Over-full employment, let us remember, is a state of affairs in which there are more vacant jobs than there are people looking for and, one may add, competent to take up these jobs. The state of over-full employment is due to an excessive demand for labour.
Its implications for an individual sector are very much similar to those for the economy as a whole, in so far as the sector in question is at all ‘specific’ in so far that is, as an increase in its supply involves a fairly long-term process of investment. So economic sector is important to develop us.
First, over-full employment leads to bottle-necks; and the greater the pressure of demand the more serious these bottle-necks turn out to be. The result is that, on the one hand, fresh recruitment is made from among incompetents and, on the other hand, superannuated people are permitted to hold on to their jobs.
Now, when this happens, not only does the average output fall but there is also a possibility that the total output should tend to fall, too; when an organization has relatively less efficient persons at both ends, it is not surprising if the middle group also gets spoiled. We have here an instance of what may be called ‘external diseconomies’. Attempts are of course made in such cases to increase the supply of trained personnel. Training courses are opened and sometimes Seminars are arranged for the spread of education in the special field. But then insufficient attention is given to quality. I know of an interesting case which happened sometime during the last war. A certain State (then Provincial) Government in our country found itself in urgent need of agricultural experts who were to help in the improvement of agricultural methods in the region.
It therefore issued instructions to an Agricultural College run under its auspices to the effect that the course of training in the College should be reduced from a period of four years, as it originally was, to a period of three years. It was done, but within less than a year the College received fresh instructions reducing the course still further, until in the end, when matters became desperate, the period was reduced to one year. If this could happen in a technical field, how much more is it likely to happen in the field of economics! So economic sector is important to develop us.
Secondly, under over-full employment there is a tendency to excessive turn-over of labour. Such empirical studies as have been made in other countries in this respect suggest that there is an inverse correlation between labour turnover and the volume of unemployment in an occupation. Now, so long as unemployment exists, a little increase in turnover in the course of a process of reduction of unemployment is surely welcome; one is an offset against the other from the productive point of view. But in a state of over-full employment, high labour turnover is a distinct waste. Capricious movements of workers from one job to another reduces the efficiency of an organization not only by reducing the output of the migrating workers, but also by impairing the effectiveness of others whose services are complementary to the former.
I am quite sure that one would, if one did some investigation, find serious cases of disturbance of this kind taking place in organizations which employ economists in our country. I have indeed heard of complaints of this character coming not only from private institutions but also from Government Departments. Promotions in these services have become so rapid that the employer finds it extremely difficult to retain people long enough for them to be of real use to him. So economic sector is important to develop us.
Thirdly, it becomes difficult in a state of over-full employment to get the right kind of people at the right tune and at right places. There is a tendency to concentration of workers in a few charmed centres, while others may find it difficult to meet even their minimum requirements. Waiting list of buyers is also a common experience in situations of this sort. Ohlin tells us the story of a Russian lady who, during the war, tried to persuade a plumber to repair a small leakage and to see that she did not have to wait as long as three weeks for the job to be done.
Similar instances can be cited in respect of appointments of economists in our institutions, with only this difference that here the waiting period runs in terms of months and years and not in terms of weeks.
Finally and this is not the least important when jobs are around, workers are apt to pay less regard to discipline. In situations of this kind, it is the employer, rather than the employee, who has to be apologetic when it comes to getting something done outside routine work. I would, on no account, demand subservience on the part of labour of any kind, nor would brook any tyranny on the part of the employer.
I do recognize that the assurance of alternative jobs is a protection to the worker against possible maltreatment by his employer. But preservation of the dignity of labour is one thing, indiscipline is another, and I doubt very much that, to ensure the former, we need so precarious a course as over-full employment. So economic sector is most important to develop us.