Harry Parsons puts forward the case for job guarantee programmes, and assesses how the public might react to this policy in a future Labour manifesto.
In a metaphor fit for pandemic times, William Beveridge once remarked that “Unemployment is like a headache or a high temperature – unpleasant and exhausting but not carrying in itself any explanation of its cause.” Unemployment harms society beyond those it affects directly, with studies following the 2008 financial crisis revealing that unemployment harms both the employed and unemployed. The Coronavirus pandemic brought the spectres of unemployment and precarity to the fore.
With a problem so great, no policy can be a panacea. But where traditional economic medicine is not leading us towards the twin cures of wage growth and job security, experimental treatments could step into the breach. One such prescription is a job guarantee.
Job guarantee programmes are defined as permanent, government funded, and locally run policy initiatives supplying jobs ‘on demand’ to all who are willing and able to work, remunerated at a living wage. There is a renewed case for examining job guarantees in the United Kingdom following the implementation of the Coronavirus Job Retention Scheme (CJRS). Ensuring that anybody seeking work can find high quality employment, a job guarantee involves the state providing employment regardless of economic conditions or personal circumstances.
Job guarantees are a type of employment assistance active labour market policy. They are distinct from universal basic income, as work is required in return for the release of state funds. Additionally, they are not universal among the population at large, but are universally available to the unemployed. Job guarantees are different to ‘workfare’ policies as they involve the direct creation of jobs by the state, contrasting with the state providing work to an individual as a pre-condition of receiving benefits.
Active labour market policies are not a new addition to the British political landscape. Alongside Tony Blair’s New Deal, Ed Miliband’s Labour Party pledged to implement a form of job guarantee programme to tackle youth unemployment. Nor are they unpopular: the sole question aimed at job guarantees within a 2020 YouGov poll addressing labour market policy found that 72% of Britons support a scheme where “the government makes sure everyone who can work has a job”.
The single goal of a job guarantee is for the state to function as an employer of last resort, ensuring that everybody that can work and wants to work has a job available to them. A job guarantee would:
- Provide high quality work at a living wage
- Stabilise the wage floor, overall prices, and the economy as a whole
- Prevent mass layoffs during recessions, preventing depressed demand and downward pressure on prices
- Act as a countercyclical ‘shock absorber’
- Function as an employment stabiliser vs the current model of an ‘unemployment stabiliser’
- Drive a reduction in demand for social security expenditure
- Function as welfare that delivers economic impact, in the form of work completed
The social benefits of such programmes are uncontroversial and widely articulated. Specific benefits of a job guarantee include increases in job quality, reducing the disproportionate impact of unemployment on the poorest in society, and delivering improvements to the income distribution. Furthermore, a job guarantee would contribute to eliminating unemployment, addressing the many social challenges unemployment creates, including poverty, health and mortality, mental health, crime and delinquency, and damage to the social fabric.
The economic benefits of a job guarantee are contested, reflecting a contentious debate characterised by clashes between Keynesian and Hayekian economic theories. Job guarantees are expensive, with studies in the USA citing a cost of 2.1% of gross domestic product. Critics argue that job guarantees are predicated on an understanding of emerging macroeconomic paradigms of neo-Keynesianism and modern monetary theory. Hayekian critics often argue that job guarantees are unaffordable, asserting the primacy of government budget constraints and the inflationary risks associated with excessive government spending. The perceived need for balanced government budgets has formed the basis of traditional arguments against job guarantees: a contested view exacerbated by political rhetoric that incorrectly compares public finances to those of a household.
A job guarantee is a superficially attractive policy option with positive social consequences; however, the contested nature of its economic impact may lead to difficulty in building widespread public support. Dovetailing with wider Conservative narratives emphasising parsimony, prudence, and balanced government budgets, critics commonly depict the policy as an obscure socialist dream. However, that was until a Conservative government implemented a furlough scheme. Job guarantees could herald a desire to build more than a ‘safety net’. Investing in the prospects of the British people must be at the core of any progressive agenda intended to deliver an age of security, prosperity, and respect.
Working for many years as an advisor to the public sector bodies, Harry Parsons has written extensively about the strategic impacts of public policies. He is also a student of Public Policy at the University of York, with research interests lying in postpositivist policy analysis and job guarantee programmes. He tweets at @HarryECParsons.