A government job guarantee can deliver full employment in the twenty-first-century, writes William Thomson.

The concept of full employment is well known, but the idea of a job guarantee may be unfamiliar. In simple terms, a JG offers employment opportunities to anyone willing to work. It is a ‘bottom-up’ job programme, centrally funded and delivered by local communities.

In 1943, Polish Economist Michal Kalecki wrote a short paper entitled “Political Aspects of Full Employment.” Drawing on a Marxist toolkit, Kalecki identified many of the macroeconomic solutions articulated by his much more famous contemporary, John Maynard Keynes. Both agreed that full employment was essential and possible, and that government spending was the solution. They were not alone in their support for full employment. Kalecki stated that “a solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending program.”

The consensus that Kalecki described was achieved during a period of “astronomical budget deficits.” It might surprise most readers that economists were agreeing that full employment, driven by more government spending, could be achieved at a time of historically high public deficits. We are attuned to narratives about seeking balanced budgets and avoiding fiscal black holes. Indeed, the myth that government finance is scarce has always persisted. When challenged on the dangers of larger public budgets, Kalecki was ready to answer: “the counterpart of the spending will be the higher standard of living of the masses. Is not this the purpose of all economic activity?”

Following the devastating and costly aftermath of World War II, full employment was achieved through government spending that created government jobs and boosted private-sector consumption and investment. It occurred alongside unprecedented spending on the Welfare State and played a central role in reducing income and wealth inequality, and increasing living standards. It was a near-universal pillar of economic progress.

Kalecki and Keynes believed that government policy should be undertaken with an eye only to the results on the economy and not based on arbitrary deficit levels. This approach is known as functional finance or simply ‘good sense’. Unfortunately, it would only drive economic policy in the UK for so long. Economists would remain on the same page for a mere thirty years.

By the mid 1970s, in the UK, full employment as a macroeconomic target had been abandoned. In fact, policies that ensured everyone who wanted a job had one, such as strong trade union rights and high wealth taxes, were blamed for the economic turmoil.

As Thatcher came to power, neoclassical economists began to replace older Keynesian economists within the UK government. Influenced by neoclassical economics and its bastard child, neoliberalism, their working model assumed “full employment”.          . These economists also considered the money supply to be controlled by the government and the primary source of inflation. These three theoretical assumptions established a direct link between government spending and inflation, precisely when inflation was becoming a significant problem. Their economic theory, represented by the Phillips Curve, suggested a direct trade-off between inflation and unemployment. This simplistic approach led to the working assumption that if you want to reduce inflation, you must increase unemployment. Full employment was dead and buried.

Thatcher’s legacy

It is now almost universally understood that the founding assumptions which derailed full employment in the 1970s – government-controlled money supply, the quantity theory of money, and the direct trade-off between inflation and employment – are at least a gross oversimplification if not a complete myth. However, no UK government or mainstream political party has ever challenged these macroeconomic assumptions in pursuit of full employment.

There is a new consensus: it is impossible, during any period of budget deficits, for any political party to deliver a decent and dignified job for everyone who wants one. This ‘political reality’ ignores the public desire for decent jobs, and the exceptionally powerful historical evidence.

Full employment in a modern wellbeing economy

In today’s economy, full employment can be delivered by a Job Guarantee (JG). The policy is designed to restore dignity to individuals unable to secure decent employment in the private or public sectors. It is the ultimate wellbeing policy. But it also has macroeconomic benefits.

Hundreds of thousands of Scots remain unemployed, partly owing to high interest rates set by the Bank of England. Worried about inflation, central bankers attempt to keep the economy below its full capacity (high interest rates reduce investment). This ensures that those who want to work are unable to do so. A ‘reserve army’ of unemployed is left on the economic sidelines. Even during an economic boom, many people who are long-term unemployed rarely find work. This is not due to a lack of effort. When the economic tide begins to turn, employers first increase hours and offer them to their current employees. They then start to drain the pool of recently retired or part-time workers. They then compete for workers in similar businesses or sectors. Only once these sources run dry do they approach the long-term unemployed.

A JG, open to anyone seeking employment, enables everyone, especially the long-term unemployed, to earn a decent wage. It also increases the purchasing power of the lowest earners. It reduces poverty by providing support to the most marginalised, and earnings rise faster among those employed in JG programmes, thereby reducing income inequality.

The job guarantee affects employers and employees outside of the scheme. With a new player in the market – providing a tailored, local, decent, and well-paying job – the private sector must significantly up its game. We have tens of thousands of precarious, poverty-wage jobs in Scotland which could be replaced by decent, secure jobs. Goodbye, too, to “bullshit jobs”, David Graeber’s description of fruitless, ultimately unfulfilling roles that support the financialisation of the economy.

The JG is a macroeconomic stabiliser

A JG stabilises the business cycle. If everyone who wants a local job is given one, the programme naturally expands during a recession and contracts during a boom. It is the ultimate counter-cyclical policy. It provides a buffer stock of employed people. Contrast this to the morally reprehensible current system that sheds jobs when inflation appears on the horizon.

It is an inflation stabiliser. Setting a wage floor affects the overall price level for labour. As labour is an essential factor in most businesses, this directly helps to stabilise the overall domestic price level. It is likely to be far superior to the current strategy of moving interest rates up (to reduce inflation) and down (to stimulate growth). A JG also increases productive capacity. An employed person is unarguably more productive than an unemployed one.

A job guarantee today

Although a JG has yet to break through in the UK, schemes have been successful in Argentina and India. Argentina’s Jefes de Hogar programme, introduced in the early 2000s, provided paid employment to over two million people. The central government funded local jobs focused on socially useful work, including community services, infrastructure maintenance, and care activities. India’s Mahatma Gandhi Rural Employment Guarantee (MGNREGA) is the largest rights-based public employment programme in the world. Signed into law in 2005, it offers a legal entitlement to paid work in rural areas and has provided tens of millions of households with income security while supporting local development through projects such as water conservation, land improvement, and flood prevention. In both cases, employment was demand-led, locally administered, and centrally funded, demonstrating that a JG can operate at scale while responding to demands from local communities.

In 2018, in the US, Bernie Sanders reignited interest in job guarantee schemes, drawing comparisons with the public employment programmes introduced under Franklin D. Roosevelt during the mid-1930s. Almost a century later, it is easy to argue that community-directed work funded by the central government has never been more important.

The unfolding unemployment crisis

Official unemployment rates have begun to rise. The latest figures (July to September 2025) showed UK unemployment rising above 5% for the first time since 2016, with youth unemployment over 15%. Both figures may be lower than those that will be observed in 2026. These rates significantly understate the true level of unemployment by counting only those who have been actively seeking work for a specified period. Underemployment is another great concern, with hundreds of thousands of people willing to work longer hours than they are offered. Meanwhile, poverty wages and gig economy jobs continue to replace well-paid, secure jobs. Many people are working excessive hours and are still unable to afford basic necessities, including food, heat, and shelter.

Across Scotland, communities struggle to adapt to and mitigate the ecological crisis. Many appear helpless to adapt to the cost of capitalism, also known as the cost-of-living crisis. By directly addressing multiple crises, a JG must be part of the solution. Within a JG scheme, many local jobs would likely be created in what can loosely be called the ‘care economy’. These would directly support those who care and tend for others. Jobs that reinvigorate high streets, community centres, and local parks would be created. Nature-based climate solutions would be prioritised. Jobs can empower a meaningful Just Transition.

Importantly, a JG breaks the connection between unemployment and support for right-wing parties. During the height of Fascism in Europe, Kalecki wrote that “the fight for full employment is … a way of preventing the recurrence of fascism.” His words remain a powerful warning.

Implementing a job guarantee in Scotland

During ‘normal times’, it is likely that the direct financial cost of a JG scheme in Scotland would be cost-neutral. All full-time roles would incur income tax and National Insurance contributions, and overall benefit spending would fall. Very quickly, other public expenditure aimed at combating poverty and inequality would decline.

Higher inequality is strongly correlated with a deterioration of public health and wellbeing, including higher drug use, more mental health issues, lower life expectancy, and increased obesity. In terms of social outcomes, unequal societies experience lower educational attainment, higher youth pregnancy rates, more violence, and a breakdown of trust. They also tend to have a less mobile social structure and divert more resources to the justice system at the expense of education and welfare.

Even under a traditional cost-benefit analysis, a JG pays for itself. But of course, no one can, or should, put a price on human dignity, which for many is provided by playing a more meaningful role in society. How do we value more stress-free time with one’s family or a walk down a now-booming local high street? To see the true value of a JG, we must move beyond the confines of neoclassical market framing.

The JG counter-cyclical challenge

When the economy slows, government revenue declines. It is during these times that a JG would increase its coverage. This counter-cyclical feature is central to the success of a JG, but it poses a challenge under Scotland’s current constitutional settlement. To fund a counter-cyclical JG, Westminster would have to step in to finance the jobs. Funding would be allocated from London, the only level of government authorised to issue new currency. Given the divergence between ‘welfare’ policy in London and ‘social security’ policy in Holyrood, winning additional financing from London is an insurmountable political challenge.

However, there is an alternative under the current devolved settlement which could see funds diverted from other centralised areas, like new woodland creation or enterprise agency funding, to provide locally directed jobs. Local wealth taxes could also fund local jobs.

What would be the impact on the lives of people, communities, and the economy?

In her book The Case For A Job Guarantee, economist Pavlina Tcherneva challenges us to consider what would happen if we “made it a social and economic objective that no jobseeker would be left without (at a minimum) decent living/wage work? What would be the impact on the lives of people, communities, and the economy?” I believe it would have a transformational impact.

A JG would rebalance an economy that has systematically favoured profits over wages. Achieving full employment in 2026 via a job guarantee is not only possible but essential. Cambridge Professor Danny Dorling suggests in his book Shattered Nation that “as the exploitation rises, the myths the establishment tries to peddle become less and less believable.” A myth has been exposed. Full employment is possible. The time for bold policy choice is now.

Detailing a Job Guarantee is one of the sessions taking place at Scotland’s Festival of Economics in Edinburgh, March 19 -21. More information available at www.scoteconfest.org.

William Thomson is a political economist, the founder of Scotonomics, and the curator of Scotland’s Economics Festival.