Good question

Interestingly, it comes from one of the commenters, not the Senior Lecturer:

Here I think, we get to the nub of the issue. Assuming we are intent upon taking this forward.

Let us ignore what precise figure we will accept as ‘full employment’. The number is not arbitrary, but by for example, raising the pension age, or the school leaving age it can be shifted substantially at a stroke. Also there will always inevitably be a degree of churn at any given time and that is not only inevitable, but necessary.

In terms of developing policy it is pointless to speak of ‘full employment’ without considering what we are going to accept as ’employment’ and how its ‘fullness’ might be achieved.

An extremely useful definition is to look at it the other way around. As Marx said, if we’ve got full employment, no more than frictional unemployment, then labour compensation should rise in line with productivity.

Thus, if labour compensation is rising in line with productivity we’ve full employment…..we quite obviously haven’t had in recent years, we’re about there now.

11 comments on “Good question

  1. If there’s one economic concept that the man on the Clapham omnibus understands its supple and demand. Yet when they point out that an unlimited supply of unskilled workers is keeping labour prices at the bottom end they are accused of being think, racist and bigoted, by the very people who are now whingeing that real wages haven’t gone up.

    And still they wonder why those thick racist bigots voted Brexit and are fed up with so called experts.

  2. (Unnecessary pendantry)

    @bind: I for one don’t know the concept of “supple and demand”, but then I haven’t used the 73 for many years.

  3. BiND, rjb is mocking your less-than-stellar orthography in your first post. Bonus dormitat Homerus and all that I suppose.

  4. @bind

    I was just pointing out a typo. I thought the 73 was the archetypal bus past Clapham common, but I’m not so sure now. I haven’t lived in London for 20 years.

    On re-reading my message, you’re right, it’s overly-cryptic.

  5. In my experience while the man on the Clapham omnibus understands supply and demand, he generally underestimates the steepness of the curve, imagining something like doubling the workers halves the wages, while in reality a modest increase in labour can substantially reduce pay. The government is well aware of this and exploits it in discussions about immigration.

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