Full employment is one of the key macroeconomic objectives in conventional economics. The current unemployment rates in some major Muslim countries and in some developed countries do not qualify them as meaningful macroeconomic objective even for so-called “developed” economies. Unemployment rate is believed to indicate the health of an economy. The current unemployment rates ranging between 5% and 8% in almost all major Muslim economies do not really indicate the health of the economy. Full employment is considered a solution for the improvement of health in the economy problem but in what sense? Full employment does not even mean eradication of poverty. Instead, it often forces people to remain in poverty.
We do not find any reference in the Quran and Sunnah about unemployment or the objective of ensuring full employment in the economy. What we find are the injunctions for feeding the Masakeen and giving support to economically less privileged members of the society.18 Conventional economics would consider such injunctions outside the realm of economics and would consider injunctions for feeding or supporting poor as free lunch, creating beggars and free riders. Conventional economics would rather suggest creating jobs for poor in an economy. This is what Professor Yunus, a Nobel Prize Laureate from Bangladesh and a founder of Grameen Bank, hinted at in a lecture delivered in Islamic Development Bank while referring to Zakah and Sadaqat injunctions in Islam. According to conventional economics, the focus of the economy at macro level is “output growth with full employment.” What would be the focus of Islamic economy at macro level? “Growth with ‘what’, if not full employment?”
There is no direct reference in the Quran and Hadith with respect to growth and full employment in the economy, which are considered two topmost macroeconomic goals in conventional economics. Growth did not need a reference. Once instinct of self-interest has been recognized, the sanctity of private property rights has been secured, rules for exploitation-free market laid down, and then it goes without saying that the system would make “growth” to take care of itself. However, it is very much evident that the Quran and Hadith require taking care of Maskanah (an Islamic term for poverty) of Masakeen (the Islamic term for poor). Masakeen can be interpreted as the people who are unable to meet their minimum living needs from the market and look toward help from beyond market.
Islam makes it the responsibility of every individual in the society to take care of the Masakeen around beyond market. Twenty-two verses (261–282) toward the end of Chap. 2 and many other verses in the Quran emphasize giving away to needy, deprived, and less privileged members of the society. Feeding the Masakeen is a top priority item in giving away as is evident from the Quranic references mentioned above.
The macroeconomic objective in an Islamic economy, therefore, needs to be specified about poor and poverty (Faqr and Maskanah, in Islamic terminology) and not in reference to full employment or unemployment. “Growth free of Maskanah” instead of “Growth with Full Employment” will be a more relevant macroeconomic objective from the Islamic perspective. No doubt, it may be hard to visualize that there would be zero Maskanah or there will be no Masakeen at any point of time in any society, but we can objectively fix a natural rate of Maskanah in the society for declaring the society free of Maskanah. We may assume, for example, that the incidence of up to 5% Maskanah may be considered as if there is no Maskanah in the society. This 5% of incidence of Maskanah may be reflecting the number of people suffering from various permanent physical and mental disabilities, making it impossible for them to make their livelihood from the market.
In view of this reality, we can therefore declare an economy as free of Maskanah if the incidence of Maskanah is below a natural rate of Maskanah. This is like saying “An economy is at full employment when the unemployment rate is below a certain level of natural unemployment rate.” The natural rate of Maskanah can be determined objectively, through household surveys, labor force surveys, and censuses. This makes the macroeconomic model of the economy similar to Classical macroeconomic model with the exception that while Classical macroeconomic model looks at “Output at Full Employment Level,” the Islamic economy looks at “Poverty-Free Output level” (poverty in Islamic terminology referring to Maskanah).