Unemployment – Severity, Cause and Solution

The problem of unemployment has become extremely severe in our country. Every survey during the recent Lok Sabha elections revealed that the lack of well-paying secure jobs is the biggest concern of people in the country.

The ruling class often boasts about India’s “demographic dividend”. This is the potential advantage of having a relatively young population. Over two-thirds of the Indian population are of working age – that is, they are between 15 and 65 years old. This proportion of working age people is much higher than the world average. However, this potential advantage is being completely wasted today as more and more people of working age are unable to find any remunerative work.

The problem of unemployment is not only a problem for the individual who is unable to find work, but it also adversely affects every member of the family dependent on that person. The number of people affected by unemployment is thus many times more than the number of unemployed persons.


In addition to about 3.5 crore persons who are considered to be unemployed, there are many more who are not counted as unemployed because they are not actively looking for work. They are not part of the labour force even though they are of working age. The share of the working age population who are working or actively seeking work is called the labour force participation rate (LFPR). This rate is not only low in our country but it has also declined over time. It is estimated in 2022 at 77% for men and 33% for women.

The low and falling labour force participation rate shows that more and more people feel hopeless about finding a job which will enable them to make two ends meet. In cities and in the villages, crores of youth are forced to idle away, as there are no jobs.

The unemployment problem is particularly acute for youth. Around 50 lakh youth join the workforce every year but many of them are unable to find remunerative work. The latest Periodic Labour Force Survey for the Jan-Mar 2024 quarter shows that one out of every six persons in the age group 15-29 is unemployed.  The proportion of youth who have completed secondary school, among all unemployed persons, has risen from 54% in 2000 to 66% in 2022. [1]

Whenever the central or state government announces that it plans to fill a few hundred vacancies in clerical jobs, tens of thousands of graduates, post graduates, and even PhD’s apply for these jobs. Very few of the highly qualified youth get regular jobs in private companies. Lakhs of youth spend years on end in vain, preparing for and writing one qualification examination after another, for a job in railways, or in some other department of the government.

The Central Government has been boasting about how the Indian economy has been growing at an extremely fast rate, faster than in the ten years of UPA rule. What it is hiding is that every year, more jobs are being destroyed than are being created. This year even engineering graduates from premier institutes like IIT are struggling to find a job.

The large-scale destruction of jobs and sources of livelihood has been accompanied by increasing insecurity and worsening conditions of work for the employed labour force

In other words, not only has the quantity of jobs available stagnated, the quality of jobs is declining. In the majority of capitalist companies, there has been a large-scale shift from regular permanent jobs to temporary and contractual jobs.

The increasing insecurity of livelihood and low quality of jobs are driving more and more of the labour force to engage in self-employment. Government spokesmen claim that self-employment is a way for youth to become ‘job givers’ instead of being ‘job seekers’. However, the reality is that self-employment in most cases reflects the absence of paid employment.


Bourgeois economists and political parties spread the false propaganda that the cause of unemployment lies in some faulty government policy. They hide the fact that unemployment is inevitable in the capitalist system.

More than 150 years ago, Karl Marx discovered that the creation of a reserve army of unemployed persons is an inevitable result of capitalism. Capitalist production leads to a rise in the scale of production and in the productivity of human labour. However, the rise in labour productivity benefits the owners of capital and not the owners of labour power. Driven by the motive of maximising private profits, the capitalist class intensifies the exploitation of employed workers. Every additional unit of capital absorbs less labour than before. The inevitable result is that one section of the labour force is super-exploited while another section is forced to remain unemployed. Thus, capitalism creates an army of unemployed persons, available to be employed whenever the capitalists need to hire more workers due to a sudden expansion of the market.

Today when capitalism has reached the stage of imperialism, it has become totally parasitic. In such a situation, the destruction of any industry or any sector of service happens in one stroke. An example of this is the growth of e-commerce companies. The expansion of monopoly companies in the online trading business has brought old style retail shops to the brink of ruin. An increasing number of small and medium sized companies are forced to wind up their business. The number of new jobs created is far less than the number of old jobs lost.

In the words of Marx[2], “The condemnation of one part of the working class to enforced idleness by the overwork of the other part, and the converse, becomes a means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army on a scale corresponding with the advance of social accumulation.”

The reserve army of the unemployed is constantly used to compel the employed workers to accept the most oppressive conditions. More and more workers are forced to work on contractual basis, for long hours without any social security. The existence of huge number of unemployed persons is also used to suppress the wages of employed workers, and to deprive them of their rights – those rights which they have won after years of struggle. These include the right to an 8-hour work day, and the right to secure employment and social security.

In sum, the root cause of unemployment lies in the objective laws of capitalism. The overriding motive of maximising capitalist profits makes the system of production incapable of productively using the available labour force. The creation and expansion of an army of unemployed persons, which is a result of the capitalist orientation of the economy, in turn benefits the capitalist class by enabling more intense exploitation of labour.


There is no solution to unemployment as long as the economic system remains capitalist – that is, oriented to maximise the private profits of the owners of capital.

In the absence of any solution to the problem, the political parties of the bourgeoisie resort to the incitement of rivalry among the people for caste-based reserved quotas. They make unemployed youth fight among themselves over the very few jobs available.

Without eliminating the source of the problem, it is not possible to solve the problem of unemployment. In other words, without abolishing the capitalist system, unemployment cannot be eradicated.

The working class has to capture political power, in alliance with the peasants and other working people, and carry out the transition from capitalism to socialism

The motive of production has to be changed, from maximising capitalist profits to maximising the fulfilment of the needs of all the people. The need to produce more of all essential articles that people need and provide all the vital services such as public health care and education, sanitation and transport, etc., will ensure jobs for all. Increase in labour productivity will make it possible to shorten the working day and increase the time available for leisure, entertainment and other activities.

[1] Ref: India Employment Report 2024 by the Institute for Human Development and International Labour Organisation

[2] Capital Volume 1, Chapter 25, Section 3:  Progressive Production of a Relative Surplus-Population or Industrial Reserve Army.

Share and Enjoy !


Leave a Reply

Your email address will not be published. Required fields are marked *