World’s first universal jobs guarantee experiment starts in Austria

The scheme is unique in offering a universal guarantee of a properly paid job to every resident who has been unemployed for more than 12 months. As well as being provided with training and assistance to find work – as happens elsewhere – participants are guaranteed paid work, even if the state must subsidise 100% of the wages or employs participants in the public sector. All participants will be paid at least minimum wage, bringing their income level higher than their previous social security payments.

All participants will be paid at least minimum wage, bringing their income level higher than their previous social security payments

It works like this: all residents in Marienthal and the surrounding municipality, Gramatneusiedl, who have been unemployed for a year or more will be unconditionally invited to take part. Participants start with a two-month preparatory course, which includes one-to-one training, counselling and, for those who need it, support from experienced social workers, occupational physicians, and psychologists. Participants will then be helped to find a suitable and subsidised private sector job or supported to create a job based on their skills and their knowledge of their community’s needs.

As well as eliminating long-term unemployment in the region, the scheme aims to offer all participants useful work, whether it be in childcare, setting up a community café, gardening, home renovations, or some other field. The pilot is designed to test the policy’s outcomes and effectiveness.

With European unemployment rising for its fifth month because of the pandemic, with UK unemployment rising at its fastest rate since the global financial crisis, and warnings of worse to come, interest in jobs guarantees has increased. Academics, trade union bodies, political groups, public health experts and think tanks have all recently called for such guarantees to be put in place. Unlike basic income schemes, which have been tested, there have not been any trials of jobs guarantees – until now. The Marienthal Job Guarantee pilot will provide crucial evidence to inform debates.

Lukas Lehner, one of the Oxford University economists who designed the pilot study and will analyse its results said, ‘With many jobs already lost and warnings of a tidal wave of unemployment around the corner, it’s understandable that the idea of a universal jobs guarantee is gaining interest. As well as its economic costs, long-term unemployment takes a terrible toll on people’s health and well-being and on family and community life.’

Professor Maximilian Kasy, co-designer of the pilot study and a leading expert in economic research methods and inequality, added, ‘The idea of a jobs guarantee programme is an important addition to the toolkit of social safety provision, especially when participation is voluntary and the jobs offered are meaningful. I am excited to participate in this first ever rigorous, transparent, and independent evaluation of such a jobs guarantee programme.’

To be part of this project feels like a dream come true. Lacking work you can’t think positively – with work you can

One of the pilot’s participants, Jennifer, 43, has been unemployed since 2011. She said, ‘I did not want to leave the house. I didn’t want to let others know that I am not doing well. To be part of this project feels like a dream come true. Lacking work you can’t think positively – with work you can. That’s most important to me. If that’s right, everything else falls into place.’

Sven Hergovich, managing director of the local Public Employment Service, who initiated the programme, said, ‘Against the backdrop of the most recent, and unprecedented, development in the jobs market we must and will do everything we can to halt the rise in long-term unemployment. This is also a clear aim of central government.’

How is it being paid for?

The Public Employment Service of Lower Austria will fund the project, at a cost of €7.4 million. This investment is expected to make economic sense, since in Austria a year of unemployment costs approximately €30,000 per person whereas the project is calculated to cost €29,841 per participant. The project’s employment activities are also expected to generate revenues of around €383,000.

Why Marienthal?

Structural unemployment in Austria has been rising since the 1980s and is being compounded by the COVID-19 crisis. At the end of August, roughly one in five unemployed people in Lower Austria had been looking for a job for more than a year.

This is not the first time Marienthal has made history. In the 1930s, the town was the site of a ground-breaking social research study on how mass unemployment affected not just incomes but also health, wellbeing, social ties, and community life. This new study returns to examine the opposite effect: how the economy, the community and people’s lives change when they can access guaranteed employment.

The Marienthal job guarantee secures three years’ employment for all long-term unemployed people, though, participants can opt for part-time work.
The pilot scheme will be implemented by the Public Employment Service of Lower Austria (AMS NÖ). All residents in Marienthal and the municipality it belongs to (Gramatneusiedl) registered as a job seeker for a year or more, an estimated 150 people, will be invited to take part.
Preliminary results of the scheme’s effects on unemployment, health, welfare, and social interaction levels, and its wider economic impact, will be released in spring 2021. The final report on the study will be published in 2024. For full transparency, the entire research design will be outlined in a pre-analysis plan soon to be registered with the American Economic Association.
The original Marienthal study was undertaken by Hans Zeisel, Marie Jahoda and Paul Lazersfeld and published as Marienthal: The Sociography of an Unemployed Community – a book that has since become a major sociological classic.
Lukas Lehner is a DPhil candidate at the Institute for New Economic Thinking at the Oxford Martin School (INET Oxford) and the Department of Social Policy and Intervention, University of Oxford. INET Oxford applies leading-edge thinking from the social and physical sciences to major economic and social challenges.
Maximilian Kasy is an Associate Professor of Economics at the University of Oxford.
Researchers from the University of Vienna will undertake qualitative research with participants.