Concept of Full Employment

Full Employment –

Full employment may be defined as the situation in which all those who are willing and able to work at prevailing wage rates are employed for the work in which they are trained.

Two important things about this definition,

First, full employment does not mean that everyone is employed, some people for example children, old men, physically or mentally handicapped people are not able to work. These people are not included in the labour force of the country. So, the full employment will exist in spite of their not working.

Second, some people who are rich enough or earning other incomes to live their lives without working, even though they are able to work but not willing to work. These people are also not included in the labour force of the country.

Unemployed people are those who are involuntarily idle. They are able and willing to work but the economy does not provide them jobs.

Another important point is that there will always be some frictional and structural unemployment, these two types of unemployment together are called Natural Unemployment and this may consist 4 to 5% of the total labour force in the economy.

So, the full employment is said to exists in the economy even if there is some amount of frictional and structural unemployment is prevailing in the economy. If the number of unemployed is greater than frictional and structural unemployment, then we say that full employment does not exists.

Keynesian full employment – it is the maximum level of employment that private enterprise countries can attain without experiencing strong inflationary pressure. But for practical use it is necessary to reduce the concept to quantitative terms and doing this raises two problems,

# First, how to determine the amount of employment sought by those who at the ruling wage rates wish to be employed ?

# Second, how to determine the inevitable minimum amount of frictional and structural unemployment ?

It (# First) depends upon (a) the number of people able and willing to work for wages, and (b) the average number of hours of work which each of them wants to employed.