1. INTRODUCTION
Full employment is one of the conditions in economy which means when nearly every one of the legal adults is able and willing to work at the commonly used wages. Full employment does not analyse that all adults have jobs. Full employment happens when the economy is producing up to its maximum stable capacity, using labour, technology, land, capital and other factors of production to their fullest possibility. In a situation of full employment, minority of workers may still be unemployed if they are between jobs for a short time of period and searching for a new employment (this situation in economics called frictional unemployment). It would express that unemployment is zero because if you are willing to work, in fact, you should not be sorted as unemployed person. To be counted as unemployed person you would need to be looking for a job actively. This does not mean everybody who able and willing to work is in employment. Some quantity of persons might leave the labour force; it could be such as women looking after children. We can also describe full employment in other way which is – full employment would be the ‘ideal’ level of unemployment. Technically, a government will never able to reach down to zero per cent unemployment because of some frictional unemployment. People who are seeking a job take time to get the suitable job for themselves by being frictionally unemployed. Being frictionally unemployed is not importantly a bad thing. That is the best way to take time to get a job suitable for their qualification level, rather than getting the first job that comes straight.
2. REASONS for UNEMPLOYMENT
People can be unemployed for a many forms of reasons. The Bureau of Labour Statistics analyses five basic reasons for being jobless:
(1) Job losers
(2) Job leavers
(3) Those who have completed temporary jobs
(4) Re-entrants
(5) New entrants
* Job Losers: A job loser or a person who has fired from his/her duty is an unemployed person who has been involuntarily quit or terminated from a job. More clearly, a job loser is:
v A person who has been permanently or for a long time period laid off a job and is willingly looking for a job.
v A person who has been temporarily or for a short time of period laid off from a job and not seeking employment due to expecting to be called back to duty in six months time.
* Job Leavers: A job leaver is a person who has voluntarily resigned from a job and is actively looking for an employment elsewhere.
* Completed Temporary Job: A jobless person can be one who has recently accomplished a short-term job and is actively looking for employment elsewhere.
* Re-entrants: A re-entrant is a person who used to be employed but has been out of the labour force for a period of time before actively seeking employment once again.
* New Entrants: A new entrant is a person who has never before been employed and is actively seeking employment for the first time. Majority of them are people who just left school or university graduates. They are counted as unemployed in the period of searching for a job
In addition, though there could be other influences which can cause unemployment, such as governmental corruption, lack of property rights and poor educational system cycles. The failure of the educational system to train enough qualified workers keeps many overseas businesses from even wanting to build up markets in those countries’ areas.
3. TYPES of UNEMPLOYMENT
Finding a job always takes time. There are always some people moving out of their parents’ home, looking for their first job, coming out of the military or graduating either school or university. Those people will be unemployed for a while. The unemployment rate at full employment is called the natural of unemployment rate
So there are few unemployment types in economics shown below:
1. Cyclical Unemployment – This unemployment is type of that happens due to ups and downs in the economy. When there is a downturn in the business cycle the rate of cyclical unemployment will get slightly high. The downturn is mentioned as a recession, and a recession occurs due to insufficient demand in the economy. As such, cyclical unemployment is associated with demand factors.
2. Structural Unemployment – When a business is forced to restructure, it is likely that some people will lose their jobs. For example, many government business enterprises have been restructured due to microeconomic reforms in recent years, and as a result many of the former employees in those businesses have become structurally unemployed in other words if a person looks for a job, but discovers his skills don’t match what employers are looking for.
3. Seasonal Unemployment – Unemployment that happens due to the change in season. For example, animal hunters only hunt at certain times of year, as are ski instructors.
4. Frictional Unemployment – If at the end of a person’s job search, she/he finds a job or when moving from one position to another it is possible that a person may go through a short period of unemployment.
5. Hard-Core Unemployment – Some people may get unwanted jobs, even though they want different position. For example, it is possible that due to a long prison sentence a person will find it difficult to find the type of position that they would otherwise like.
6. Full Employment – is when we only have natural unemployment (the cyclical unemployment is zero) http://economics.mrwood.com.au
1. WHY FULL EMPLOYMENT IS ONE OF THE MAIN TARGETS OF GOVERNEMNTS?
A Government will struggle to reach its aim of an 80% national employment rate – unless it allows cities huge freedom to get the unemployed into jobs. If the unemployment reaches to high rate it will have few kinds of social and economic costs. First of all, the unemployed person will not have any income or may have low income and also they will become unskilled and de motivated. It may make it rather difficult to find employment in the next future, as a result, the government will have to pay more benefits to the unemployed, and this will increase government credit borrowing. Eventually, unemployment may get worsen in social problems such as crime, vandalism and juvenile delinquency. However, it is quite useful for government reducing the national rate of unemployment by using supported side polices. For example, better qualified education can get workers’ skills improved and also reduce structural unemployment. These will take a long time and it could not be possible to reduce all the unemployment for the government. In addition low unemployment can be reached through by balancing inflation low and maintaining stable and sustainable growth e.g. “In the 1990s both unemployment and inflation fell due to supply side policies and effective demand management by the MPC. Therefore, this suggests that a low inflation target is effective in meeting other objectives as well. However, this may prove more difficult if there was an adverse shock to the economy. Overall low unemployment is a desirable objective but the policies to achieve this need careful examination. Increasing AD will only be effective if there is a recession. To reduce the natural rate, supply side policies will be needed.” http://www.economicshelp.org
Inflation – measures stability of price. It could be “Cost push” inflation. Cost push inflation is from the support side where the cost of production increases. Full employment means that there are a limited amount of idle labour resources so it’s up to labour cost to get new employees. This increases the cost of production so this is then passed on through the price of final goods (inflationary price rise). But also demand pull inflation could occur due to the high incomes which could lead to a rise in the consumption and cause prices to rise.
5. CONCLUSION
In summary, as it can be seen for government to achieve the full employment is one of the quite important targets in its business cycle. Theoretically, in condition of full employment – the situation of everyone who wants a job, economists basically consider an unemployment rate of approximately 4% to illustrate full employment. However this percentage does not fit for every developing country in the world. Some countries may have different percentage for their own economy to measure the full employment. Achieving to the full employment gives to government more opportunities to take control on economic circulation such as fluctuating inflation in business etc.