Definition and Explanation:
The concept of full employment has been defined differently
by different economists. Lord Beveridge defines full employment as:
always more vacant jobs men”.
Keynes defines full employment negatively as:
absence of involuntary unemployment”.
If we take literary meaning of full
employment, it means complete absence of unemployment. Then practically
speaking, it is not possible to achieve full employment. Some sort of
unemployment is bound exist in a country.
For instances, there are some people
who remain unemployed for a short time due to changing over from one job to
another. Then there are some people who are learning a new job and are on
probation getting a very meager sum or receiving nothing. All such person are
fractionally unemployed. So long as the number of fractionally unemployed person
dose not exceed three to five percent the total labor force, then full
employment is said to exist.
We may, If we like name it as high level of
employment. It should be noted that while considering the aggregate
a country, children, old persons, disabled persons, and the drones who do not
care work, or who are not able to work are excluded from the total labor force.
The total labor force of a country consists of only those persons who are able
and willing to work.
We can thus up that the existence of full employment all
that is necessary is that there should be at least:
“As may unfilled jobs as
there are unemployed persons and that normal time lag between losing one job and
finding another is short”.
of Full Employment:
There are three main measures by which full
employment can be attained and maintained in a country. They are:
(1) Fiscal Policy.
(2) Monetary Policy.
(3) Public Works.
(1) Fiscal Policy:
Fiscal policy refers to the measures
which a government takes for the management of its budget. It is the desire of every
government that the budget of a country is shaped in such a manner that it
should help in slowing down the swings of business cycle and maintaining high
progressive level of employment without causing inflation in the country. So
when a government finds that private investment is decreasing in a country and
the income of people is falling, it increases public expenditure. In order to
encourage private investment, it gives grant or bounties or relief in taxation
to the people. When private investment increases too high, the government
reduces its own expenditure and increases taxes so that full employment without
inflation is achieved at.
(2) Monetary Measures:
Monetary policy refers to the measures which a,
government takes for regulating the money supply in a
country. It is generally associated with the supply of
credit and the rate of interest- The government can
encourage investment and maintain high level of
employment by lowering the rate of interest and keeping
the supply of money adequate.
(3) Construction of Public Works:
public works is meant the construction of
projects designed for public welfare or works carried
out by government with the public funds. Highways,
canals, bridges, parks, and public buildings, etc..
etc., are examples of public works. In the period of
depression, government can increase the level of
employment by launching public works program. In case
of over full employment, the expenditure on public works
can be curtailed so that the level of full employment is
attained at without inflation. It should be noted that
in a country it is not simply the high level employment
or full employment which is the desired goal. If a
country achieves full employment through inflation, then
certainly its consequences will be disastrous. So what
the economy needs is that there should be high level of
employment but not accompanied by inflation.