Full employment

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Full employment is the economic concept that refers to a situation where the entire active population of a country is working. This situation would imply that the markets are in perfect balance, companies would have no problem finding qualified personnel for their jobs and citizens would find employment at any time.

The concept of full employment[1] is rather theoretical since it is hard to find a real case where unemployment is exactly zero. In practice, the labour market presents many imperfections: the workforce is always changing, and people come and go to work for many reasons such as different interests, moving to another country, starting a new job or studies, etc. It is practically impossible to reach an exact moment in which the demand and supply of labour are equal, but it is an ideal situation, and everything that means approaching it is positive, socially and economically speaking.

Is it possible to reach full employment?

Two major currents of thought diverge in terms of the methodology to follow:

  • Keynesianism. The defenders of this current affirm that the supply and demand of the labour system cannot be adjusted automatically, being the State responsible for intervening in times of recession and recovering the employment rate in the country. Keynes thought that unemployment was one of the main faults of capitalism and a natural product of market forces, so it was necessary to apply the right policies to solve it.
  • Liberalism. The liberals assure that, for the country to enjoy a situation of full employment, the presence of free competition in the markets is necessary. In this situation, the State would simply adjust the legal framework to defend this free competition and protect business initiatives.

Regardless of each current or individual's thoughts, full employment must be one of the main objectives for each country, despite the impossibility of putting the concept into practice. Work, in many places, is considered a "human right"[2] that all its inhabitants have, so the achievement of this objective is essential for social and economic well-being, and has to be granted. All individuals must provide for themselves and their families, so employment is a necessity.

The exponential growth of the world's population along with technological development (less need for manual labour) and the globalization of the world's economy in recent years has brought significant changes into our lives including, of course, the labour market. Since there is no capitalist economy known to have achieved full employment, in recent years many governments have implemented what is called a job guarantee, or the employer of last resort (ELR)[3] proposal programs, helping people willing to work who, for any reason, can't find a job in the private sector. The State then has to play this role to guarantee jobs for anybody willing to work. The ELR program will balance the system, growing when the private sector is in recession and shrinking when the private sector grows.

Unemployment is closely linked with poverty, social exclusion, racial and ethnic minorities, lower education, inequality, etc. so governments should adopt measures to eradicate it and be responsible to take all possible steps to achieve and maintain full employment[4]. Among these measures we can find:

  • Education: Individuals with better education have more chances to be employed and also get better jobs.
  • ELR programs, as described earlier.
  • Technological innovation: Creating new fields of employment based on new technologies.
  • Increase the flexibility of working time.
  • Foment an entrepreneurial climate (small and medium-size businesses are the major source of new jobs).
  • Make wage and labour costs more flexible.


  1. Harvey, Philip. (2016), pp. 1-22
  2. Jacobs, G. and Slaus, I. (2011), pp. 60-89
  3. Wray, L.R. (2009), pp. 1-13
  4. Natarajan, A. (2010), pp. 42-48

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Author: Zaira Bancells Guerrero, Mónica Guijarro Bernabeu, Gabriela Varela Barker