India introduced a job guarantee programme, for the rural poor in 2005. It was dismissed by many as fiscal folly. Yet this developing country has weathered the financial storms of the economic downturn far better than most European countries. Argentina ran a successful programme in the wake of their debt default and Canada has had a good experience with such programmes.
Job guarantee as an economic policy builds on the concept of employer of last resort. The policy requires that the public sector offers a fixed wage job to anyone willing and able to work. The job pool expands when private sector activity declines, and declines when private sector activity expands.
To avoid disturbing the private sector wage structure and to ensure the job guarantee is consistent with inflation targets, the wage rate should be set at the current legal minimum wage for each age range.
Under the programme, people of working age who are not in full-time education or full-time employment would be entitled to a full-time or part-time job, undertaking work of public benefit at the minimum wage. The aim is to replace involuntary unemployment 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 be forced to become reliant on benefits.
Read it at Liberal Democrat Voice (UK)Opinion: Job Guarantees – an economic stimulus worth considering?
By Joe Bourke
(h/t Neil Wilson via email)