TWN Info Service on UN Sustainable Development (Jul23/02)
6 July 2023
Third World Network

UN: Employment guarantee a vital tool in the fight against poverty
Published in SUNS #9817 dated 6 July 2023

Penang, 5 Jul (Kanaga Raja) — The introduction of a job guarantee – whereby the government guarantees a job to anyone willing and able to work – can contribute to “the full realization of the right to work, transforming it from a policy objective into an enforceable legal right,” according to a United Nations human rights expert.

In a report (A/HRC/53/33) to the 53rd regular session of the United Nations Human Rights Council, the Special Rapporteur on extreme poverty and human rights, Mr Olivier De Schutter, said that conceived of as a permanent feature of employment policy that contributes to social protection, a job guarantee scheme can contribute to income security, work experience and skills development for the participants, at the same time strengthening the bargaining position of workers across the economy.

“It can also support a just transition to a green economy and provide services to the population that are currently under-supplied. It can make the right to work an enforceable human right and a pathway to escape poverty.”

“With miserable working conditions and low pay affecting the majority of the world’s workers, and disruptions and job losses in labour markets we can expect to see from the rise of AI, it is clear that the world of work needs an urgent rethink,” said Mr De Schutter ahead of presenting his report to the Human Rights Council.

“It is no longer enough for governments to merely try to create the right conditions for job growth,” he added.

Instead, he said, they should guarantee a secure and socially useful job at a living wage for anyone who wants one. “Properly understood, this is what the right to work is truly about.”

“For too long exploitative employers have had the upper hand, knowing workers will choose poorly-paid and insecure work over destitution,” the UN expert said.

“A job guarantee would turn the tables, with workers being able to fall back on government jobs that offer decent conditions and wages.”

“The global employment paradox is that while there are too few decent jobs, there is certainly no shortage of work to be done,” Mr De Schutter said.

He said: “Spurred largely by our obsession with economic growth at all costs, jobs in the care, education and health sectors are woefully under-supplied by the market despite being of immense value to society – no doubt because they don’t churn out obscene profits.”

“A job guarantee could fill the roles we so desperately need, but that the private sector has no financial incentive to provide,” Mr De Schutter emphasized.

THE PARADOX OF TOO FEW JOBS

According to the report by the Special Rapporteur, the idea of a job guarantee is not new.

The report said that in the United States, the Works Progress Administration was part of the New Deal response to the depression of the 1930s.

“Public employment schemes have been a common response to structural unemployment in member countries of the Organisation for Economic Co-operation and Development (OECD), though with less use in recent decades.”

They have also been a widely used strategy in low- and middle-income countries, often as a short-term reaction to mass unemployment, it added.

The UN expert said that among the most famous examples are the Productive Safety Net Programme in Ethiopia, which covered about 10 per cent of the population in 2018; the Mahatma Gandhi National Rural Employment Guarantee Act in India, with 76 million beneficiary households in the financial year 2020/21; or the Expanded Public Works Programme in South Africa, which created a million job opportunities in 2021/22.

The job guarantee is an answer to a paradox, said Mr De Schutter, adding that on the one hand, many people are jobless or can only work part-time. Globally, 473 million people are seeking employment.

The UN expert said that official unemployment rates do not include all those who have abandoned the search for employment as a result of a lack of opportunities, or because, for instance, due to insufficient provision of childcare or support for dependent persons, they cannot reconcile paid work outside the home with often unpaid work within the household.

For example, he said that in the European Union and in the United States of America, only around half of those seeking employment are officially unemployed.

“In low- and middle-income countries, moreover, assessments are especially difficult due to the importance of informal work and the prevalence of under-employment, in the form of involuntary part-time or seasonal work or low-paying jobs under-utilizing skills.”

More jobs will have to be created in the future, said the Special Rapporteur, adding that an additional 470 million people will be looking for work in developing countries between 2019 and 2035, with a particularly fast growth in sub-Saharan Africa.

“This is why the creation of 400 million decent jobs is such an important component of the Global Accelerator on Jobs and Social Protection for a Just Transition announced in September 2021 by the Secretary-General and the ILO Director General. Growth alone will not suffice.”

The UN expert also said not all growth is job rich: automation may in fact result in strong growth (supported by productivity gains) going hand in hand with net job losses; and in situations in which growth is primarily explained by the exploitation of natural resources, as in Africa, there is only a weak association between gross domestic product (GDP) and employment – this is one reason behind calls for the introduction of a job guarantee in the African region.

Unemployment or under-employment significantly increases the risk of poverty, since social protection against this life risk remains highly uneven, he added. “Globally, only one in five people who are unemployed receive cash benefits: the others are excluded because no scheme exists or because they are ineligible under existing schemes.”

The UN expert said that even in high-income countries, only 52.2 per cent of unemployed people receive cash benefits, with figures lower still in less developed regions – 17.5 per cent in upper-middle-income countries; 5.5 per cent in lower-middle-income countries and just 0.8 per cent in low-income countries. And even where they exist, unemployment benefits are often inadequate.

He said that as a tool of employment policy, public employment programmes can provide jobs to those who are jobless, adding that they can bring back into the active labour force individuals who are considered to have become “inactive”: of those reached by the Argentinian Jefes y Jefas de Hogar Desocupados programme, set up to provide work for cash during the 2002 economic crisis, half were previously thought to be inactive.

They can also provide employment to those who are involuntarily working part-time or who depend on seasonal work, said Mr De Schutter. “This is a powerful tool against poverty,” he underlined.

“Employment was the most important contributor to poverty reduction in a set of 16 low- and middle-income countries in which substantial poverty reduction occurred in the period 2000-2010: in 14 out of 16 countries, labour income explained more than 40 per cent of the change in “poverty” (and 50 per cent in 10 countries). And job retention schemes played a crucial role during the COVID-19-induced economic crisis.”

Yet, although there is too little employment, many societal needs remain unfulfilled and much work needs to be performed to meet them, he added.

“The greening of the economy and the growing recognition of the importance of the care economy – care to older or dependent persons, early childhood education and care, and health care – are opportunities in this regard.”

In highlighting the existence of the paradox, the UN expert said that there may be a shortage of decent jobs, but there is no shortage of work: the problem is that markets under-supply the public goods that are needed for the greening of the economy and for a thriving care economy, and that governments have too little public revenue to invest in creating the jobs needed for these transitions.

“It is against this background that the introduction of a job guarantee is proposed,” said Mr De Schutter.

BENEFITS OF JOB GUARANTEE

According to the Special Rapporteur, access to decent work provides income, reducing poverty, but it also allows individuals to gain self-confidence and to gain a sense of purpose.

For instance, Mr De Schutter said the female participants in the Jefes y Jefas de Hogar Desocupados programme mentioned participation in social life and the learning of useful skills, rather than just income earned, as the main benefits of participation.

Long-term unemployed people taking part in the Marienthal pilot in Austria reported improvements in subjective well-being, reduced stress levels and a range of other benefits, including improved social recognition.

He said that similar results were achieved by the Kinofelis programme set up in Greece as part of the response to the debt crisis in 2011, which had offered eight months of employment to 45,000 participants by 2017, to create useful work and to improve skills to favour the reintegration of unemployed people in the labour market.

“While employment creation has been a powerful tool to reduce poverty, it does not always provide a safeguard against poverty: while, globally, half of women (47 per cent) and three quarters of men (74 per cent) of working age do some form of income-generating work, not all wages are living wages and not all jobs are decent jobs.”

For many, precarious working conditions and a lack of decent pay characterize the work experience, said the UN expert.

“The “gig economy”, casualized labour contracted through digital platforms, has rapidly emerged as an important employment category, yet also one with less social protection and less scope for collective bargaining than more traditional employment forms: rich countries are now confronted with forms of precariousness that have long existed in low- and middle-income countries and regulatory regimes are trying hard to catch up.”

Precarity is also particularly widespread among the 2 billion informal workers, forming 60 per cent of the global workforce, said Mr De Schutter.

“While conventional active labour-market policies aim at integrating job-seekers into regular employment after programme participation, job guarantee schemes aim at employment through programme participation, thus improving the economic and social situation of participants.”

Job guarantee schemes provide an opportunity to equip participants with new skills, including informal skills derived from work experience, thus improving the prospects of the beneficiaries to find a job after leaving the programme or to start successful businesses, said the Special Rapporteur.

In this context, he said that while a meta-analysis of 200 studies of different active labour-market policies (most of which were in OECD countries) found no impact on employment rates from public employment programmes, it did confirm the positive effects of training programmes, defined as classroom and on-the-job training – the probability of finding employment increases by 6.7 per cent after two years.

“Similarly, a study of active labour-market policies in Latin America and the Caribbean concluded that training encouraged formalization and improved employment prospects, although short duration training programmes (lasting four months or less) were less likely to show positive results than other programme designs.”

A job guarantee scheme, paying at least a living wage and open to all who wish to work, should be of the greatest benefit to those most at risk of under-employment or of having to accept poor quality jobs, said the UN expert.

He said that it can therefore contribute to a “just transition” by providing options to the workers displaced by the decarbonization of the economy.

In addition to these workers, the Special Rapporteur drew special attention to three other groups – youth, women and the long-term unemployed.

He said globally, more than one in five of those aged 15-24 years are not engaged in education, employment or training, with women twice as likely to be so than men (31.5 per cent compared with 15.7 per cent).

“The pandemic increased the numbers of those not engaged in education, employment or training by close to 20 million, from 21.8 per cent (2015-2019) to 23.3 per cent in 2020.”

Youth unemployment rises faster in downturns. In OECD countries, for every 1 per cent increase in adult rates, youth unemployment rises by 1.79 per cent, said the UN expert.

He added that the COVID-19 pandemic provided a powerful illustration of this vulnerability across the globe: before the pandemic struck, 13 per cent of all those employed were young persons, yet they made up a third (34.2 per cent) of the 2020 employment loss.

He also said in 2022, 43.8 per cent of women were in paid employment, compared with 67.9 per cent of men.

“Women are also disproportionately represented in informal work and they earn on average 16 per cent less than men (and 35 per cent less in some countries).”

Many public employment programmes therefore specifically seek to support women’s participation and since they provide equal wages to women and men, they can help to address wage discrimination, he underlined.

As for the long-term unemployed, the UN expert said that the longer a person is without a job, the more difficult it becomes for that person to gain access to employment: the probability of finding work is 0.3 in the week after unemployment, 0.08 after eight weeks and down to just 0.02 in the year after unemployment.

“Participation in a public employment scheme may therefore help overcome the high barriers the long-term unemployed face,” he added.

The Special Rapporteur said that by creating jobs in times of economic downturn, and supporting the transition to jobs in times of growth, a job guarantee scheme can act counter-cyclically, maintaining income levels and demand during downturns and reducing the wider consequences of unemployment.

Mr De Schutter said job guarantee schemes can also serve to supply goods and services under-supplied by the markets either because they are public goods, such as infrastructure works, or because of the limited ability to pay of the potential beneficiaries, for instance, those in need of care services.

“In the past, public works schemes have focused on heavy (and relatively labour-intensive) infrastructure works, such as building roads or improving water management. Such schemes have become more diversified in recent years, a trend that the COVID-19 pandemic accelerated.”

For instance, the UN expert said that the South African Presidential Employment Stimulus, an additional scheme to the Extended Public Works Programme, created 795,151 jobs between October 2020 and December 2022, two thirds of which (596,109) were in basic education sector, providing teaching assistants and support for schools.

In Pakistan, the 10 Billion Tree Tsunami project employs 65,000 workers a day to plant 10 billion trees to adapt to climate change, he added.

“A job guarantee can improve resilience to shocks and contribute to social stability. Public employment improves local resilience both by protecting income security at household level and by maintaining economic demand, thus avoiding the cascading damage the spread of unemployment would otherwise produce.”

Moreover, said Mr De Schutter, “where such schemes allow investment in better environmental management (such as of soil and water), these can also improve productivity and reduce the effect of climate disruptions and biodiversity loss on food security.”

For instance, he said in Ethiopia, the Productive Safety Net Programme generated improvements in irrigation, leading to a 12 per cent increase in vegetable yields.

The UN expert said while the proportion of households reporting food insecurity increased by 11.7 percentage points in 2020 as a result of the COVID-19 pandemic, the increase was only 2.4 percentage points for households participating in the Productive Safety Net Programme.

The households were also less likely to reduce spending on health and education (7.7 percentage points) and agricultural inputs (13 percentage points) than other households.

The UN expert said provided that inclusive decision-making processes are put in place, ensuring that women and socially marginalized groups participate effectively, the establishment of a job guarantee can provide an opportunity for local engagement, where the projects to be supported by public employment are identified by the communities of users.

“Effective participation also ensures that the projects supported contribute effectively to local development: in general, active labour market policies are only effective when designed with the involvement of social partners.”

Noting that “a large panoply of job guarantee schemes exist”, the UN expert said there is no single best model: each scheme should take into account local conditions and be co-designed by social partners, civil society and public authorities.

The Special Rapporteur identified a number of questions that such co-construction processes should address, namely, universal versus targeted approaches, setting the pay, and duration of scheme participation.

The UN expert also addressed the issue of objections to the job guarantee, noting that it is sometimes argued that job guarantee schemes are costly.

For example, spending on the Argentinian Jefes y Jefas scheme during the 2001/02 financial crisis was 1 per cent of GDP, while the introduction of a job guarantee in the United States would represent 1.33 per cent of GDP.

However, the UN expert said that such investments should be assessed against the huge costs of unemployment, which go far beyond the loss of tax revenues and the social protection provided to job-seekers by the State in countries in which unemployment benefits exist.

He said that in 2021, OECD countries spent an average of 0.58 per cent of GDP on unemployment assistance.

“With joblessness comes poorer health, shorter lives, psychological distress and reduced future employability and earnings.”

Long-term unemployed persons lose social networks; they express lower levels of life satisfaction and social integration; and they are stigmatized as not contributing to society, said Mr De Schutter.

Unemployment is also corrosive within families – it increases domestic violence, and reduces children’s chances of entering tertiary education, he added.

For instance, he said in Germany, long-term unemployment of fathers reduces the chance of children staying on in tertiary education by 17 percentage points.

“Youth unemployment also reduces later employment chances and pay: in the United Kingdom of Great Britain and Northern Ireland, early experience of youth unemployment results in a 12-15 per cent penalty on wages at age 42; in the United States, a six-month spell of unemployment when young equates, on average, to a loss of $22,000 of later earnings over the following 10-year period.”

Conversely, ensuring full employment results in reduced health costs for the working-age population, higher tax returns from full employment and from the increased formalization of the workforce, and multiplier effects from spending in local economies and the value of public works, said Mr De Schutter.

“Any assessment of the benefits of a job guarantee should also capture the productivity returns of a more skilled and healthy workforce, which would be expected to grow over time.”

He said that considering the important benefits to society of tackling unemployment and of providing goods and services under-supplied by the market, financing from general taxation would be fully justified.

“Some schemes may, moreover, pay for themselves, where they are financed from ring-fenced unemployment insurance funds,” said the Special Rapporteur.+