestrained economic growth.

Most developing countries tussle with high underemployment or unemployment. Many people can barely live from what they earn. This is why creating new jobs, improving incomes and working conditions for existing jobs, together, is immensely important. Employment is quite unstructured in India given the fact that a large part of the workforce is in the unorganised sector where it gets blurred.

Article: Impact of economic growth on employment — People Matters

The importance of employment is very well established in the western world. Real GDP and employment move in line with each other in most mature economies. However, data for the past quarter of the century, it is found that employment and GDP ratio share a robust inverse relationship in the Indian economy. Employment grows faster during a slowdown and it grows slowly during the boom period. One of the explanations for such unconventional relationship could be opportunistic behaviour of employers, as employees lose their bargaining power during slowdowns, employers hire more at lower cost.

On the contrary, as the economy recovers, the employers try to retain their employees instead of hiring new resource, since income rather than employment decides consumption. GDP growth shares an inverse correlation with the employment. Following questions arise in mind when such a situation perpetuates — 1.

relationship between gdp and unemployment in india

The increasing pace of recruitment across sectors, is it really required? It also confirms that higher employment is not necessary for higher GDP growth. One of the key reasons why employment may have become irrelevant during the past decade or so is the sharp fall in the labour force participation ratio LFPR.

DNA: Analysis on increase of India's GDP growth rate

As a result, even lower employment growth failed to increase the unemployment rate, which is the key.