Seasonal Unemployment

Updated on January 31, 2024
Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

Seasonal Unemployment Definition

Seasonal unemployment refers to when the demand for labor or workforce is lower than normal under certain conditions. However, such a situation is only temporary, and employment reverts to normal after that.

Key Takeaways

  • Seasonal unemployment refers to a temporary situation where labor demand decreases during specific circumstances, resulting in unemployment for a part of the year. 
  • This type of unemployment is typically agreed upon by both employers and the workforce, with employees being hired only for a certain period and remaining unemployed during the off-season. 
  • Seasonal unemployment often occurs when certain industries experience reduced demand due to seasonal factors, weather conditions, or changes in production schedules. It is a common phenomenon in agriculture, tourism, and construction sectors.

Examples of Seasonal Unemployment

The following are examples of seasonal unemployment.

Example #1

Let us understand this concept of seasonal unemployment with the help of an example:

There are a few seasonal crops, i.e., crops that yield only in a particular season, e.g., the Rabi or the winter crops. Farmers working for the yield of these crops would be seasonally unemployed during the other time of the year. That means, when there is an off-season for one crop, the farmers are unemployed as they do not get to work on the field for any other purpose.

Example #2

To further understand, let us consider another example of seasonal unemployment:

Christmas Jobs: There are a few extra jobs that are created during the Christmas and new year eves, e.g., the salespeople in a few retail stores, for the sales of Christmas trees, decoration, Santa disguises, etc. after which they will not have any work for the rest of the year. They are employed only to deal with the additional customer activity during the relevant season and would not be hired for an entire year but only for the particular season.

Seasonal Unemployment

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Benefits of Seasonal Unemployment

The following are the benefits of seasonal unemployment.

  • Seasonal unemployment is relatively regular and is commonly predictable.
  • Workers accepting seasonal employment are well aware that they will be employed only for a particular period, which they will resume being unemployed. Hence, wages will be paid accordingly.
  • It is better than complete unemployment as the labor force would earn wages for at least a part of the year. So, it is an essential part of many jobs.
  • Some people choose seasonal employment because they have some other prime activity to do when they are unemployed. For example, summer jobs, hobbies, etc., which they would not prefer or would not join if the employment had been all year round.
  • It may be considered as an opportunity by some professionals or students to build skill sets during a time of the year as they may be in other employment or coaching for the rest of the year. E.g., internships, fixed-term hires, etc.

Limitations of Seasonal Unemployment

The following are limitations of seasonal unemployment.

  • The primary disadvantage or limitation of seasonal unemployment is the same as any other unemployment. The employees/ workers/ Labor force face personal hardships when they are unemployed. However, it all depends on the employees also. Some might be willing to remain idle during the unemployment season, while others may search for other jobs.
  • Like other forms of unemployment, another demerit of this kind of unemployment is lost production. The producers may not produce the goods required to the customers when there is seasonal unemployment. But this cannot be construed as the disadvantage of seasonal unemployment itself. It is the drawback of the industry producing seasonal products entirely.
  •   Even though they are willing to be employed throughout the year, such employees might not find jobs that last for the entire cycle or jobs that provide long-term commitment.

Seasonal Unemployment vs Disguised Unemployment

Seasonal unemployment is sometimes confused with disguised unemployment. Let us understand the differences between the two to appreciate the concepts individually:

Point of DifferenceSeasonal UnemploymentDisguised Unemployment
MeaningIt is a phenomenon where the workforce is unemployed for a part of the year.It occurs when the workforce does not contribute to their full potential or when the number of people is hired for a job than actually required.
WorkingEmployed for a part of the year and unemployed or remains for the rest.Employed throughout.
JobsIt happens when people cannot find jobs for some months of a year.They appear to be employed but they have no productivity or very little productivity in this situation.
ExampleFarmers working on a seasonal crop have work before the season such as digging, sowing, planting, harvesting, threshing, fertility checks, etc.A field requires only 4 laborers while 6-7 are employed because of entire family is not employed elsewhere and working on the field.

Conclusion

Seasonal unemployment is an agreed condition by the employers and the workforce that will hire them only for a part of the year. After the agreed-upon time, the workforce will remain unemployed for the rest of the year. It occurs when a few industries slow down or shut down for a particular season or make shifts in their production schedule as per the weather, demand, etc. Another reason may be short-term projects such as construction, etc. As noted above, it is different from disguised unemployment, where more people are employed in a job than required.

We have seen that this time of unemployment has its disadvantages like any other type of unemployment, meaning the idle workforce cannot make any money for survival during the unemployed part of the year. That said, there are also advantages, as discussed earlier, that it is better than unemployment wholly, pursuing interests, etc.

Frequently Asked Questions (FAQs)

1. What causes seasonal unemployment?

Seasonal unemployment occurs when certain industries or job sectors experience fluctuations in demand due to seasonal variations or weather conditions. For example, agricultural workers may face unemployment during off-seasons when there is no need for planting or harvesting crops.

2. Is seasonal unemployment bad for the economy?

Seasonal unemployment is not necessarily bad for the economy as it is a natural and expected occurrence in certain industries. It is a temporary and predictable form of unemployment, and workers often anticipate it. However, prolonged or widespread seasonal unemployment in multiple sectors can have adverse effects on local economies.

3. What is seasonal unemployment vs. cyclical unemployment?

Seasonal unemployment and cyclical unemployment are both types of temporary unemployment, but they have different causes. Seasonal unemployment is due to seasonal patterns in specific industries. Cyclical unemployment, on the other hand, is caused by fluctuations in overall economic activity, usually associated with economic downturns or recessions.

This has been a guide to what seasonal unemployment is and its definition. Here we discuss examples of seasonal unemployment along with benefits and limitations. You can learn more from the following economics articles –

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