Full Employment

In a modern market economy, when human resources are fully employed, all other non-human resources are also utilized most efficiently during the same period. The actual output of the national economy approaches or equals potential output, the state of economic output lies at the maximum edge of the production-possibility curve (PPC), and economic development and growth are in the prosperous phase of the business cycle. Because full employment and the overall economic performance it represents align with the optimal state desired by the public, achieving full employment becomes a major core challenge for social development. The government then has the responsibility and obligation to take significant action in the field of full employment. Full employment thus becomes the most critical component of governmental functions and the primary objective of macroeconomic regulation for any national government.

1. Full employment means that all individuals willing and able to work have secured relatively satisfactory jobs. In contrast, unemployment refers to those willing and able to work but lacking job opportunities. Unemployment occurs when individuals passively lose employment opportunities despite wanting jobs. Those with the ability to work but unwilling to do so are not considered unemployed in the strictest sense and are generally termed "voluntarily unemployed." Additionally, individuals outside the statutory working-age range (e.g., under 18 or over 60) are not counted as unemployed.

2. Fully employed workers can perform efficiently in their jobs, and human resources can be optimally allocated—commonly phrased as "the right number of people doing the right amount of work." If three people are doing a job meant for two, it is considered that one person is unemployed, which economists refer to as "hidden unemployment" or "potential surplus labor."

3. Full employment does not mean everyone has a job. Even under full employment, a certain level of structural and frictional unemployment persists. This includes temporary unemployment due to technological progress, industrial restructuring, changes in working age, or shifts in demand preferences. Such unemployment has a natural rationality, representing normal labor mobility and a dynamic adjustment process for optimizing human resource allocation. It is a necessary aspect of economic development and social progress. Full employment is regarded as the optimal state for efficient human resource allocation.

4. Both theoretically and practically, full employment is considered a state that includes a natural rate of unemployment. The natural unemployment rate represents the long-term equilibrium or full-employment unemployment rate. At this stage, the economic cycle is in an upswing or boom phase. Unemployment benefits, social assistance, welfare expenditures, social security, living standards, psychological conditions, population scope, operational quality, and social acceptance are all deemed acceptable.

5. Different countries and periods have varying natural unemployment rates. Governments can determine whether full employment has been achieved in a specific period based on their circumstances. Taking the U.S., the most developed modern market economy, as an example:
   
   

   • In the 1950s–60s, the natural unemployment rate was 3.5–4.5%, meaning a labor force employment rate of 95.5–96.5% constituted full employment.

   • In the 1970s, the natural rate was 4.5–5.5%, corresponding to a 94.5–95.5% employment rate.

   • In the 1980s, the natural rate rose to 5.5–6.5%, with a 93.5–94.5% employment rate indicating full employment.

6. If the actual unemployment rate in a modern market economy is significantly higher than the natural rate, it indicates insufficient effective demand and a sluggish market, requiring improvements in economic performance.
   An actual unemployment rate near or equal to zero is impossible. In traditional socialist planned economies, where the actual unemployment rate appeared close to zero, the reality was that unemployment or surplus labor was masked under inefficient overemployment as "hidden unemployment" or "potential surplus labor." This not only failed to resolve unemployment issues but also led to long-term inefficiencies in economic and social development. The political superiority claimed under such conditions also lacked sustainability.