Friday, 18 January 2019
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The Job Guarantee

By Dr John Falzon –

The other week I had the pleasure of speaking at the Full Employment Conference hosted by the University of Newcastle’s Centre of Full Employment and Equity (CofFEE).

Being, I think, the only non-economist to address the conference I was grateful for the kind treatment I received at the hands of the participants.

My rant was about the fate of the Excluded. The more I reflect on what I see, especially from the perspective of the St Vincent de Paul Society, the more I conclude that the convergence of social, economic and political exclusion in the lives of the people we assist is symptomatic of the new “enclosures of the commons”. People are denied access to that which is necessary to live.

In Australia we already have a situation where essential goods and services have been commodified to the extent that they are out of the reach of millions of people. Let’s start with food.

Our analysis informs us that for sole-parent families, for example, expenditure on food represents around 20 per cent of the weekly outlay (5 per cent more than the average). As the most elastic item in the family budget it is not uncommon for our members to encounter parents going without meals in order to cover the rising costs of rent or utilities. It is also not uncommon for a sole parent to skip meals in order to allow their children to invite a couple of friends over for an afternoon after school.

In other words, these deeply devoted parents forego their own “normality” (eating regular meals) in order give their children the opportunity to do “normal” stuff like inviting friends over for a hotdog and cordial.

It’s not a scenario we can be proud of as a nation, particularly when the sole parents making these kinds of sacrifices are vilified in the popular imagination as being bad parents who are bludging off the welfare system. Similarly, people who are struggling on a single Newstart Allowance are left with around $16.50 a day, after taking out the rent payments they are likely to be paying for the cheapest accommodation in any of our capitals.

This is real exclusion. It is exclusion from the essentials, essentials that should be treated as common goods. The market, for all its positives, fails as a mechanism that can actually allocate even the minimum requirements for a household when it comes to food, energy, housing, health, education, childcare and transport. It is exclusion from the social. By this I mean that sense of being part of society. Paradoxically, when the commons are treated exclusively as commodities it is the beginning of the end of the social life of the people who are unable to afford them.

What we end up with is a system that residualises the people who are excluded from it, sending them to charities in order to furnish them with the essentials or leaving them with levels of service provision that are effectively rendered second or third-rate in comparison with their user-pay counterparts.

Which brings me back to the Conference on Full Employment at the University of Newcastle. Professor Bill Mitchell, the Director of CofFEE, is a long-time champion of the Job Guarantee.

Following the same logic as my rant on exclusion, Bill explains very simply that the same can be said about the labour market. He points out that the problem of unemployment and underemployment is also, in effect a problem of the commons. We cannot solve this problem of labour market exclusion by relying on private sector employment growth alone. The people who are categorised as being surplus to the needs of the private sector must be guaranteed employment by the public sector.

Bill describes the Job Guarantee as follows:

It… does not operate like any other ‘Keynesian’ fiscal policy, nor like a Monetarist ‘money drop’.

It achieves full employment not by raising aggregate demand, but rather by offering jobs at a basic compensation rate to all who are ready and willing to work.

Aggregate demand may rise as an incidental consequence – or it may fall if Job Guarantee is implemented with budget tightening. Unlike a ‘money drop’, it requires that participants work for their compensation.

Unlike ‘pump-priming’, it achieves full employment with what can be described as ‘loose’ labour markets because it ‘hires off the bottom’. It does not seek to employ any specific number of workers nor does it seek specific skills; most importantly, it does not chase wages upward – it never competes with higher and rising private sector wage offers.

This is the primary reason that full employment can be achieved without setting off inflation, and at any level of aggregate demand. Full employment is then sustained through time with a buffer stock of employable labour.

I agreed with Bill that this was a stronger solution to structural unemployment and underemployment than the current arrangements which consist mainly of trying to match people with advertised jobs, while doing little or nothing to address poor labour market conditions particularly in terms of locations of concentrated unemployment or particular population cohorts. All the while, of course, the people who have been effectively locked out of the labour market are blamed, demonised and forced to survive on below-poverty line income support payments.

Add to the mix the bewildering approach the Government has taken by capturing people experiencing unemployment in the Compulsory Income Management net, as if by treating people in a paternalistic way and by humiliating them in public you could actually improve their prospects of employment! The same goes for the kinds of approaches that make the welfare-bashers feel good in direct correlation to the amount of pain inflicted on people who are already excluded, such as payment suspensions, soon to be used in a targeted fashion against about 4,000 teenage parents from 10 disadvantaged areas.

The logic of exclusion appears to be that there’s nothing like a good dose of poverty-intensification to create jobs for teenage mums!

Of course the greatest outrage in the eyes of the welfare bashers is that it is public money that is being used to support the Excluded.

The welfare dependency discourse seeks to ensure that the state assists with the transfer of ever-increasing proportions of national wealth to those who are “not dependent” and therefore not at risk of moral turpitude.

This discourse was central to the 1999 Discussion Paper released by Senator Newman, “The Challenge of Welfare Dependency in the 21st Century”.

It was, however, as analysed in O’Connor’s excellent 2001 article in the Australian Journal of Social Issues, the writings of Gilder and Murray in the US, that popularised into an unquestionable doxa the claim that: “real poverty is less a state of income than a state of mind” and that the government dole blights most of the people who come to depend on it and that, therefore, cutting welfare would benefit the poor because welfare has a dramatically “negative impact on motivation and self-reliance”.

Murray called for the complete abolition of all federal welfare programs and income support structures in the US.

The status quo is not good enough. Neither is a reversion to pre-welfare state impoverishment of entire sections of the working class, while the profit share increases at the expense of wage justice for people who are in low-paid, insecure, or casual work or in no work at all.

It is time to build a strategic alliance between insecurely employed, underemployed, unemployed and excluded not for conditional improvement but for radical analysis and reconfiguration of society.

Professor Mitchell’s proposal for a Job Guarantee is a good one. It is practical, achievable and, while costing more in the short term, will cost less in the medium to long term as social security expenditure is actually reduced along with the concomitant social and economic costs of unemployment and poverty.

At the same time it allows people to benefit from employment, including a real wage. Note that this is nothing like the work-for-the-dole model which stigmatises people and is nothing like the experiencing of having an actual job.

I mentioned to Bill Mitchell that this sounds all very good but that it would probably take quite a long time to activate.

“You’d be surprised”, he told me, and then went on to describe the results of a large-scale program based on the Job Guarantee approach that was used in Argentina as an emergency measure in 2001 following the financial crisis of that year. “It was rolled out in a matter of months with remarkable results.”

The program had a massive impact on people experiencing poverty, especially women and minorities. Rather than people being stuck in the public sector many of the workers made the transition to better-paying private sector jobs as the economy picked up. In the meantime they were getting both on-the-job training and access to literacy education. The jobs were designed by local committees to respond to community needs in particular locations. Some of the jobs involved the setting up of small enterprises such as carpentry shops or baby clothes tailoring shops or toy shops. Other forms of employment were focussed on the provision of public goods and services such as food kitchens, childcare, aged care, public libraries and community centres.

Unemployment is at its highest rate in a decade, with more than one million Australians now out of work, according to the recent report by Roy Morgan Research, with unemployment running at 8.6 per cent, with a further 848,000 people under-employed.

There is no excuse for punishing people doing it tough, on the edges of the labour market. There is, however, plenty of room for action on increasing income support payments, guaranteeing a job for all who need one and ensuring that people in low-paid and insecure work do not continue to be pushed into working poverty. Now that’s a Christmas Wish List worth fighting for!

Dr John Falzon is Chief Executive Officer of the St Vincent de Paul Society National Council of Australia. This article was first published on The Drum

Dr John Falzon will sleep out on June 21 to raise awareness for homelessness in Australia. Click here to find out more how you can support the 2012 Ceo Sleepout.












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