What is Disguised Unemployment?

What is Disguised Unemployment?


Unemployment happens while someone who's actively attempting to find employment is not able to discover work. Unemployment is frequently used as a degree of the fitness of the economy. The maximum common degree of unemployment is the unemployment rate, that's the range of unemployed human beings divided through the range of human beings inside the hard workforce. Disguised unemployment or hidden unemployment is an economic term that refers to the part of the working population that is engaged in overwork and has or does not have the lowest productivity. Hidden unemployment will not affect the overall performance of the economy. Their full potential and opportunities are those who are engaged in work tasks that cannot increase productivity or are unemployed. Although they have the ability to increase productivity, they are not actively looking for job opportunities. These people can be regarded as hidden unemployment sources. This is very common in third-world countries that are still developing and have a large population and therefore have so-called surplus labor.


Disguised unemployment is very common in third world countries, which are still developing and with large populations. This is known as a labor surplus. Disguised unemployment is challenging to identity; however, it can be characterized by the following:

  • It is normally connected to small family businesses with more employees than required or self-employed individuals. It is also known as the informal agricultural labor market.

  • Marginal productivity is noticeably low.

  • It is differentiated from seasonal unemployment ( which can occur due to climate factors ).

In addition, disguised unemployment can be seen as the portion of a population that is not efficiently employed and is also not included in the total employed or unemployed numbers. Individuals who do not work to their full capacity and capability, those who perform work tasks that do not provide much production value or individuals who are unemployed and are not actively seeing working opportunities despite possessing the capacity to enhance productivity are included in disguised unemployment. Moreover, one way of looking at disguised unemployment can be a consideration that people are not efficiently employed. Such individuals could possess significant strengths and skills that are being missed while performing tasks that are beneath their skillset.


1. Agricultural sector in rural areas-

When 10 members of a farming family are employed on a small farm plot, then 5 is sufficient. Those additional 5 members are actually unemployed rather than employed.

2. Service Sector in Urban Areas-

If all 10 members in a family are working in a shop or small family business, while 5 are enough to work efficiently then those additional 5 members are actually unemployed.


  • Underemployment: In positive conditions, individuals who do part-time work can qualify as disguised unemployment in the event that they desire to attain and may do a full-time job.  It additionally consists of people who receive work nicely underneath their ability. In such situations, hidden unemployment also can be called "underemployment," consisting of people who function at some capability however now no longer at most capability.

  • Illness and Disability: Another type that may be protected is people who are unwell or in part disabled. While they may not be working properly but they are capable of being productive for the economy. This form of disguised unemployment is temporary in the case of illness and categorized when someone is receiving disability assistance.

  • No Longer Looking for Work: Whatever the cause, if someone ceases looking for jobs, he or she is regularly now no longer taken into consideration unemployed with regards to measuring the unemployment rate. Many countries require that a man or woman actively pursue employment to depend as unemployed.


Damini Nagar
B.A LLB from Indore institution of Law

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