Promising results from employment programmes piloted by economists at the Institute for New Economic Thinking at the Oxford Martin School have pointed towards better options for Welfare Reform in the UK, Europe and beyond.
Since 2020, economist Max Kasy has helped run two major welfare pilots in Europe; a job guarantee scheme in Austria and a basic income trial in Germany. Both trials have recently reported back, with the European Parliament deciding to promote further pilots on the back of promising results.
With welfare reform becoming a hot topic in the UK and elsewhere in Europe post-pandemic, the researchers have pointed to these trials as providing better options for welfare reform than those being proposed.
Guaranteed job programme progresses to further European trials
Run between 2020 and 2024 in the town of Marienthal in Austria, this initiative was designed to bring long-term unemployed individuals back into the workforce.
The pilot, collaborated with the job centre, was unique in offering a universal and unconditional guarantee of a well-paid job to every resident who was unemployed for more than 12 months. Recipients were offered either employment in a social enterprise, or subsidized private employment, both at market wages. Participation in the scheme was voluntary and it was designed to provide meaningful employment, along with innovative ways to motivate participation.
Results found that participants’ incomes rose and they gained greater financial security. Those taking part were happier, more satisfied, and felt more in control of their lives. They had more meaningful interactions with others, felt more valued, and felt they had more people around them who they could rely on.
Following the success of the trial, the European parliament has decided to promote further pilot projects in several countries in the hope of scaling up.
Basic Income pilot shows people keep working
A basic income trial in Germany, implemented between 2021 and 2024 has recently reported.
This pilot project followed 122 people for 3 years, who received €1,200 every month unconditionally. In the comparison group were another 1,580 people who did not receive any money. Recipients were between 20 and 40 years old and employed at the start of the experiment.
Key findings, summarised by NGO Mein Grundeinkommen were mapped across work, self-determination, well-being, finances and unexpected effects.
- Work - Do people stop working with a basic income? This assumption has often been discussed, but never proven. The pilot project shows that the opposite is the case.
- Self-determination - The study results show that people with a basic income act more independently – one group in particular.
- Well-being - Basic income has significant effects on the happiness and mental health of the study participants.
- Finances - The study shows that basic income leads to recipients actively building up assets and being able to meet their material needs. But they don't just use the money for themselves.
- Unexpected effects - Many assumptions about the unconditional basic income are confirmed by the study – but not all.
The study results of the pilot project will be published in various journals and scientific journals.
Welfare reform for the 21st Century
Reflecting on the results, Max Kasy of INET Oxford's Economics, Inequality and Opportunity Programme, said that the trials showed governments that tcredible options for welfare reforms do exist.
"Two striking findings have emerged from these experiments. First, everyone wants to work! In the job guarantee program, everyone who was offered a job accepted this job. In the basic income trial, there was no decline of employment in the recipient group, relative to the control group. This finding strongly suggests that work requirements, and the surveillance and coercion that they entail, will not solve problems of unemployment, but only decrease the wellbeing of recipients. Unemployment is a matter of the availability of opportunities, and not due to a lack of desire to participate in meaningful work.
"Second, both basic income and guaranteed jobs strongly increased the wellbeing and mental health of recipients. Basic income improved wellbeing by improving the autonomy of recipients. Recipients had a greater sense of agency and control over their lives, in both their work and their leisure time, due to the safety and absence of surveillance associated with a basic income. The job guarantee improved wellbeing by improving recipients' sense of purpose and meaning and social belonging. Recipients benefitted from employment above and beyond the monetary remuneration that they received. These different mechanisms reflect the different needs of different groups of people, the young and employed in the case of our basic income trial, the long-term unemployed and marginalized in the case of the job guarantee program."
