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JOB GUARANTEE IN PRACTICE by Victor Quirk, Emma Allen, Trond Andresen, Anthea Bill, Beth Cook, Ben Goldsmith, JamesJuniper, Robert La Jeunesse, William Mitchell, Jennifer Myers, Martin Watts, RiccardoWelters, and Graham Wrightson
1.
Introduction
Following the abandonment of full employment as a primary objective of government policy in the mid 1970s, the role of the public sector as a significant source of employment was
sacrificed in pursuit of private sector efficiency in the use of public resources. A failure to acknowledge that an efficient public sector delivers social benefits that profit-seeking firms
do not, led policy makers to fallaciously equate reductions in public sector employment with efficiency (Mitchell, 2001a: 4). The absence of the public sector as an employer of last resort
entrenched unemployment, undermining the economic security and life aspirations of a generation of Australians, and severely damaged the present economic capacity of Australia
through the concurrent abandonment of the public sector as a net producer of skilled workers (Mitchell and Quirk, 2005).
A policy proposal to restore the role of the public sector as a significant employer, and to do so in a way that also controls inflation, known alternatively as the ‘Job Guarantee’ or the
‘Employer of Last Resort’ (ELR), has been advocated for over a decade by economic policy research centres in Australia (Centre of Full Employment and Equity – CofFEE), North
America (Centre of Full Employment and Price Stability – CfEPS, Kansas City, and The Levy Institute, New York) and Europe (CofFEE Europe, Maastricht). The economic
principles underpinning this proposal constitute an alternative economic paradigm to that which has dominated economic policy-making in Australia for 30 years, and which has
entrenched under-employment, fuelled private debt and destroyed the nation’s skills formation capacity (Mitchell, 2001b).2
The debate between these rival economic paradigms is often very technical in nature, which has tended to discourage media coverage or engage a wider audience, despite the profound
socio-political implications at stake. The consequence is that most Australians, including many academics and public policy makers that would find the alternate paradigm extremely
interesting and useful, are unaware that it even exists. The comprehensibility of these ideas has been further undermined by the absence of a straightforward detailed description of how
the Job Guarantee/ELR could operate in Australia, which is largely due to an unwillingness of its leading advocates to presume authority in the mechanics of public administration. This
paper seeks to redress this difficulty by offering for public discussion a draft demonstration model, which links the theory to practice by clarifying necessary and optional features of the
scheme.3 The authors welcome any suggestions for improving either the design of the scheme or the comprehensibility of its presentation in this paper.4
2.
The basic idea of the Job Guarantee
Under the Job Guarantee scheme, people of working age who are not in full time education and have less than 35 hours per week of paid employment would be entitled to the balance of
35 hours paid employment, undertaking work of public benefit at the minimum wage. The aim is to replace unemployment and under-employment with paid employment, so that those
who are at any point in time surplus to the requirements of the private sector (and mainstream public sector) can earn a reasonable living rather than suffer the indignity and insecurity of
underemployment, poverty and social exclusion.
A range of income support arrangements, including a generic work-tested benefit payment, would also be available to unemployed people, depending on their circumstances, as an
initial subsistence income while arrangements are made to employ them. This would rarely be necessary once the system was well established, because in most circumstances JG jobs
would be immediately available and offered instead of income support. Under the work-test, any offer of a suitable job paying at or above the legal minimum wage, including a JG job,
would terminate the income support payment.
JG workers will have considerable flexibility as to when they work within a range of core hours, to maximise their availability for part-time or casual mainstream employment, for job-seeking, for caring responsibilities that have limited their employability in the private sector,self-employment, study, or other pursuits, being paid only for the hours in which they work.
CACHED PDF: cache:aL8OAgdFBZQJ:www.fullemployment.net/publications/wp/2006/06-15.pdf+&cd=1&hl=en&ct=clnk&gl=au
1.
Introduction
Following the abandonment of full employment as a primary objective of government policy in the mid 1970s, the role of the public sector as a significant source of employment was
sacrificed in pursuit of private sector efficiency in the use of public resources. A failure to acknowledge that an efficient public sector delivers social benefits that profit-seeking firms
do not, led policy makers to fallaciously equate reductions in public sector employment with efficiency (Mitchell, 2001a: 4). The absence of the public sector as an employer of last resort
entrenched unemployment, undermining the economic security and life aspirations of a generation of Australians, and severely damaged the present economic capacity of Australia
through the concurrent abandonment of the public sector as a net producer of skilled workers (Mitchell and Quirk, 2005).
A policy proposal to restore the role of the public sector as a significant employer, and to do so in a way that also controls inflation, known alternatively as the ‘Job Guarantee’ or the
‘Employer of Last Resort’ (ELR), has been advocated for over a decade by economic policy research centres in Australia (Centre of Full Employment and Equity – CofFEE), North
America (Centre of Full Employment and Price Stability – CfEPS, Kansas City, and The Levy Institute, New York) and Europe (CofFEE Europe, Maastricht). The economic
principles underpinning this proposal constitute an alternative economic paradigm to that which has dominated economic policy-making in Australia for 30 years, and which has
entrenched under-employment, fuelled private debt and destroyed the nation’s skills formation capacity (Mitchell, 2001b).2
The debate between these rival economic paradigms is often very technical in nature, which has tended to discourage media coverage or engage a wider audience, despite the profound
socio-political implications at stake. The consequence is that most Australians, including many academics and public policy makers that would find the alternate paradigm extremely
interesting and useful, are unaware that it even exists. The comprehensibility of these ideas has been further undermined by the absence of a straightforward detailed description of how
the Job Guarantee/ELR could operate in Australia, which is largely due to an unwillingness of its leading advocates to presume authority in the mechanics of public administration. This
paper seeks to redress this difficulty by offering for public discussion a draft demonstration model, which links the theory to practice by clarifying necessary and optional features of the
scheme.3 The authors welcome any suggestions for improving either the design of the scheme or the comprehensibility of its presentation in this paper.4
2.
The basic idea of the Job Guarantee
Under the Job Guarantee scheme, people of working age who are not in full time education and have less than 35 hours per week of paid employment would be entitled to the balance of
35 hours paid employment, undertaking work of public benefit at the minimum wage. The aim is to replace unemployment and under-employment with paid employment, so that those
who are at any point in time surplus to the requirements of the private sector (and mainstream public sector) can earn a reasonable living rather than suffer the indignity and insecurity of
underemployment, poverty and social exclusion.
A range of income support arrangements, including a generic work-tested benefit payment, would also be available to unemployed people, depending on their circumstances, as an
initial subsistence income while arrangements are made to employ them. This would rarely be necessary once the system was well established, because in most circumstances JG jobs
would be immediately available and offered instead of income support. Under the work-test, any offer of a suitable job paying at or above the legal minimum wage, including a JG job,
would terminate the income support payment.
JG workers will have considerable flexibility as to when they work within a range of core hours, to maximise their availability for part-time or casual mainstream employment, for job-seeking, for caring responsibilities that have limited their employability in the private sector,self-employment, study, or other pursuits, being paid only for the hours in which they work.
CACHED PDF: cache:aL8OAgdFBZQJ:www.fullemployment.net/publications/wp/2006/06-15.pdf+&cd=1&hl=en&ct=clnk&gl=au
