Disguised unemployment is also known as hidden unemployment. Disguised unemployment or Hidden unemployment refers to a segment of the labor force that is engaged in redundant jobs with little to no productivity. Disguised unemployment does not affect the gross productivity of an economy. 


  • In a family business, such as a clothing shop, where 10 people are employed but only 7 workers are required to do the job efficiently, the three additional workers are disguisedly unemployed, and thus their removal would have no effect on the shop's sales or outcome.

  • In farms where the labor force exceeds the requisite level, disguised unemployment is prevalent. 

Disguised unemployment, also known as disguised unemployment, refers to the part of the labor force that is engaged in ineffective work that generates little to no output. Individuals that do not function beyond their maximum potential and skills, those who undertake work activities that do not have any productivity benefit or those that are unemployed and are not aggressively pursuing employment prospects while having the capacity to increase productivity, may both be considered contributors to veiled unemployment. 

Disguised unemployment is very widespread in third-world countries that are already emerging and have a large population, resulting in what is perceived as a labor surplus. Disguised unemployment is very common in countries that are in a process of developing. Disguised unemployment leads to surplus labor and this kind of disguised unemployment is difficult to detect. However, it can be distinguished by the following characteristics:-

It is usually associated with the small businesses that have more employees than needed as well as with self-employed individuals. The level of marginal efficiency is usually poor.



Many that are sick or deemed partially impaired can also be counted. Though they might not be currently employed, they may be contributing members of the community. This form of veiled unemployment is temporary in the case of sickness and is classified as someone receives disability benefits. This ensures that the person is often excluded from a country's unemployment figures.


When an individual ceases searching for jobs, regardless of the cause, they are often no longer deemed unemployed when the unemployment rate is calculated. To be counted as unemployed in many countries, an individual must be actively looking for work. If an individual stops searching for work, whether temporarily or permanently, they are no longer counted until they resume their quest. When an individual wants to work but has given up searching due to being discouraged by a lengthy hunt, this can be considered veiled unemployment.


People working part-time can apply for disguised unemployment under some cases if they choose and are capable of performing full-time work. It also concerns many that take jobs that are way beyond their ability level. In these situations, veiled unemployment can often be referred to as "underemployment," which refers to people that are employed but not at maximum potential. An individual with a degree of Law accepts a full-time shop assistant job due to a failure to find jobs in the concerned profession, for example, might be deemed underemployed because they are operating below their level of expertise. An individual who works part-time in their profession but wishes to work full-time will also be considered underemployed.

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Vainy Kacharia
I am an eminent 3rd year BA LLB student of NMIMS University. I have an inclination in the field of legal studies since I like to stick to the path of obeying rules and justify the wrong-happenings with the right people . I have an engrossment to grow myself working as corporate lawyer .

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