TheTaxHeaven Dictionary - Know the meaning of tax

Disguised Unemployment - Definition, its Causes, Impact and Forms of Disguised Unemployment


Disguised unemployment refers to a situation where individuals appear to be employed, but their work lacks significant productivity. It is common in developing nations with large populations, primarily impacting small family enterprises and the informal agricultural sector. 

Such individuals may not fully utilize their skills, may be involved in less productive tasks, or may not be seeking work actively, despite having the potential to contribute more to the economy. 


Disguised unemployment, also known as hidden unemployment, involves individuals participating in work that yields minimal productivity. 


  • Part-time workers capable of full-time employment.
  • Highly qualified individuals settling for jobs below their skill level.
  • Ill or disabled people capable of performing specific tasks.
  • Early retirees who were forced out of employment.
  • Individuals involved in less productive tasks.
  • Individuals not actively seeking work.


  1. Underemployment: Part-time workers desiring full-time employment.
  2. Disease and Disabilities: Individuals with health issues or disabilities who can still contribute economically.
  3. Those not seeking employment: People not considered unemployed because they are not actively job hunting.


  • Decreased overall productivity.
  • Inefficiencies, resource wastage, and slowed economic growth.
  • Income inequality due to surplus labour supply.
  • Social and psychological impacts on workers in low-productivity jobs.

Addressing the Issue 

  • Promote economic diversification and modernization of sectors with high disguised unemployment.
  • Invest in education and skill development programs.
  • Encourage entrepreneurship and support small and medium-sized enterprises.

In conclusion, disguised unemployment involves a large number of people working without making a significant contribution to productivity.