Can we reach full employment?

After hovering between 8 % and 10 % for almost 40 years, the unemployment rate, thanks to a series of reforms in labor costs and incentives to return to work, now seems closer to 7.5 %, having even approached 7 % by the end of 2022. The current economic slowdown, the result of the fight against inflation, seems to be doing little to alter the dynamics of the labor market, which remains tighter than before the COVID-19 pandemic. But is the goal of full employment – the holy grail of economic policy, equivalent to an unemployment rate below 5% – attainable? Most OECD countries, and the EU in particular, are already at full employment.  The contrast with Germany – with 3.1 % unemployment and a 77 % employment rate in 2023 – is stark.

And yet, courses of action are clearly identified: a shock in favor of employment for senior citizens, an increase in apprenticeships for young people without qualifications, continued reform of unemployment insurance, more flexible employment contracts, integration into employment of those on minimum social benefits, fighting discrimination, unlocking regulations that hamper the growth of start-ups, etc.

Is full employment not only attainable, but also desirable, and at what cost? If the remedies have been identified, what are the obstacles to their implementation? Which of the forthcoming reforms do you consider to be priorities, for both companies and workers? How can we better support companies and workers to reduce labor shortages?