Why is full employment important
Full employment / high level of employment
A Objective of the magic square is the full employment or the highest possible degree of employment. Of course, every society strives to have as many workers as possible. One can measure the employment level of a country with the help of the Unemployment rate (= indicator).
In Germany, this has been at a very high and rising level since the 1970s. Full employment prevailed in the Federal Republic of Germany until the 1960s. By the way: The unemployment rate in Germany in the 1920s was around 14 percent. The reason at that time was the severe economic crisis in the USA.
Formula for calculating the unemployment rate:
Unemployment rate = number of registered unemployed x 100 / (number of civilian workers + unregistered unemployed)
Ideal state of full employment
One usually speaks of full employment when the Unemployment rate is less than three percent. A certain percentage of the unemployed cannot be avoided even under optimal economic conditions. Reasons for this can be, for example seasonal unemployment be. For example, an unemployed bricklayer falls under seasonal unemployment in winter - provided he was employed during the season.
Another aspect why the optimal economic situation is full employment (Unemployment rate> 3 percent), is the voluntary unemployment. After all, there are also people who would actually be physically and mentally able to work, but who, in practical terms, simply have no motivation to go to work.
Why is the 3 percent limit already considered full employment?
- Because seasonal unemployment cannot be prevented
- Because voluntary unemployment cannot be prevented
- Because frictional unemployment cannot be prevented
The Goal of the state is of course one the lowest possible unemployment rate. Why? Quite simply: Because then fewer support payments (e.g. unemployment benefits) have to be paid and, in return, more is earned through taxes and social security contributions, for example.
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