Unemployment in Belgium and Full Employment Policy

Abstract

Post-war experience of unemployment in Belgium is of interest for several reasons. First, as one of the few examples of serious unemployment in an industrial country of Western Europe since the war, it offers an opportunity to consider the applicability of full employment techniques in a particular situation. Secondly, it demonstrates the deliberate use of deflationary pressure to bring about structural readjustments. Thirdly, it suggests that a democratic country may tolerate a considerable amount of unemployment rather than carry out a full employment policy, the success of which is assumed to involve measures which tend to erode the basis of a free economy. By free economy in this context is meant one in which there are no direct controls over consumption or investment and no direct regulation of commodity or factor prices or the movement of labour. Belgium may be considered to have approximated to this situation during most of the period with which this article is concerned, namely from the beginning of I948 to the middle of I950. The article will deal with the unemployment situation in relation to full employment policy, defined as some combination of monetary-fiscal policies and public investment compatible with a free economy. It will be divided into three parts; first, the nature of the unemployment problem; second, employment policy; third, factors determining policy. I The development of employment and unemployment in post-war Belgium can be broadly traced from Table I. The first signs of a lapse from full employment appeared before the end of I947. During the first six months of I948 the number of wholly unemployed remained below 4 per cent. of the insured working population, but in the fourth quarter of I948 the upward trend accelerated,