World’s first job guarantee trial ‘eliminates’ long-term unemployment

A world-first trial in which people in an Austrian town were guaranteed a job has “eliminated” long-term unemployment there.

The pilot programme designed by Oxford University economists for the Lower Austria municipality of Marienthal was launched in 2020 and offered residents unconditional and well-paid work for more than 12 months.

New results, shared with The Independent, show the policy left participants happier, more financially secure, and more involved in their community – as well as vanquishing joblessness in a region that has previously struggled with it.

Sven Hergovich, chief of the Lower Austrian Public Employment Service which managed the scheme, said: “I had high hopes when we started the programme but these positive results even surpass my expectations.”

Policymakers around the world were watching the results of the study closely, amid rising international interest in the job guarantee approach.

Proponents of such a guarantee include former US presidential candidate Bernie Sanders, while the UK's Trades Union Congress suggested one could smooth the economic recovery from the Covid-19 pandemic.

Under the Marienthal trial, people in the town's municipality who were unemployed for a year or more were invited to take part and given a two-month course consisting of one-to-one training, as well as access to counselling and medical support.

Employment allocated under the programme included work in carpentry, renovation, gardening, elderly care, and office administration.

Some jobs offered to the town’s more than 150 unemployed were existing roles that needed to be filled, but others were created.

Where possible those jobs were designed to support public services, including the local school and kindergarten. Participation was voluntary and there were no sanctions for not taking part.

“After more than 600 job applications over three years, my wish for employment proved hopeless,” said Werner V, aged 60, one of the programme’s participants.

“Too old, too expensive, over-qualified, without long-term prospects due to my age, as an academic with multiple degrees seemingly over-qualified for service jobs … many obstacles seemed to exist.

“The job guarantee proved extremely valuable and useful for me. In cooperation with the municipality and the local museum, I am archiving and documenting the cultural, scientific and economic value of the historical site of Marienthal.”

The choice of Marienthal as the location for the study was loaded with symbolism: in the 1930s, it was the site of a ground-breaking research study into how mass employment from the closure of the local textile factory caused social disintegration and damage to civic life.

Researchers at the time established that the impact of losing a job went well beyond financial hardship and could have a profound psychological impact on the person concerned, and wider repercussions in their community.

The area around Marienthal has suffered from long-term structural unemployment, which has been rising since the 1980s. In August 2020 roughly one in five unemployed people in the region of Lower Austria had been looking for a job for more than a year.

The trial also saved money: a year of Austrian unemployment costs approximately €30,000 (£26,000) per person, whereas the project costs €29,841 per participant per year.

The Public Employment Service of Lower Austria funded the project to the tune of €7.4m, with the employment activities expected to generate €383,000 in income. Since the programme began more than 100 people have participated.

Maximilian Kasy, a University of Oxford professor and study author, said: “It is striking to see what a difference the programme made. Yes, people had more money, but the positive impacts went well beyond economics: they were happier, more rooted in their community, and felt in the driving seat of their lives again.”

Lukas Lehner, study author and economist at the Institute for New Economic Thinking at the Oxford Martin School, added: “Long-term unemployment scars lives and damages communities, yet the Marienthal job guarantee shows it is possible to virtually eliminate this harm with an affordable, innovative social policy. People want meaningful work at fair pay, and helping them to access it benefits us all.”

In the UK, the TUC's New Plan For Jobs, released in May 2020, said the government “should provide funding to offer a new jobs guarantee” that would “provide a minimum six-month job with accredited training, paid at least the real living wage, or the union-negotiated rate for the job”.

It said the scheme should prioritise every worker aged 25 and under who has been unemployed for three months or more.