What is the Difference between Disguised Unemployment and Seasonal Unemployment?

What is the Difference between Disguised Unemployment and Seasonal Unemployment?

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Jaya
Jaya Sharma
Senior Executive Content
Updated on Feb 20, 2024 16:05 IST

The main difference between Disguised Unemployment and Seasonal Unemployment is that seasonal unemployment leads to no availability of work opportunity at certain times whereas disguised unemployment occurs when more people are employed than required. In this article, we will be discussing what is the difference between disguised unemployment and seasonal unemployment in detail.

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Disguised and seasonal unemployment are two types of situations where unemployment might be apparent or in reality. In this article, we will explore the different features of these types of unemployment in detail.

Seasonal unemployment is when individuals temporarily lose their jobs because of the periodic patterns in some sectors, like farming or travel. On the other hand, disguised unemployment describes a scenario where there’s an excess of workers in the economy, typically seen in countryside regions.

Table of Contents

What is the Difference between Disguised Unemployment and Seasonal Unemployment?

The following table highlights the 5 differences between seasonal and disguised unemployment:

Parameter Disguised Unemployment Seasonal Unemployment
Definition More people are employed than are actually needed for a job. Individuals are unable to find work during certain seasons of the year.
Reason Excess supply of labpir leaving no marginal productivity to workers. Seasonal variations in the demand or supply of labour.
Prevalence Common in the agricultural sector, especially in developing countries. Common in industries that are seasonal by nature, such as the tourism industry or agriculture.
Impact Does not contribute to productivity as the removal of a few workers would not affect output. Contributes to productivity but only during certain periods of the year.
Solution Better distribution of labor, industrialization, and education can help reduce disguised unemployment. Diversification of skills and industries can help reduce seasonal unemployment.
Type It is a normal economic situation of our economy. It is an underlying structural problem within the economy.

 

Disguised Unemployment vs Seasonal Unemployment: Key Differences

The following points indicate the detailed difference between seasonal and disguised unemployment:

  • Seasonal Unemployment is the temporary job loss due to nature of the industry. Disguised unemployment occurs when there is surplus labour in the economy.
  • The seasonal unemployment ends as the industry regains speed and growth. On the other hand, disguised unemployments persists for longer period of time.
  • In terms of time period, seasonal unemployment is short term whereas disguised unemployment can last for long term.
  • Seasonal unemployment is predictable and occurs at the same time every year. Disguised unemployment is not identified as problem by either employers or workers.
  • External factors lead to seasonal unemployment such as weather condition or decreased consumer demand. On the other hand, disguised unemployment is caused due to structural issues within the economy. 

What is Disguised Unemployment?

Disguised unemployment is a form of unemployment where individuals appear to be employed but their contribution to the total output is essentially negligible. This type of unemployment is prevalent in overpopulated, developing countries, particularly in rural areas where agriculture is the main source of income. 

For instance, a farm may need only three workers for efficient operation, but if it employs five workers, the extra two workers are considered to be disguisedly unemployed. Their removal wouldn’t affect the farm’s productivity. This situation often arises due to a lack of alternative employment opportunities.

Advantages

The following are the advantages of disguised unemployment:

  • Disguised unemployment ensures that there is always labor available for work. This is especially beneficial in sectors like agriculture, where work is often seasonal.
  • In developing countries, where social security systems may not be robust, disguised unemployment can act as a form of social security. People have some work, even if it is not fully productive.
  • In rural areas, disguised unemployment can contribute to community cohesion as people often work together on communal lands or projects.

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Disadvantages

The following are the disadvantages of disguised unemployment:

  • One of the major disadvantages of disguised unemployment is the wastage of human resources. The economy cannot fully utilize the potential of its workforce.
  • Disguised unemployment often leads to low productivity as too many workers are employed in the same job that can be performed by fewer people.
  • It can be an economic burden on the country as it may lead to lower GDP and higher dependency ratio.
  • With more people engaged in low-productivity work, there is less incentive for innovation and improvement.
  • Disguised unemployment can contribute to income inequality. Those who are underemployed often earn less than those who are fully employed.

What is seasonal unemployment?

Seasonal unemployment occurs due to the seasonal nature of the job. This type of unemployment is common in industries that are dependent on the season of the year, such as agriculture, tourism, and construction. 

For instance, in agriculture, workers may be employed during planting seasons, but may be unable to find work for other months of the year. Similarly, in the tourism industry, there may be more jobs available during peak tourist seasons and fewer jobs during off-peak seasons. Seasonal unemployment is a normal part of the economic cycle and is typically predictable and temporary. However, it can lead to financial instability for workers who are affected.

Advantages

The following are the advantages of seasonal unemployment:

  • Seasonal unemployment allows workers to have periods of work and periods of leisure, providing them with a flexible schedule.
  • It provides an opportunity for workers to gain experience in various industries throughout the year.
  • Some seasonal jobs offer higher wages to attract workers for a short period of time.

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Disadvantages

The following are the disadvantages of disguised unemployment:

  • The major disadvantage is the instability of income. Workers may face financial difficulties during off-season periods.
  • Seasonal workers often do not receive same benefits as those received by full-time employees, such as health insurance and retirement plans.
  • There is no job security in seasonal employment as the job ends after the season.

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Similarities Between Seasonal Unemployment and Disguised Unemployment

While disguised unemployment and seasonal unemployment are both forms of unemployment, they share some similarities:

  • Both disguised and seasonal unemployment are more prevalent in rural areas, particularly in countries with a significant agricultural sector.
  • In both cases, the labor force is not fully utilized. In disguised unemployment, extra workers are not contributing to total output, while in seasonal unemployment, workers are idle during off-peak seasons.
  • Both types of unemployment often occur because there are no alternate job opportunities for the affected workers. This is especially true in regions where agriculture is the primary source of income.
  • Disguised and seasonal unemployment can lead to lower income levels for the affected individuals and can contribute to poverty.
  • Both forms of unemployment indicate a need for policy interventions, such as skills training, job creation, and economic diversification, to provide more stable and productive employment opportunities.

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FAQs

What are the causes of disguised and seasonal unemployment?

Disguised unemployment may occur due to overpopulation, lack of alternative employment and education skills. Seasonal unemployment might occur due to the nature of industry in which the employees are working. Another reason may be the fluctuation in market demand.

Give an example of disguised unemployment.

One of the most prominent examples is related to agriculture. This industry has peak seasons for planting and harvesting. When these seasons occur, bigger farmers hire additional workers to help them out. Rest of the year, these laborers stay unemployed.

Give an example of seasonal unemployment.

This type of unemployment occurs when the number of people hired are more than actually required. This means that their output is negligible. While a company may only require 4 employees on a project, it hires 6 people. In totality, if seen, only 4 employees are enough for the project and if the additional 2 employees are removed, the output on the project remains the same.

Why is disguised unemployment more common in agriculture?

Agriculture often involves traditional methods where extra hands do not proportionately increase productivity, leading to disguised unemployment, especially in developing countries.

Is seasonal unemployment predictable?

Yes, seasonal unemployment is predictable as it occurs at the same time each year, corresponding with the off-season of certain industries like tourism or agriculture.

About the Author
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Jaya Sharma
Senior Executive Content

Jaya is a writer with an experience of over 5 years in content creation and marketing. Her writing style is versatile since she likes to write as per the requirement of the domain. She has worked on Technology, Fina... Read Full Bio

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