Full employment: moral necessity and achievable goal

Employment & Income,Inclusive Economy26 Mar 2014Ivo Šlaus

Recognizing employment as a fundamental human right is the most important policy to promote full employment.

Imagine a world in which swelling numbers of youth in both economically advanced and developing countries find no prospects for productive and remunerative economic engagement and you imagine a world of increasing insecurity, frustration, alienation, instability, social unrest and violence. Failure to address the global employment challenge threatens to make that world a reality. In a market economy where individuals are responsible for supporting themselves, access to gainful employment is the economic equivalent of the right to vote in democracy. It is essential for the survival of the individual. It is equally essential for the continued viability of society. The single most important policy needed to promote full employment is to recognize employment as a fundamental human right.

Full employment appears as an ever-receding, increasingly unattainable goal. But appearances can be deceptive. The greatest barrier to full employment is conceptual, not actual. In spite of historically unprecedented population growth, widespread adoption of labour saving technological and increased market competition from low wage developing countries, since 1950 job growth has outpaced the explosive growth of population, the rapid adoption of labour-saving technologies, the manifold expansion of world trade, and the dramatic shift from manual labour to white collar work.

Yet a sense of helplessness and hopelessness prevails regarding employment, because of the flawed notion that economics is governed by immutable universal laws akin to those that prevail in physics. In reality the laws governing economics are man-made, the result of human choice and subject to change. Public policy determines the relative trade-off between further capital investment and labour by incentivizing capital and taxing payroll. Reducing or eliminating payroll taxes and reducing depreciation allowances will have a marked impact on job creation.

Human beings are the most precious, perishable resource we possess. Yet current theory and policy regards them as a dispensable, disposal resource. We need to replace these outmoded concepts with a human-centered, human-capital intensive perspective. Public policy defends the right of uncontrolled financial speculation, even when it destabilizes financial markets, undermines the real economy and destroys jobs. We defend the right of speculators, but ignore the right of citizens to productive employment. A financial transaction tax and other policies that discourage short term speculative investment will drive more capital into the real economy to create jobs and raise incomes.

A major reason for rising unemployment is a growing shortage of skills. Even as technology is eliminating some types of jobs, it is creating new ones which demand new and higher levels of skill. Education and training of the workforce have failed to keep pace with the growing demands resulting from rapid technological and social change development. This has resulted in a widening skills gap. A massive effort to improve the level and quality of education and training can close the gap and act as a catalyst for both economic growth and job creation. Raising the mandatory minimum level of education by one or two years in each country will expand employment in education, slow the entrance of youth into the workforce and raise the qualifications of new job seekers. Low-cost, online, computerized vocational training programs can be used to impart hundreds of work-related skills.

Employment grows as society develops. A vast array of unmet social needs combined with an enormous reservoir of underutilized social resources – technological, scientific, educational, organizational, cultural and psychological – can be harnessed to dramatically expand employment opportunities and achieve full employment on a global basis. Instead of efforts to artificially stimulate job creation, policy should focus on efforts to accelerate social development by raising awareness, improving social organizations, encouraging innovation and imparting entrepreneurial attitudes and skills to youth. New jobs are mainly created in the small and medium sector where business failure rates are very high. Providing counseling to reduce business failures will spur job creation. Full employment is not merely a moral necessity. It is a practically achievable goal.