Job guarantee

job guarantee ( JG ) is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment . Its aim is to create full employment and price stability, HAVING by the state promised to hire unemployed workers have an employer of last resort (ELR). [1]

The economic policy stance currently prevailing over the world uses a policy of inflation control ; When Pressures cost rise, the standard monetary policy the carried out by the monetary authority ( central bank ) tightens interest rates , Creating a buffer stock of unemployed people, qui Reduces wage demands, and Ultimately inflation. When inflationary expectations subside, these people will get their jobs back. In Marxian terms, the unemployed serve as a reserve army of labor . By contrast, in a job guarantee program, a buffer stock of employed people provides the same protection against inflationwith the social costs of unemployment, a possible fulfillment of the dual mandate of full employment and price stability . [1]


The job guarantee proposal is particularly associated with certain post-Keynesian economists , [2] particularly at the Center of Full Employment and Equity (University of Newcastle, Australia), at the Levy Economics Institute (Bard College) and at the University of Missouri – Kansas City including the affiliated Center for Full Employment and Price Stability. [3]

JG draws from has social justice tradition of right to work , Such As the United Nations Universal Declaration of Human Rights and the US Employment Act of 1946 , and an early form Was Proposed by Hyman Minsky . [4] [5]

The JG was conceived independently by Bill Mitchell (1998) [6] and Warren Mosler (1997-98). [7] It has since beens further Top Developed by authors, Including Randall Wray (1998) [8] and a comprehensive treatment of it appears in Mitchell and Muysken (2008). [9]


The JG is based was buffer stock principle whereby the public sector offers a fixed wage job to anyone willing and reliable to Work thereby Establishing and Maintaining a buffer stock of employed workers. This buffer stock expands when private sector activity declines, and declines when private sector activity expands, much like today’s unemployed buffer stocks.

The JG thus fulfills an absorption function to minimize the costs associated with the flow of the private sector. When private sector employment declines, public sector employment will automatically react and increase its payrolls. So in a recession, the increase in public employment will increase net spending, and stimulate aggregate demand and the economy. Conversely, in a boom, the decline of public sector employment and spending caused by JG jobs for higher paid private sector employment will be stimulated, so the JG functions as an automatic stabilizercontrolling inflation. The nation is still fully employed, with a changing mix between private and public sector employment. Since the JG is open to everyone, it will functionally become the national minimum wage .

Under the JG, the rate of pay is lower than the minimum wage. The aim is to replace unemployment and underemployment with paid employment (up to the hours Desired by workers), 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 underemployment and poverty , social exclusion .

Income support

A range of income support arrangements, including a general income -tested benefit payment, would be available to unemployed people, depending on their circumstances, as an initial subsistence income. This would be necessary because the circumstances of the future would be significantly increased.

Inflation control

The fixed JG wage provides an in-built inflation control mechanism. Mitchell (1998) called the ratio of JG employment to the total employment rate of employment (BER). The BER conditions the overall rate of wage demands. When the BER is high, it will be correspondingly lower. If the inflation rate is higher than the target rate, it would be triggered to increase the BER, which would be affected by the JG sector. Ultimately this attenuates the spiral inflation. So instead of a buffer stock of unemployed being used to discipline the distributional struggle, the JG policy achieves this through compositional shifts in employment. Replacing the currentNon-accelerating inflation rate of unemployment ( NAIRU ), the BER that results in stable inflation is called the non-accelerating inflation buffer employment ratio (NAIBER) (Mitchell 1998). It is a full employment steady state JG level, which is dependent on a range of factors including the path of the economy. There is an issue about the validity of an unchanging nominal anchor in an inflationary environment. The JG would be adjusted with growth growth to avoid changing real relativities. Its viability as a nominal anchor relies on the fiscal authorities reining in any private wage-price pressures.

No relative wage effects

The JG introduces the issue of relative inflation and the rising demand for inflation. (See Mitchell and Muysken, 2008 for more details). Additionally, in today’s demand is constrained economies, firms are likely to increase capacity utilization to meet higher volumes. Given that the demand is higher than that in the NAIRU (Non-Accelerating Inflation Rate of Unemployment) economy, it is clear that if there is any demand-pull inflationit would be lower under the JG. There are no new problems faced by employers who wish to hire labor to meet the higher levels. JG employment and spending. JG employment and spending. However, these pressures are unlikely to accelerate inflation while the JG pool contains employables by the private sector.

Wage bargaining

While the JG policy frees wage bargaining from the general threat of unemployment, several factors offset this:

  • In the labor market, it is possible that these pressures may eventually become effective. With a strong and responsive tertiary education sector, skill bottlenecks can be avoided with an unemployed buffer stock;
  • Private firms would still be required to train in the same way they would be in a non-JG economy. However, JG workers are more likely to have more than one person, who are forced to succumb to lengthy spells of unemployment. This changes the bargaining environment hiring costs. Previously, the same firms would have lowered their hiring standards and provided on-the-job training and vestibule training in tight labor markets. The JG policy thus reduces the “hysteretic inertia” in the long-term and allows for a private sector expansion;
  • With high long-term unemployment, the excess supply of labor poses a very weak threat to wage bargaining, compared to a JG environment (Mitchell, 1998).

Comparison with other policies


A crucial point is that the JG does not rely on the government spending at market prices and then multiplies to achieve full employment which characterizes traditional Keynesianaggregate demand management. The JG program differs in that it would be targeted to households. It is a bottom-up approach to economic recovery. It is a program that stabilizes the incomes and purchasing power of individuals at the bottom of the income stream. Stable incomes through economic growth and stability of the economy and stability of the economy. balance sheet stability “. [10]

This section needs expansion . You can help by adding to it . (April 2010)

Full employability

The JG seeks to Reorient labor market policy away from the current OECD emphasis is full employability whereby gouvernements engages in programs to prepare the unemployed for work without Guaranteeing That Work Will Be available Towards a focus is Creating enough work. The full employment cycle has come under fire from a number of sources in recent years (see, for example ILO, 2004). [11]


Main article: Workfare

Workfare is a scheme where participation in activities is a requirement for obtaining social benefits. Workfare schemes may not cover the entire employment rate, and may not offer the same income as a full-time minimum wage job.


There are now several countries which have implemented direct employment creation schemes to counter the major problems associated with persistent unemployment. For example, the Argentine government introduced the Jefes de Hogar (Heads of Households) program in 2001 to fight the social malaise that followed the financial crisis in that year .

Similarly, the Indian Government introduced in 2005 a five-year plan called the National Rural Employment Guarantee Act (NREGA) to bridge the vast rural-urban income disparities that have emerged as India’s information technology and service sector has boomed. The program has successfully empowered women and rural women, but has also attracted the ire of landowners. The projects tend to be highly labor-intensive and low skill, like dam and road construction, and soil conservation, with modest and positive long-term benefits and mediocre management.

The South African government has introduced the Expanded Public Works Program (EPWP) to overcome extreme poverty and poverty. The programs run against the full employment burden they recognize that the solution to joblessness and poverty is more important in the provision of employment opportunities than a focus on the victims. They also recognize that the state of the state of the local government has a major role to play in providing for employment guarantees.

Programs enacted but not implemented

In the United States , the Humphrey-Hawkins Full Employment Act of 1978 allows the government to create a “reservoir of public employment” in the private sector. These jobs are required in the private sector. HOWEVER, the act Did not suit les Such a tank (it only authorized it), and no such program has-been Implemented in the United States, Even Though the unemployment rate beens HAS Generally above-the spleen (3%) Targeted by the act.

In popular culture

In the third season of the American political drama House of Cards , a job guarantee program, called “America Works,” is a key policy proposal of protagonist Frank Underwood (portrayed by Kevin Spacey ) after becoming President of the United States . Details of the program are sparse, aim it is portrayed as Involving Both public sector employment (in the form of public works programs) and private sector employment (with subsidies for Employers Who take one new workers), and is Intended to be financement with cuts to Social Security and Medicare . America Works is not fully implemented, but a pilot programcentered in Washington, DC is portrayed as having been rescued.


In 2011, the Institute for Public Policy Research , a UK think tank associated with the Labor Party , advocated a job creation program – with compulsory takeup, on the breadth of benefits – for the long-term unemployed only. The Labor Party under Ed Miliband subsequently Went into the 2015 general election with a promise to Implement an Even More Limited Job Guarantee (SPECIFICALLY, part time jobs with guaranteed training included for long-term unemployed youth) if Elected; [12] however, they lost the election. This is still a Labor Party policy – however, they are looking at universal basic income as possible alternative policy.

See also

  • Center of Full Employment and Equity
  • Chartalism
  • Full Employment Abandoned
  • Involuntary unemployment
  • National Rural Employment Guarantee Act
  • Natural rate of unemployment


  1. ^ Jump up to:b L. Randall Wray , “Job Guarantee”
  2. Jump up^ Wray, L. Randall (Aug. 2001), The Endogenous Money Approach(Working Paper No. 17), Center for Full Employment and Price StabilityExternal link in( help ) |publisher=
  3. Jump up^ Center for Full Employment and Price Stability
  4. Jump up^ (Minsky 1965)
  5. Jump up^ (Wray 2009)
  6. Jump up^ WF Mitchell (1998) “The Buffer Stock Employment Model – Full Employment Without a NAIRU” Journal of Economic Issues 32 (2), 547-55
  7. Jump up^ WB Mosler (1997-98) “Full Employment and Price Stability” Journal of Post Keynesian Economics , 20 (2), 167-182
  8. Jump up^ R. Wray (1998)Understanding Modern Money: The Key to Full Employment and Price Stability, Edward Elgar:Northampton, MA.
  9. Jump up^ WF Mitchell and J. Muysken (2008). Full Employment Abandoned: Shifting Sands and Policy failures ,. Edward Elgar:Cheltenham. Revised: January 2009[1]
  10. Jump up^ Tcherneva, Pavlina R. [2]”Fiscal Policy Effectiveness: Lessons from the Great Recession”, 2011
  11. Jump up^ International Organization Labor(ILO) (2004) “Macroeconomic policy for growth and employment” Committee on Employment and Social Policy, Governing Body, 291st Session. Geneva: International Labor Office
  12. Jump up^ “Labor extends jobs guarantee for long-term unemployed” . BBC News. March 10, 2014 . Retrieved 6 January 2017 .

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