Achieving Full Employment
By Hema Senanayake –November 20, 2015
Hema Senanayake
Full employment is an economic situation in which virtually all who are able and willing to work are employed. Some economists consider that having less than 3% of unemployment rate as full employment. At least due to two important reasons any meaningful economic reform should target to achieve full employment, not one million jobs, as has been promised by the new government.
I concluded last week’s column as follows: “Near zero unemployment rate has nothing to do with the growth level of an economy. Yet, it has something to do with human imagination.” This intimates that the full employment is a possibility now.
Unemployment is an issue in many economies around the world. But it is not an issue for all the countries. Most importantly, during the Great Recession of 2008 and in subsequent years, Austria resolved the issue of growing unemployment successfully by using a novel approach. In other words Austria achieved full employment in a difficult period of time while many other European countries posted severe unemployment rates.
For example Spain reported over 20% unemployment when Austria has been reporting almost full employment. The approach is simple; Austria devised a policy mechanism to share the employments available in the country. They deviated from the rule of eight-hour workday and sometimes they deviated from the five-day workweek. We all agree that the country’s economic output is produced with a certain number of work hours of all kind. Now, can we devise a methodology to share the working hours among all prospective employees? Yes, we can. The result is that we will have full employment. This is a resolved question now at least by one country. Let us discuss what is not resolved. Hence, in this column I want to focus on something else assuming that we can achieve full employment.
At least two important economic objectives can be achieved only if we can have full employment. One is that we can prevent in indulging extreme consumerism. Second is that we can have the best possible economic efficiency only if we can have full employment. In this article, I will focus on the issue of extreme consumerism. Perhaps in next week’s column we will address the issue of economic efficiency.Read More
