Many congratulations to Professor Edmund Phelps for snapping up this year’s Nobel prize in economics. Along with Milton Friedman, Prof Phelps helped to show that governments cannot reduce unemployment below a natural rate by boosting demand. Curiously, no one knows precisely what the natural rate of unemployment is, though it is reckoned that 5% is a reasonable ball-park figure.
Significantly, the UK unemployment rate has been hovering around 5% for a while, which suggests that Britain may be at, or near, full employment. Exactly how long “full employment” will last is unclear, but recruitment agencies and headhunters must be rubbing their hands as businesses scramble for suitably qualified workers….