Answer to Question #256849 in Macroeconomics for Vinu

Question

Full employment is a slippery concept. How? Can full employment prevail in a developing economy like India? If yes, how? If no, why?

Answer 1

Full employment can be described as a situation whereby all available labor resources are used in the most efficient way. In this sense, we mean a situation whereby all skilled and unskilled hands are occupied with something to do (i.e no one is idle). This in other words imply a situation where a country like India for example has no unemployed sect of people.

Full employment is termed slippery because everyone gets to work in a job they're comfortable with and can decide at any point in time to quit the current job for another if the taste(quest for more money) changes since there's always employers willing to employ them and pay them desired amount.

Therefore in the case study of India economy for example, as a developing country, In as much as full employment is soothing to workers who would be willing to earn more, the situation leaves companies to compete over employees since skilled workers can demand higher wages with more benefits and employers would have to be compelled to oblige or else, employees would go for a greener pasture in another company where they would be paid. This then would at the long run, tell negatively on the economy of India. Hence, for a sound economy in India, full employment cannot prevail.