Fiscal Policy in Relation to Employment

Abstract

Fiscal policy to maintain full employment is equivalent to a policy to prevent unemployment. Since unemployment is exportable, the leading industrial countries in the world agreed in the late 1940s to take preventative measures if the number of unemployed rose above 3 per cent of a country's labour force. In the UK the commitment to full employment goes back to the famous White Paper on Employment published by the Coalition government in 1944. In consequence, all the major political parties were pledged to maintain full employment. When, in later years, the Conservative and Labour government came to differ, it was not over the desirability of full employment, but over the best ways of achieving it.