Well, the factories and employment thing is presumably a bit of an abstraction. In free, capitalist societies, the government doesn't really own much in the way of factories. They buy military and other goods from private sector companies which have their own factories.
The way I rationalise GalCiv2's mechanic in my head is:
- Your government "building a factory" really amounts to things like zoning that region for industry, building the necessary infrastructure, etc.
- The private sector then comes in afterwards and builds the actual factories themselves. They're owned by the private sector.
- Normally (when your government isn't actively building anything) those factories are busy cranking out big screen TVs and talking Elmo dolls which those private companies are selling for their own profit.
- If the government wants to build something, they pay the private sector to build it, using the private sector's factories. This is nicely reflected in GalCiv2's mechanic where the government dishes out money to use the existing industrial output of their society.
So when your government isn't using factories, that doesn't necessarily mean they're sitting idle. Of course all this really only applies to free, capitalist societies... but whatever.