Why does Australia need a Job Guarantee program?
Unemployment and the associated poverty and social ill effects include:-
- Losing work-skills: employers hire from those already working or unemployed short-term. Prolonged unemployment can lead to an erosion of skills.
- Poverty reduces people’s capacity to buy nutritious food, housing and health care. Unemployment can force families to deny educational opportunities to their children. Affects health – reduced participation in society: financial strain.
- Particular parts of the community are more severely affected than others, exacerbating problems of inequality within metropolitan areas and between the cities and some regional areas. Unemployed in Outback Qld circa 13% Youth around 20%..
- Young people are particularly adversely affected – large numbers, particularly in rural and remote areas – a dreadful situation for them to be in to face a meaningful future in our society.
- Government’s providing derisive and inadequate income support eg Newstart – to provide a Budget Surplus!!!!
- Drugs, alcohol abuse and crime flourish in a poor, unemployed community.
In Australia at the end of September 2019 there are around 700,000 persons unemployed. A further 1.1 million persons are underemployed. https://www.abs.gov.au/ausstats/abs@.nsf/mf/6226.0
More recent ABS data shows no improvement to this dismal and destructive pattern. See See ABS
The inability of unemployed individuals and their families to function in the market economy gives rise to many forms of social dysfunction, in addition to output loss
The mass unemployment problem – as presented by Neo-liberal Governments
Professor Bill Mitchel has this to say in a log post – one of many on this topic- A new progressive agenda? (September 28, 2010).
“Unemployment is couched as a problem of welfare dependence rather than a deficiency of jobs….responsibility to be shifted from government to the individual. To force individuals to become accountable for their own outcomes, governments embraced a shift from active to passive welfare and the introduction of alleged responsibilities to counter-balance existing rights.
Reciprocal obligation was developed … as a means of reintegrating the allegedly, welfare dependent underclass into the community.
… no reciprocal obligation on government to ensure that there are enough jobs for all those wanting work. … fallacy to consider that the difference between getting a job and being unemployed is a matter of individual endeavour or preference.”
Introducing a Job Guarantee to Governments and the Australian Community
The government should introduce a Job Guarantee that offers a job at a living (minimum) wage to anyone who wants to work but cannot find employment. See:- Particularly, Bill Mitchell – Professor in Economics – University of Newcastle, NSW
The Australian government can afford this program because it has has no financial constraint as the issuer of the currency. A currency-issuing government can always choose the unemployment level once the spending and saving decisions of the non-government sector are implemented.
A Job Guarantee would be an automatic stabiliser that ensures that the Government is doing necessary amount of spending where it is needed in the right places and right time to achieve full employment with stable prices.
When the private sector is recovering, federal government spending would automatically fall as people leave the Job Guarantee for higher paid jobs elsewhere.
When the private sector experienced a downturn, federal government spending would automatically increase as people lose their private sector jobs and enter the Job Guarantee.
Unemployment is a major loss of valuable productive resources, depressing the economic economic growth and lowering our standard of living of the whole community.
Offsetting the cost of a Job Guarantee would include lesser demand for Centrelink services, enhanced tax revenue and receipts, including those on superannuation and investments.
The costs associated with substance abuse, including health care costs and police interventions would lessen. Unemployment and its adverse social effects adds very substantially to on-going and escalating Government spending.
Local economies, particularly those in Rural and Remote areas would see an enhanced economy and small businesses would have better prospects.
Training must be included, to ensure that the unemployed are equipped with skills that will be needed when the private economy starts again to employ more people.
Not a “work for the dole” proposal. This is voluntary, full time employment, guaranteed and managed by the government. It is not intended to be compulsory: it’s there for people who want to work. How to deal sensibly and humanely with those who are able to work and refuse to do so should examined and addressed – it is beyond the ambit of this paper.
Those who cannot work because of drug or alcohol dependencies should be offered health care, training counselling and more to equip them for meaningful work.
Australia’s Local Governments and Community Councils should manage delivery of JG programs
Job Guarantee Programs should be managed at local area or even neighbourhood levels.
Each area’s Program must be managed and supervised by appropriately qualified people – a well paid, sought-after job. (Including some Centrelink staff, fewer of which would be now needed).
A Job Guarantee’s management and some of its day to day work allocation and supervision would require additional staffing at Local levels with staff engaged by the Local or Community Council or perhaps also by a Statutory Authority on an on-going basis.
The funding for these permanent or long-term jobs should be funded by the Australian Government as an essential element of a JG program.
Some Job Guarantee examples
With the Corona crisis – Delivering groceries and medicines to the elderly and vulnerable who are self quarantined.
Climate action solution -The perfect match – tree planting and job creation
Most workers would already have most of the skills necessary to undertake reafforestation projects.
See a UK Guardian article (July 4, 2019) – from its environmental editor – Tree planting ‘has mind-blowing potential’ to tackle climate crisis
Other Job Guarantee projects and jobs
- Noxious Weed eradication – pests: graffiti – rubbish removal on beaches and in waterways
- Road Maintenance at low levels – small truck/4 or so workers- potholes, rubbish. Bike paths – many rural roads see cyclists at risk from traffic. Path enhancement is useful and ‘pick and shovel’
- Aged Care needs, care etc – working with the long term professionals – but NOT to replace or augment primary health carers or providers – supplement in non-essential areas for enhanced amenity etc.
- Community gardens, particularly in remote areas – good tucker for kids, aged, deprived. ( On-going management permanent – JGs supplement and augment)
- Enhanced care of National Parks, recreation areas, sporting facilities, school premises and streets and neighbourhoods generally. ( On-going management permanent – JGs supplement and augment)
- Indigenous health, nutrition, social and other problem areas – Care for Country.- Indigenous Fire Management practices – ( On-going management permanent – JGs supplement and augment)
- Gardens for fresh produce in remote areas, particularly Aboriginal and Islander Communities.
Essential works and programs should not rely on Job Guarantee workers or initiatives
Aged Care and Disability (NDIS) must be provided by a responsible Government.On-going Fire Management, Aboriginal “Care for Country”, Transmission Line and Road Maintenance Education etc – JG provides ‘extras’ and for the unexpected eg Fire Flood – but not the primary delivery, day to day essentials.
The points made above are only a very broad outline – see here for a review of JG in USA and generally online and elsewhere for much more information.
Some Programs with broadly intended policies in the World include:-
India’s Rural Job Guarantee
India has had a rural jobs guarantee program in place, for unskilled workers.The jobs provided a minimum wage– “… livelihood security to rural residents by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.’ ‘….. concerns about corruption and unevenness in implementation across states. … several tangible positive effects (pdf): ….. It has also served as a built-in stabiliser of the economy during downturns.”
The Program has fallen in a heap since recent Government’s policy decision not to fund the program adequately. This failure to fund what even the World Bank considered useful and effective seems to follow widespread failure to understand how a modern economy works. Budget Surplus superstition versus the
Other programs – not the same as a Job Guarantee
Workfare is a scheme where participation in activities is a requirement for obtaining social benefits.
Several countries have implemented direct job creation schemes to combat persistent unemployment – Argentina, South Africa, but these schemes are not similar to a Job Guarantee.
In the United States, the Humphrey-Hawkins Full Employment Act of 1978 authorizes the government to create a “reservoir of public employment” in case private enterprise does not provide sufficient jobs. Never implemented!
How do we Balance the Budget and pay for all this?
Australia issues its own currency, $A. It can run a pure deficit, without borrowings. A budget surplus drains savings from the private sector and that leads to loss of jobs and less work done. The Government has to spend money into existence. Without that there can be no tax.
A Sovereign Currency Nation’s government like Australia’s primary purpose is to improve the well-being of its population. Balancing budgets is an irrelevant and destructive blind alley. The real economy is what is relevant to well-being, care for the environment, defence, research education, aged-care and employment (and so much more).
A Sovereign Currency Government issues the currency and it must first spend it by crediting private bank accounts before it can tax – by debiting bank accounts. The claim that governments must tax or borrow to ‘finance’ its spending is false under a fiat-currency system. See – https://www.investopedia.com › Economy › Economics
The restrictions on government spending are the quantity of real goods and services available for sale in its own currency, including all the unemployed labour. The only constraint that a currency-issuing government, such as the Australian government faces, are how many real goods and services are available for sale in $A.
Our wide-spread quasi-superstition about balanced budgets is a blight on public policy discussion. However this Blog is about Job Guarantee and there is ample material on the Web about monetary theory and practice – see for example- http://bilbo.economicoutlook.net/blog/?p=41133#more-41133