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Distinguish between Open and Disguised Unemployment

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  • Last Updated : 25 Sep, 2022
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Disguised unemployment is a condition in which the skills of the labor or the workforce that has been hired for employment, are not utilized in the production or to impart services i.e. the output of this workforce is not contributing to the growth of the economy and can be regarded as a form of unemployment in some cases. It may also be regarded as hidden unemployment. Some key points about disguised unemployment are:

  • This type of employment has zero contribution to the economy of a country.
  • It generally occurs in developing countries where large populations create a surplus in the workforce.
  • It occurs when the number of workers hired is more than required or when too many workers are filling too few jobs. This results in low productivity.
  • It may refer to any population that is not employed to its full capacity.

Underemployment is regarded as a type of disguised unemployment. If the people that are capable of working full time are employed at a part-time job then this may not utilize their skill set completely and can be regarded as underemployment which is a type of disguised unemployment. Thus we can say that disguised unemployment means when people are employed in disguise but not actually.

Some examples of disguised unemployment are

  • If only 5 people are required to complete a task and instead 10 workers are hired for the same then 5 people are said to be in a state of disguised unemployment.
  • We often see people such as electricians, carpenters, and plumbers who are unable to find work according to their full potential and hence are in a state of disguised unemployment.

What is open unemployment?

Open unemployment is a situation that may occur in any country and is a major area of concern. It occurs due to a lack of opportunity in a country. This type of situation arises when the people who are skilled and educated are unable to find a job that can fetch them regular income to sustain them which leads them to be unemployed for a long time or for a lifetime. It occurs when the workforce increases at a much faster rate as compared to the number of opportunities in the country.

People who are a victim of open unemployment generally move to criminal practices in order to sustain themselves which increases the crime rate in society. Some people also move to work as laborers in factories or the agricultural sector which no doubt reduces open unemployment but causes disguised unemployment as the full potential of these people is not utilized.

Difference between Disguised and Open unemployment

S. No.  Disguised Unemployment Open Unemployment
1. This situation occurs when the skills of the employed people are not utilized to their full potential. This situation occurs when people do not find adequate opportunities according to their skills.
2. People remain employed in disguise. People are not employed at all.
3. These types of people earn a regular income but it is lower than their potential. These people do not earn any type of regular income to sustain their lives.
4. It is generally found in developing countries. It may occur in any country.
5. Example: When 10 people are hired for a work that only requires 5 people to do the work. Example: When an educated and skilled person is unable to find a job to earn a regular income.
6. This type of unemployment has no effect on the production of goods or services This type of employment may affect the production of goods or services.

FAQs on Unemployment

Question 1: Define disguised unemployment?


It is a situation in which more people are hired for a work than required. In other words when the potential of a person is not completely utilised, then the person is said to be in state of disguised unemployment.

Question 2: What do you mean by open unemployment?


When a skilled or educated person who is capable of doing job or work is unable to find a job according to his skills so that he can earn a regular income, then the person is said to be in state of open unemployment.

Question 3: Give one example of disguised unemployment.


When 10 workers are hired for a role that needs only 5 workers, then it can be regarded as disguised unemployment. It is generally seen in agriculture sector.

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