The Solution

Since the unemployment problem is caused by the failure community to respond to the decreasing Number of People Employed in relation to the Turnover, then the solution is to organise the International Community to respond by increasing it. Once we do this, full employment will become a reality within a short number of years. It is reasonable to assume that if such a solution were to be accepted internationally it would at least cause some serious problems, however, such an assumption is inaccurate. When we examine the proposed solution, it becomes manifestly clear that the implementation of the solution presents only three "difficulties", and each is easily converted into an advantage in a way that benefits everyone.

The ratio needs to be controlled and the control must be exercised by the governments of the world. The agreement will be legally binding and enforced in much the same way, as all company law. This can be accomplished without disruption and with no major administrative complications, for almost all of the information that is required for it to function smoothly is already being made available to the authorities by employers, because existing law demands that they submit annual accounts to the revenue commissioners.

To implement the agreement the first step will be to calculate the number of people world-wide employed in each sector of industry, such as building, banking, the car assembly industry and so forth. Then it will be necessary to determine the total annual turnover of each sector. Dividing the turnover by the number of people employed, gives a figure that represents the average turnover per person in that particular industry. This will provide the ratio between the annual turnover and the number of people employed in producing that turnover, this will be done for each sector of industry world-wide.

To take the car assembly industry as an illustration: the number of people employed in assembling cars world-wide will have to be worked out. Having established the turnover, the ratio will then be calculated. In the illustration already given, that ratio works out at 98 people employed for every 96.4 million euro annual turnover. This figure of 98 will be used as a starting point to negotiate a new higher ratio, which will become the Minimum Employment Ratio Figure (M.E.R.F.) for that particular industry. The M.E.R.F. will be set by international agreement. Derogations will certainly be necessary in the case of specific companies and countries, depending on circumstances.

When the negotiations are completed, let's suppose that it will be agreed, for the car assembly industry, to employ 100 people for every 96.4 million euro annual turnover, then that will become the Minimum Employment Ratio Figure for that industry. From then on, every car assembly plant world-wide will have to employ 100 people for every 96.4 million euro annual turnover. The M.E.R.F. will then be worked out for each other sector of industry and commerce.

The M.E.R.F. for each category of industry will then be increased slightly, by approximately 2% annually, until such time as unemployment will no longer exist. The introduction of such an agreement will guarantee full employment throughout the world. This will create an unprecedented "feel good" factor and will justifiably create enormous hope and confidence. Globally, we have the capacity to increase production very considerably because with more than half our citizens trying to survive on less than $3 a day, they cannot afford to buy even the food or medicine that they need to survive, so billions of items are not produced, not because they are not needed, but because the poor cannot afford to buy them. You cannot buy much on three dollars a day. But as the unemployed begin to work,they will buy more of what they need to live in dignity. This will create a boom in the world economy, and this in turn will create additional employment.

For every 2% increase in employment due to the international agreement, it is reasonable to assume that there will be an additional 2% increase due to the boom in the world economy. When these two factors are combined it results in a 4% increase in employment each year. The solution does not rely on the "feel good" factor, it will simply speed up the process. The cumulative effect of a 4% increase in employment over a period of six years represents a 26.5% increase as can be seen from table 2 below.

The figures speak for themselves. Depending on the "feel good" factor, which could be as high as 3 or 4 percent, it will take approximately six years to achieve full employment.

Let us now look at the first "difficulty" - the cost of employing the additional people. The 2% mandatory increase in the size of the work-force can be organised to actually cost less, simply by adjusting the level of tax. Almost all companies and other employers world-wide are paying tax for every person that they employ, based on his or her earnings. This tax varies from country to country, and ranges approximately from 5 to 15 percent. It may be in the form of a tax or social insurance - it is sometimes referred to as the "Employment Tax".

To illustrate how the 2% increase in the size of the work-force can actually cost less, let's suppose that a particular state has an "Employment Tax" of 13%, this makes employing people 13% more expensive than it otherwise would be. The idea therefore, is to reduce this tax by two percentage points, (to 11%) which will reduce the cost of employing the work-force by 2%. However, the increased size of the work-force will increase the cost by 2%. The cost goes down by 2% and up by 2% at the same time, the net result therefore is a zero percent increase. It would be an added advantage to arrange this tax concession in a way that will ensure that companies actually pay less, even though they will be employing more. This can be achieved quite simply by reducing the tax by 2.2 percentage points annually for as long as it is necessary.

Table 3 below assumes that the government tax is 13%, and that we agree to reduce it by 2.2 percentage points each year for six years, while simultaneously increasing the M.E.R.F. by 2% for the same duration. If the "Employment Tax" in a particular state is already low, for example 6%, then as soon as that figure has a negative value, instead of paying tax, the company will receive a compensation payment from the state, or from an international fund, to ensure that it will get the full benefit of the reduction. Such an arrangement will ensure that the overall employment cost will be reduced as can be seen from table 3 below.

This saving of €6,090 in the sixth year, represents a reduction of a half of 1%. The table clearly demonstrates that there is an overall reduction in the cost of employing the work-force. This reduction is not very significant economically, however, psychologically it is of great importance.

So far, the examples taken are of large industries, however, a similar system can be worked out for smaller-scale enterprises, such as farming, shops, garages, etc. Each type of business will have it's own M.E.R.F. depending on the labour intensity, profit margins, etc. of that particular industry. An employer will have to employ others, as soon as he or she has reached a certain turnover, (let's say €400,000) then for additional turnover (let's say for every €200,000) that employer will have to employ an additional person. A system to enable overtime and part-time work to continue will be incorporated into the agreement.

And now for the second "difficulty". If a company needs only one hundred people to produce its turnover what then will the extra people who are employed be doing? The answer is that for every 2% increase in the M.E.R.F. there will be a corresponding 2% decrease in the time spent at work. This will mean that in every place of work; in every factory, office and shop, the number of man-hours to be worked will not change, the only difference will be that more people will work shorter hours, they will get paid the same as before, but it will cost their employer slightly less. Table 4 below establishes that the number of man-hours to be worked will remain unchanged.

Table 4 also shows that in six years, a 39 hour week will be reduced to only 34.6 hours, a reduction of half a day. Today, many are unemployed, while many more are working hours which are far too long, both situations are unsatisfactory. Wouldn't it make a lot more sense if a greater number of people worked shorter hours?

We have overcome the first "difficulty" of the cost of employing the extra people, and the second "difficulty" of finding work for them to do, we now need to look at the third and final "difficulty" - the apparent problem of the loss of revenue to the state, due to the gradual elimination of the "Employment Tax". This loss will be compensated for in a number of ways. The state will not have to pay out vast sums of money on unemployment assistance. Not only will they be saved the expense of assisting the unemployed financially, those who had been receiving assistance, will, in this new situation, be assisting the state by paying income tax, social insurance and in other ways. The revenue from most taxes will be greater, due to increased spending, higher profits and other factors. In addition to that there will be savings in many of the social services such as policing, health care, public housing, etc. With everybody working there will be fewer social problems, such as crime, drug addiction, and so forth. There will also be savings in a wide variety of expenditures which are indirectly related to the unemployment situation. The savings resulting from the improved social conditions coupled with the extra revenue received from taxes will more than compensate for the loss of the "Employment Tax".

From the figures that have been outlined, there can be no doubt but that full employment world-wide can be achieved in close to six years, and in a way that will benefit everybody in the world and also every company and government. This proposal is but one way to achieve full employment. It could also be done, for example, without reducing the "Unemployment Tax", by simply allowing the additional 2% in the cost of employment to be passed on to the consumer, which would have an inflationary effect of about 1%, and that would be a small price to pay for full employment.

The implications of being able to provide work for everyone, and in a way that ensures that all are gainfully employed in providing the goods and services that are needed for mankind, are beyond our imagination. It will put an end to extreme poverty, and to all kinds of industrial exploitation, and create an economic system that will benefit employers and employees alike. It will create agreement in the work environment and will help to bring harmony among the nations. In short it will transform the human race.
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