What unemployment rate is considered high?

full employment

Full employment is when there are more vacancies than citizens looking for work. However, politics and science assume that many jobseekers need some time in such a situation to find a suitable new job. Therefore, even under optimal conditions, some citizens will be temporarily unemployed. Science speaks of frictional unemployment because it is caused by difficulties (frictions) in the job search. It is the reason why full employment is not equated with an unemployment rate of zero, but is reached at 2 to 4 percent.

Germany on the way to full employment?

With an unemployment rate of 5.7 percent in 2017, Germany is approaching full employment. Individual regions have already achieved the target: Bavaria had an unemployment rate of 3.2 percent in 2017, Baden-Württemberg had a rate of 3.5 percent. Full employment can also prevail in certain occupational fields. In the technical and scientific professions, which include engineers and computer scientists, there is now even a shortage of workers. According to calculations by the Institut der deutschen Wirtschaft, there was a shortage of more than 337,000 skilled workers in the MINT professions in autumn 2017.

Full employment in economic policy

Germany has enshrined full employment in the so-called Stability Act as an important objective of economic policy. Further goals are stability of the price level, external balance and adequate economic growth. The four goals are often referred to as the “magic square” of economic policy. The attribute “magical” indicates that the goals cannot usually be fulfilled at the same time.

Harmonized unemployment rates 2016

Netherlands

6,0

Switzerland

4,9

Austria

6,0

Japan

3,1

Australia

5,7

Denmark

6,2

Germany

4,1

United Kingdom

4,8

Italy

11,7

Belgium

7,9

Canada

7,0

Sweden

7,0

OECD average

6,3

United States

4,9

France

10,1

Ireland

8,4

Spain

19,7

Source: OECD