🔗 Job guarantee

A job guarantee (JG) is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability, by having the state promise to hire unemployed workers as an employer of last resort (ELR).

The economic policy stance currently dominant around the world uses unemployment as a policy tool to control inflation; when inflation rises, the government pursues contractionary fiscal or monetary policy, creating a buffer stock of unemployed people, reducing wage demands, and ultimately inflation. When inflationary expectations subside, expansionary policy aims to produce the opposite effect. In Marxian terms, the unemployed serve as a reserve army of labor. By contrast, in a job guarantee program, a buffer stock of employed people (employed in the job guarantee program) provides the same protection against inflation without the social costs of unemployment, hence potentially fulfilling the dual mandate of full employment and price stability.