November 20, 2013
What is Full Employment
Basically full employment is achieved when an unemployment rate reached 2%. Readings made through books and internet shows that some would define variable percentage of full employment. There were 0%, 1%, 3%, 4% and even up to 5%. In this context, we will use 2% as the benchmark for full employment rate.
This 2% is considering only people who are eligible to work, at certain age for instance from age 16-60, not inclusive of children. These 2% is actually including those who were just graduated from university, those who were in between jobs and those who are waiting to get into a new job. Malaysia is considered one of the countries with full employment besides Austria, China, Switzerland, Germany and Japan.
Full employment is highly influenced by factors of production being fully utilized in the country. One of the factors is the land & premise availability factor. Mentioning Malaysia as an example, initiating a business would require a premise and probably a land to start with. Considering Malaysia has a lot of new business parks or shop house lots being developed, it is considered that the offering of premises to start a business is very high. Land would also easy to be rented out.
Other factor would be rising of public construction work like building highways, parks, public buildings, transportation and internet infra using public funds. These are the medium where people can make use to create business or to find a job as these projects would create many jobs and it will continue to provide jobs through maintaining the infrastructure build as using these infra will definitely for some payment.
Government may also impose other policies like active labor market policies of which to protect both employers and employees. Tax policies for start-up companies will also help to boost new companies in order to generate more business thus creating more jobs for the people.
When most of the factors above exist, more and more business will grow, thus more jobs created. With supplest job in the market, people would easily get a job or switching jobs thus full employment rate is achieved.