Disguised unemployment is a type of unemployment where people are apparently employed but are actually not working to their full potential. It is also known as hidden unemployment. In this situation, more people are engaged in work than required, and their productivity is low. Disguised unemployment can be seen in both rural and urban areas. In rural areas, an example of disguised unemployment is when more people work on a piece of land than required. In urban areas, it can be seen when people like painters, plumbers, and electricians are unable to find work on a daily basis and work way less than their potential. Disguised unemployment is challenging to identify, but it can be characterized by the following:

• Individuals who do not work to their full capacity and capabilities
• Those who perform work tasks that do not provide much productivity value
• Individuals who are unemployed and are not actively seeking working opportunities despite being able to work

Disguised unemployment is very common in developing countries with large populations.