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Persistent long-term unemployment and social exclusion have negative effects at both the individual and societal levels—could a job guarantee overcome long-term unemployment and its associated risks? A report by the Levy Economics Institute in the United States lends weight to the argument that unemployment is a policy choice that must not be tolerated, and that full employment is achievable and sustainable.
A job guarantee scheme is aimed at vulnerable groups with poor prospects of re-entering the labour market, with the state acting as an “employer of the last resort” to achieve full employment—and thus social inclusion—by providing living-wage jobs. Such a scheme offers voluntary subsidised employment, in not-for-profit enterprises or the public sector, to all long-term unemployed people within a given region. The idea is to create additional employment opportunities for long-term unemployed people that are also useful for the general public.
In October 2020, a job guarantee pilot project was begun 25 kilometers south of Vienna in Gramatneusiedl, a municipality in eastern Austria. In the 1930s, University of Vienna researchers Marie Jahoda, Paul Larzarsfeld and Hans Zeisel travelled to the historical factory town of Marienthal to study the negative effects of mass unemployment on people for the first time. Today, the Austrian Model project Modellprojekt Arbeitsplatzgarantie Marienthal—or MAGMA for short—conversely offers jobs to the long-term unemployed in the very same place.
MAGMA’s key characteristics
MAGMA was developed by the Public Employment Service of Lower Austria and is operated by itworks, a private employment service provider specialising in active labour market measures. All registered job seekers who had been unemployed for longer than nine months were invited to join the job-guarantee scheme, with participants being employed by itworks or taking part in non-profit activities within the community.
On the whole, most participants felt involved in an activity that was meaningful and socially useful, and their expectations of a job which is considerate to poor health were exceeded.
Each job seeker takes an obligatory eight-week training course, during which they can contribute their own ideas about the work they could do. The positions on offer are voluntary, paid according to the relevant sector-level collective agreement and guaranteed until April 2024. Collaborating with the local council, itworks then creates suitable roles including carpentry, gardening, staffing the local kindergarten or supporting a non-profit association. As job offers are temporary, participants receive counseling as part of the programme to encourage them to take up employment in the wider labour market if possible. MAGMA additionally offers wage subsidies to employers as incentives to hire long-term unemployed people.
What can we learn from the Austrian Model project?
The findings of the University of Vienna’s accompanying study, Marienthal.reversed, show the possibilities and limitations of the practical implementation of a job guarantee for long-term unemployed people.
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As the project participation is open to everyone registered as long-term unemployed, the group is highly diverse in terms of gender, age, qualifications, duration of unemployment, health and nationality. Many share characteristics of those who, on average, are most affected by long-term unemployment, but some do not. As people’s experiences of unemployment and their individual needs are rather diverse, offering suitable jobs to everyone is a core challenge.
What MAGMA shows is that by adapting jobs to people—for example, by considering health conditions or care obligations—it was possible to integrate more people into employment.
Through further analysis of the group, we categorised three distinct types of participant based on their living conditions, situation during unemployment and their personal assessment of MAGMA.
- Type 1, the “imagined target group”—the largest group among the participants— highly values being able to work, improve their financial situation, have a job near home and see their health condition being considered. By adapting the working conditions to the participants’ abilities and possibilities, MAGMA has enabled them to have paid work, thus bringing about a very positive change to their precarious living situation.
- Type 2, “the distanced”, a smaller group, is quite different. Even though the project also had positive effects on them, important expectations—especially a “normal job” and help to advance professionally—were not fulfilled from their point of view. They considered it inappropriate to find themselves in a group of long-term unemployed people because they did not identify with that status and did not want to be associated with it.
- Type 3, the “active self-realisers”, the smallest group, had a very positive attitude towards MAGMA because the opportunities offered by the project fit their modus vivendi and interests. They contribute their own ideas and resources to the project but perceive it more as an honorary appointment than subsidised employment.
One year into the project, we have observed a slight improvement in overall life satisfaction on average. We mostly saw an improvement in participants’ financial situation, self-efficacy and confidence. Moreover, we found better levels of social inclusion and perceived recognition, though some do have more stress since the beginning of the pilot. On the whole, most participants felt involved in an activity that was meaningful and socially useful, and their expectations of a job which is considerate to poor health were exceeded.
The main takeaway
The MAGMA project has shown the need for an “employer of the last resort” for long-term unemployed people, and provides evidence for the feasibility of a job guarantee programme. It brought many benefits for most participants. However, managing the inherent heterogeneity among participants remains a challenge. It is demanding to provide work that is both subjectively meaningful and beneficial to the community. Moreover, the current time limitations of the project mean it cannot (yet) offer enough security for every participant.
What MAGMA nevertheless shows is that by adapting jobs to people—for example, by considering health conditions or care obligations—it was possible to integrate more people into employment. In view of many employers’ recruitment problems in Austria and elsewhere despite high levels of unemployment, the fact that job guarantee schemes do “work”—and have meaningful positive effects on former long-term unemployed people—stands as an important message at a time when labour markets are facing significant disruptions.
To learn more about how to build back more inclusive labour markets, read also the OECD's latest Employment Outlook
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