UBI or JGS or both

Jobs or Security, or Both?

Craig Dalzell – 10th March 2022

Back in 2017, I wrote a policy paper imagining various potential social security policies that  Scotland could explore once independent. It came out at the same time as new Social Security powers were starting to be devolved to Scotland and the department to manage them – the aptly named Social Security Scotland – was in the planning stages. Our policy suggestions weren’t directly aimed at that round of devolution because we knew of the limits that the powers but our influence was still acknowledged by the team in that our paper helped make the argument that Social Security Scotland should be built in a way that would allow it to be easily expanded either as more powers are devolved or if independence arrived and resulted in Scotland gaining full control over social security.

Nonetheless, it is interesting that in the time since, limited versions of several of the policies we called for have become accepted policies in Scotland with a nominal Parliamentary majority existing for them across several parties and/or cut-down or pilot versions of the policies now in the Scottish political pipeline. Universal Basic Income, a Job Guarantee Scheme, a Minimum Income Guarantee and the idea that the UK’s welfare system is simply inadequate are no longer the somewhat radical ideas that they still were in 2017 but are now established positions of political Scotland and each able to command a majority vote in the Scottish Parliament should a bill to introduce them ever come to fruition.

This is not to say that debate isn’t still going on within and outwith Scotland around the details of these policies – especially where they interact with each other. There is an ongoing debate in particular between whether Scotland should adopt a Universal Basic Income (UBI) or should adopt a Job Guarantee Scheme (JGS). My position is that they are not mutually exclusive and that we should do both.

Universal Basic Income

Briefly, a UBI dispenses with the complex, unfair and discriminatory system of ad hoc “benefits” and instead would provide every resident of Scotland with a regular, unconditional payment. In our 2017 paper, we were still fighting for the fundamental idea of UBI which is why the system we present there is for a UBI which barely replaces benefits and pays out at a level equivalent to current Universal Credit – as we’ve seen through the Covid pandemic, this is obviously far too low so we now call for a UBI to start at a much more adequate level. “Basic” in this sense should mean “enough to meet the basic needs of a person such as housing, heating and food”. More important than the precise level to meet a “basic” income though is the concept of the income being “Universal”. Some limited Basic Income schemes are either targetted by income bracket or – as in the case of the schemes now launching in Ireland and Wales – are targetted at a particular group of people, artists and young care leavers to give the two mentioned examples. These limited schemes aren’t unworthy but a full universal basic income has an important added benefit of encouraging universal acceptance. Folk on higher incomes might well (though not necessarily) see their income taxes rise to “compensate” for their UBI. It migzht be that they pay more in income tax than they receive in UBI and that its introduce represents a “net loss” to their personal income.

However, the fact that someone on higher income still gets their UBI encourages them to think of it as “theirs” too. The pandemic has shown how vulnerable anyone’s job can be to events they can’t control and so the security floor of an adequate UBI should still be there. Additionally, if the Scottish Government really does want to push the idea of an “entrepreneurial state” through its economic strategy then it should consider a UBI as a cushioning of the risk of setting up new business ventures – I myself have abandoned a business idea because I realised that I could not afford for it to fail.

If, however, a Basic Income is means-tested and limited only to folk on lower incomes then those on higher incomes who do not receive it but may still be “paying for it” through taxes then they have an immediate incentive to lobby to reduce their tax burden by ensuring that the UBI is reduced, defunded or scrapped altogether. The pandemic exposed many people to the meanness of the UK benefits system for the first time and that shook a lot of folk into calling for change – that that change has not yet come shows how difficult it can be to do so should highlight the need to get UBI right first time.

Job Guarantee Schemes

In brief (and with a more detailed explanation available here) the premise of a Job Guarantee Scheme is that instead of or in addition to the Government maintaining things like the Job Centres where someone who is unemployed can get support to look for work, the Government could also maintain a pool of job vacancies that would offer immediate employment to anyone who requested a job. These schemes are usually envisaged as a means of dealing with “frictional unemployment” – that gap you may experience between losing one job and gaining another – and as such are usually targeted as a means of creating a “floor” of wages and conditions in Scotland. This could be powerful under devolution in the sense that devolved Scotland has no power to legally raise the UK’s inadequate minimum wage but could hypothetically create enough guaranteed jobs paying out more than the minimum wage such that anyone who wasn’t being paid enough could quit and take on a JGS job unless employers raise wages to retain them. However, frictional unemployment isn’t the only form of unemployment and a JGS might not be the best tool to tackle them. “Structural Unemployment” happens when despite jobs being available and despite you being unemployed and wanting to take up a job, you cannot do so. This could be because you don’t have the skills and knowledge to take on the job being offered – asking a former steel worker to become a computer programmer might well be as difficult as asking the reverse. It might be because a suitable job doesn’t exist in your are and you are unable to move – not everyone can simply uproot their life for work so a job in Aberdeen might be of little use to someone looking for work in Dumfries. A JGS that only maintains minimum wage jobs will also be of limited use to someone who is currently in a highly paid job but who sees the writing on the wall for their industry or sector. We cannot, for example, hope to transition oil workers into the renewables sector by offering minimum wage positions, certainly not if we want to in any way pretend that that transition would be a Just one. For me, just as a Basic Income must be a Universal one, a Job Guarantee must look beyond a wage “floor” and think about being part of national industrial strategy to also look at how government policy can provide and stimulate jobs both in specific sectors that it wants to support (such as within the Green New Deal) or in specific areas of Scotland that have been abandoned by “the market”.

Why Not Both?

Arguments have been made that these two policies are at odds with each other but I disagree. I fundamentally reject the idea that an adequate UBI would lead to a substantial number of people withdrawing from work and doing nothing at all – that is simply not backed up by any of the UBI studies that have been conducted. Those who do quit their job often do it for reasons such as to focus on studies, care for children or family or who wish to spend more time doing things that society currently doesn’t value as “work”.

There is a risk that a UBI without adequate economic strategy could result in us not fixing all of the other issues affecting Scotland’s economic inequalities – in particular we could see a large chunk of that UBI filter into the pockets of rentier capitalists and landlords who extract value from the economy without producing much or anything themselves. A JGS could well be part of the solution to that (especially if it helps to provide the massive amount of labour we’ll soon need to build Green New Deal homes or to retrofit existing ones).

On the other hand, a Job Guarantee alone – even an expansive one that looks beyond just frictional unemployment – would offer people the right and freedom to work but would deny people who didn’t want to work, or couldn’t work, the freedom to not work. A Job Guarantee should not ever become a Job Obligation. Doing so would remove even more power from workers by denying their right to withdraw their labour. The threat of destitution if you don’t work is at the heart of the UK’s “welfare” policies and was rightly censured by the UN in 2018 for this attitude. The independent Scotland I’m fighting for should be seeking to divest from this inhumanity.

Still, I’m heartened that more people are discussing radical policies such as these as if they were “normal”, even if we don’t have them yet. It is a sign of how far and how quickly shifts in political attitudes can happen when activists call for them. I welcome the ongoing debate but to my mind, these two policies are designed to address two different problems. UBI is fundamentally a policy to provide social security whereas a JGS is designed to address economic inequality. If Scotland truly wants to transform both society and economy, to address the climate emergency and to create a truly resilient nation able to protect against and adapt to future crises – surely we need both?

6 thoughts on “Jobs or Security, or Both?”

  1. Totally agree. I’ve long felt frustrated with ideas of ‘targeting’ UBI as that completely defeats its universalism and can do the opposite – create division! Pilots encourage us to feel the idea is being taken seriously and in some ways that is true but if they shave off fundamental principles – a decent liveable level and for everyone – they might do more harm than good. After I sent a congratulatory email to a relative in Wales( along with these sentiments) she replied by saying she supported the idea as she had worked with care leavers but wonders what her own grandchikdren would feel seeing these youngsters getting an income when they are struggling too.

  2. Yes Craig. Agree completely. In addition, I think there is a kernel of something worthwhile in Graham McCormick’s Land, Ground, Floor and Roof Tax. There must be a way to work all of these together to achieve a more just and humane Scottish society.

  3. There is no reason the BI would be means tested. It is the voluntary part of the VJG. Also a BI + for folk who can’t participate but the JG should expand the definition of work and value to communities and be built around what a person can contribute not the other way around so may be able to include more disabled people.

  4. The idea is not to compete with the private sector but to add value to communities. There may be opportunities to expand the JG to encompass training and building Green infrastructure. The bonus with the JG is that it is self stabilising, expanding in economic downturns and contracting in good times. This also reduces the likelihood of inflation. This is a push back against NAIRU. The JG wage, a real living wage anchors wages for the whole job market and forces the private sector to at least match it to lure people out of the JG.

  5. Robert Parker

    Glad to read that UBI is gaining more ground.
    Perhaps the personal tax allowance could be set at the UBI level?

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