Reducing the NAIRU and Achieving Full Employment

As argued in Chapter 1, governments across Asia must give maximum priority to promoting full, productive, and decent employment if they are to make a serious dent in the large-scale unemployment and underemployment that exists in Asia’s labor markets. What government policies and actions will promote such employment? In this final chapter, we focus on addressing this question. However, before we get to the specifics, it is useful to reiterate what we mean by full, productive, and decent employment. In a developing country context, where a large proportion of the labor force is underutilized, full employment is about reducing unemployment as well as reducing underemployment; it is about employment creation. Moreover, the employment that is created must be productive. Creating jobs without regard to their productivity, as may be attempted by governments for the sake of reducing unemployment, is at best a short-term solution. Finally, employment must be decent. This entails that employment provide workers with basic rights (such as the freedom of association, protection from forced or compulsory labor, and elimination of discrimination) and security. In what follows, we first discuss the policies and actions required for attaining full and productive employment. Those required for ensuring that employment is decent are provided after that.

IT IS inconceivable that any one should not want full employment, or at least should express his dislike openly. The wage earner wants it, because it means the maintenance of his standard of living. The man wants it, because it means the continuous operation of his productive unit. The general public wants it, because it means an unbroken and maximum flow of the goods and services upon which it depends for the maintenance of the good life. True, there may be a small number of moss-backed, casehardened industrialists who would welcome a constant pool of unemployed as a means of breaking down labor resistance and keeping wages low. But in these days they are not likely to say much about it in public. It follows that those who are now opposing proposals to insure full employment, by legislative or other measures, must do so because they object to the means rather than the end. Almost invariably the means that are opposed represent an extension of governmental (usually federal) activity or authority, and it is upon this that the objections are based. This would seem to indicate that governmental measures to secure full employment are deprecated either on the ground that they would not be effective for the purpose indicated, or else that the extension of governmental activity into the field of is so abhorrent in itself that it is worth avoiding even at the high price of depressions, failures, and untold human suffering and degradation. For it is very generally admitted today, not only by far-seeing liberal leaders like Henry Wallace, but also by intelligent men and the orthodox economists who are their theoretical mentors.and practical protagonists, that free by itself cannot guarantee full and continuous employment for the total working force of such a highly capitalized country as the United States. Even the most assured and vociferous exponents of the leave everything to free enterprise school would hardly want to back up their protestations with an ironclad promise not to go running to the government for relief should a blue Monday arrive, nor even to accept the assistance voluntarily offered by a paternally-minded administration. The business cycle, with its recurrent extremes of boom and depression, is now recognized by the more emancipated of the conventional economists as an unavoidable feature of a capitalistic, or price-and-profit, system. This relationship is accepted with varying degrees of complacency or resignation by those who regard the capitalistic system as the perfect flower of social evolution and cannot conceive that any other arrangement could possibly be on the whole preferable. Explanations of the process, and of its manifestations, vary. Some students find the central cause in the essentially unworkable and paradoxical character of the price-andprofit system itself. It has been conclusively demonstrated,' that monetary profits on a society-wide scale are a physical and mathematical impossibility. Even some writers of essentially orthodox economics textbooks admit this, as, for example, Gemmill and Blodgett when they say that, In the long run, therefore, we expect to find that the profits of a competitive industry just about balance the losses of that industry.' Mr. R. H. Doane, in his book The Measurement of American Wealth, has demonstrated the proposition by the statistical approach, showing by carefully correlated figures that over the long stretch of time the profits of American industry as a whole are almost precisely balanced by the

This is a summary and continuation of an important debate begun at the last CSP conference in Sheffield. Drawing on their recent book, 'After Full Employment' (reviewed in this issue), John Keane and John Owens argue that a return to the post-war policy of full male employment is neither feasible nor desirable. They propose instead the redistribution of work together with a guaranteed income for all. Michael Rustin disputes all this. Full employment, he argues, can be restored if an appropriate political strategy is pursued; to divorce income from work on the other hand is ethically unattractive and politically and economically unwork able. Keane and Owens will reply in the next issue of CSP,

ABSTRACTThis article examines SDG 8 ‘Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’. It critically examines the goal from two perspectives, the business approach advocated by the International Organisation of Employers (IOE) and the human right to full employment and decent work advocated by the International Trade Union Confederation (ITUC) and human rights NGOs. While full employment and decent work are indeed prominent in SDG 8, the 2030 Agenda embraces market-centred institutional arrangements that may present obstacles to achieving the goal. Specifically, grafting the human rights to full employment and decent work onto a business-oriented economic growth agenda in SDG 8 calls into question whether the 2030 Agenda enshrines full employment and decent work as human rights obligations of states or merely as benefits of economic growth. The article concludes that the ambiguity in SDG 8 presents both opportunities for human rights monitoring and accountability but also enhanced legitimacy for the business approach.

A Study on Internet Use, Gender Concepts, and Full Employment of Women Based on the Ologit Model

One of the more remarkable features of the Keynesian Revolution has been evidenced in the rapidity with which employment has become the standard of social well-being. The almost-universal unity of economists ideologically ranging from Hayek to Hansen that full or high employment is a social responsibility has been matched by equal interest by various governments, culminating, for example, in the British, Canadian and Australian Papers and the Employment Act of 1946.' That many of these governmental policies, particularly the American version, were considerably short of a employment guarantee does not mitigate to any extent the fact that unemployment in any significant degree would appear to no longer be consciously countenanced by political governments. If such a guarantee is even closely approximated, and policy is implemented to bring an economy to such full employment, the problems of unemployment are quickly replaced by the possibility of an inflationary potential. This paper will be concerned in particular with two of the major questions potentially faced in a employment economy-(a) is a employment guarantee compatible with a stable price level, and (b) within such an economy, what is the impact of the union on the price level. It is recognized that the degree of guarantee can have a considerably varying influence in relation to the above questions-certainly the Murray Full Employment Bill of 1945 contained a stronger guarantee than did its resultant legislation. However, for the purpose of simplicity, it will be assumed that some form of effective guarantee has been promulgated, perhaps approximating Beveridge's definition, having more vacant jobs than employed men ... at fair wages, of such a kind, and so located that the unemployed men can reasonably be expected to take them ... the labour market should always be a seller's market rather than a buyer's market.2

As soon as the increased real value of assets raises the consumption function sufficiently to start employment and output up again, prices and wages will cease falling, and the real value of assets will cease rising.... Thus the deflation of prices (which a la Pigou is supposed to continue to cause an ever increasing real value of liquid assets until full employment is reached) stops at the lower turning point. The force that is supposed to drive the economy into full employment already peters out once the lower turning point is reached.2

TO-DAY it is widely believed that the supreme aim of economic policy should be to provide full employment. Anybody who dares to criticise this article of faith is deemed to utter, in the words of St. Paul, vain and profane babblings . That is what now propose to do. Let me hasten to say at once that of course think full employment very desirable, and that of course agree that one of the principal aims of public policy should be to create conditions under which full employment is possible. But other things are very desirable too-for example, liberty and peace and better standards of living and less economic inequality and more social security. And a clash may easily arise between one of these aims and the aim of full employment. For example, it is very simple to abolish unemployment by abolishing liberty at the same time. If free trade unions are suppressed and strikes forbidden, if workers are not allowed to choose jobs or refuse them but must do what they are told, then of course full employment could be achieved. But think most of us would prefer our liberty. In the same way, war nearly always means full employment. This is partly because of the conscription of labour and partly because of vast Government expenditure. In 1942 heard one very eminent economist say of the United States: I always knew they could eliminate unemployment if only the Government spent enough. Most of us would think some LI 5 million a day rather too high a price, and in any event we would prefer peace to full employment plus war. The clash shall speak of this evening is the clash which may arise between full employment and better standards of living, with special reference to international trade. Standards of living depend mainly on output per head. Let us begin, therefore, by asking how significant unemployment is from this standpoint. Would full employment give us a world of plenty ? must remind you that a certain amount of unemployment is inevitable. At any moment some workers are seeking new jobs, some are not at work owing to bad weather, and some will not be able to earn the minimum standard rates fixed for their occupationunless special provision is made for this sub-normal minority, they will be able to get work only intermittently. It is generally recognised that a normal state of full employment would include a number out of work at any given moment. Thus, even in France, where the 1 The substance of an Inaugural Lecture delivered at the London School of Economics on zznd January, 1946, with Professor Robbins in the chair.

V IRTUALLY the full employment of available labor and resources was tacitly assumed by most of the nineteenth-century wage theorists. Actual full employment has been a rather rare condition in the western world during the last two centuries. However, the economies of both Great Britain and the United States moved decisively toward full employment in the period between the years just before World War II and the subsequent wartime and postwar years. In what ways and to what extent has this relatively new condition of prolonged full employment affected the structure of wages? There are many ways of answering such a question, depending on what aspect of wage structure is considered. For example, it is now reasonably clear that a transition to full employment works toward the narrowing of wage differentials between workers of different grades of skill.' What happens to the relative levels of wages paid by different industries, as an economy moves toward full employment? Comparatively little attention has been devoted to this question. One outstanding study of interindustry wage structure has been the recent analysis by Donald Cullen.2 This painstaking study was mostly concerned with long-period relationships between the average wages paid by different American industries. Cullen found that the rank-order of industries was very stable, even over long periods of time, as regards the average annual earnings of their respective employees. Over a mere ten-year period, there was, naturally, even less change in interindustry wage structure than occurred over longer periods. Thus for the decade I939-49, Cullen's coefficient of rank correlation for seventy American industries was .92.3 These findings suggest that even a sharp change from very considerable unemployment (I939) to virtual full employment (I949) will have little effect on the structure of wages as between industries -at least that such a change will not alter materially the rank-order of the average wages of the various industries. In Great Britain, the full employment conditions of wartime and postwar years provide a similar contrast with the slack employment of the prewar period. Did the relative wages paid by different industries also remain stable in the face of this drastic change in labor market conditions? We shall see presently that the answer depends on how one chooses the method of measurement. Our first test of interindustry wage structure was selected to provide the greatest possible comparability between the British and American wage data and the method and data used by Cullen. We were able to find British and American wage information, prewar and postwar, for 28 industries which were reasonably comparable with the American industries selected by Cullen.4 We used i938 as a repre'E.g., see Harry Ober, Occupational Wage Differentials, I907-I947, U.S. Department of Labor, Monthly Labor Review, August I948; Louis R. Salkever, Toward a Theory of Wage Structure, Industrial and Labor Relations Review, April I953; K. G. Knowles and D. J. Robertson, Differences Between the Wages of Skilled and Unskilled Workers i8881950, Bulletin of the Oxford Institute of Statistics, xm (Apr1l I95I), I09-27 and Earnings in Engineering, I926I948, ibid. (June I95I), I79-200. Our limited purpose is to investigate interindustry differences in average earnings. We are acutely aware of the variability of wages between firms within an industry, between workers of different levels of skill, and the week-to-week variability of the earnings of individual workers. Compare Robert R. L. Raimon, The Indeterminateness of Wages of Unskilled Workers, Industrial and Labor Relations Review, vi (January 1953), I80-94; and K. G. J. C. Knowles and Ann Romanis, Dockworkers' Earnings, Bulletin of the Oxford University Institute of Statistics, xiv (September and Octo-

ABSTRACTPassage of the Humphrey‐Hawkins Full Employment and Balanced Growth Act of 1978 is the most recent step in the development of a national full employment policy. This article traces the origin of the legislative debate over full employment back to the 1940s, the only previous time that Congress gave serious consideration to full employment legislation. It analyzes the conflicting economic and political interests and philosophies that led to the defeat of the Full Employment Bill of 1945 and to passage of weaker legislation, the Employment Act of 1946, which dropped the commitment to full employment. The article then traces the contours of unemployment since World War II: recurrent recessions; significant unemployment between recessions; the unequal distribution of joblessness, hitting hardest at groups such as minorities, women, and youths; and growing urban and regional unemployment. Some of the hidden social, human and economic costs of unemployment are explored. So is the relationship between unemployment and crime, poverty, welfare, the urban crisis and inequality. Full employment reemerged as a major issue in the 1970s because of the impetus from groups whose unemployment problems persist between recessions. Coalitions of these groups pressed for a national policy to secure full employment for all groups. This led to passage of the Humphrey‐Hawkins Act. But the controversy over full employment has not ended. Attempts to implement the Act, the article concludes, may heighten underlying controversies over issues such as inflation, wage, price and profit controls, the environment, and job creation and may make full employment one of the leading domestic issues of the 1980s.

TODAY IT IS POINTLESS to prolong the discussion whether full employment is the 'dangerous experiment of the socialist planners' or the 'hypothetical position to which impersonal market forces tend to push our economy' for today, full employment is a continuing reality. This is not to imply, however, that full employment as the sole object of government policy has been as yet squarely put to the test of public opinion. We have enjoyed this condition not because it was politically expedient or socially desirable, but rather because it has been militarily necessary. And as long as international tension exists, as long as our foreign policy is oriented to our determination to negotiate from a 'position of strength', as long as we are determined to fill the vacuum of power created by post-war disarmament, full employment will very likely (however inadvertently) be the by product of these policies.' But even in the absence of world tension, the continuing experience of full employment has undoubtedly created a climate in which governments could anticipate a favorable mass conditioned-reflex to measures designed to maintain jobs-for-all. The full employment of the last decade has not been, however, an unmixed blessing. The greatest single problem coexistent with full employment has been the instability of the general price level-an instability largely generated by the income drives of consolidated pressure groups in our society, income drives made more effective by the existence of full employment itself. But price level instability, many reason, results simply from the imbalance between money demand and physical supply, and the former may be readily controlled through budgetary, tax and credit policies. This argument, offering solutions to the problem of instability seemingly beautiful in their simplicity, largely ignores the social setting into which the above 'solutions' must be projected. The purpose of this paper is to examine the socio-psychological pressures which greatly com-

Attitudes to full employment in official publications have varied. There have been changes in view as to the content, meaning and ranking of full employment in comparison to other objectives, and as to the significance of trade-offs between full employment and other objectives. Full employment conceived as total employment was worshipped at the beginning of the period under review. It was worshipped with less fervour in the 1960s. Opinions differed over what should have been done to reduce unemployment in the short-term as opposed to long-term and over what level of unemployment represented failure to achieve "full employment". Perceived opportunity costs - in terms of foregoing other objectives - of pursuing full employment more intensely, increased over the 30-year period. By the end of the period the notion of full employment was losing its connotation of prolonged job security.

Among the valuable contributions Robert Browne made in his career was the role he played in shaping the “Equal Opportunity and Full Employment Bill of 1974” that was introduced by Congressman Augustus Hawkins of California. Browne defined full employment as “a condition in which all persons willing and able to work, no matter what their race, gender, or national origin would be guaranteed a job”. In his view, if the private sector was unable to produce full employment, the government should act as the employer of last resort. Language in support of that view was included in the Hawkins bill. Robert Browne believed only a national policy to achieve that goal would eliminate racial disparities in employment and unemployment—a long term reality in the American labor market. The 1974 Hawkins bill was met with only tepid Congressional support, little notice from civil rights leaders, and no response from the business community. Little was done to advance full employment legislation until Senator Hubert H. Humphrey of Minnesota embraced the cause in 1975. Negotiations with Congressman Hawkins led to the development of the “Full Employment and Balanced Growth Act of 1975,” a legislative measure to replace the Employment Act of 1946. The new bill was commonly known as the Humphrey–Hawkins Full Employment Bill. Robert Browne offered far less support for the new bill than for the original full employment bill introduced by Mr. Hawkins. The Humphrey Hawkins Bill failed to provide explicitly a job guarantee for all workers, and included an inflation target to make price stability co-equal with full employment as a national policy objective. The Humphrey–Hawkins Bill was enacted into law in 1978, and remains the nation's policy dictum on full employment to this day.

3 - OBSTACLES TO FULL EMPLOYMENT

I do not propose to discuss here the problems of the transition from war to peace, or how unions can help to get full employment in the first place. I am concerned with the more fundamental problem of the place of unions in a society which has achieved full employment in peace-time, without sacrificing any of the essential freedoms, and which wants to keep both full employment and freedom. I am assuming that full employment involves planning. I am assuming also that unions are not just nuisances but, in one form or another, permanent and desirable social institutions. Can we plan production without planning wages, hours, and conditions of work? If full employment involves planning these also, where do the unions come in ? Must they sacrifice their traditional freedom to bargain collectively on behalf of their members, and suffer a sea-change into something, if not rich and strange, at least very different from what they have ever been before? Or can the community do this part of its planning through collective bargaining? Can we continue to have purely sectional bargaining, plant by plant, industry by industry, or must the various unions act as a unit according to a general wage policy laid down by some central organization? Must trade unionism change its functions, or its structure, or both?These questions have been widely discussed in Britain, and to some extent also in the United States; in Canada, as far as I know, hardly at all. If we mean business when we talk of full employment, especially full employment in a free society, it is high time they were. For they are not by any means minor questions. Mrs. Wootton goes so far as to say that “Of all the possible points of conflict between conscious planning of priorities and traditional freedoms, the regulation of wages is likely to prove the most stormy”; and of course in this context “wages” include hours and conditions of work—not only what is paid, but what it is paid for. In Canada, freedom to bargain collectively can scarcely be called one of the “traditional” freedoms; for most Canadian workers it is still a recent, hard won, and imperfect conquest. But it is none the less prized for that, and it will not be easily surrendered, even as the price of full employment. For of all the freedoms, this is perhaps the one that comes closest home to the ordinary worker.