MAGMA

In October 2020, the Austrian Public Employment Service (AMS) in Lower Austria launched the Marienthal Job Guarantee Pilot (MAGMA), a pilot programme tackling long-term unemployment (LTU) in the region of Gramatneusiedl, Lower Austria, with the idea that ‘it is better to create jobs than to pay long-term unemployment benefits’.

The initiative’s primary objective is to address long-term unemployment in the community of Gramatneusiedl over a period of three-years, thereby eradicating LTU and improving the overall well-being of the community. All long-term unemployed people living in the region are included in the project, as the pilot provides employment to residents of Gramatneusiedl who have been registered with the AMS for more than a year or are at risk of long-term unemployment (9 to 12 months).

By the end of 2023, 112 new jobs had been successfully created and filled.

Problem addressed

In the early 20th century, Marienthal was a thriving industrial town, with a large textile factory employing a significant portion of the local population. However, the factory closed down in the early 1930s, leading to a devastating economic crisis in the area. This crisis was famously studied by a team of sociologists, who published their findings in the influential book “The Unemployed of Marienthal” in 1933 (Jahoda, Lazarsfeld and Zeisel, 2017).

Innovative solution

Starting in October 2020, the three-year pilot project Modellprojekt Arbeitsplatzgarantie Marienthal (MAGMA; “job guarantee pilot project”) started to offer a job guarantee for the long-term unemployed in that location. Initiated by the regional office of the Austrian Public Employment Service in Lower Austria, the programme aims to abolish long-term unemployment, counter its social and individual effects, and provide counselling to help participants secure employment in the regular labour market. However, unlike traditional active labour market policies, which prioritise reintegration into the regular labour market, MAGMA differs significantly and is more similar to income support or welfare initiatives. As part of the innovative concept, MAGMA was designed as a field experiment to evaluate the causal effects of guaranteed employment on individuals and the local labour market.

Key results and benefits

The MAGMA project illustrates the viability of a job guarantee program and underscores the necessity for alternative programmes for long-term unemployed individuals. Key to its success is partnering with capable entities that provide meaningful tasks relevant to the primary labour market. Equally crucial is robust counselling by public employment services or similar institutions before participants enter the program. Collaboration among all relevant institutions is essential to integrate social security networks and secure collective funding for such initiatives.

While the primary goal isn't transition to the open labour market, the program saw an increase from one third initially to around 43% by 2023. Overcoming obstacles included securing meaningful non-profit work and navigating participants' physical and mental limitations, which was the primary reason for dropouts.

Potential for mainstreaming

The primary objective of MAGMA was to directly eradicate long-term unemployment within the municipality and improve the economic and social well-being of participants. Unlike conventional active labour market policies, MAGMA aimed not to replace existing measures but to innovate and create meaningful work opportunities. Various aspects of the initiative highlighted significant successes in demonstrating its effectiveness. An essential motivation was to provide evidence of alternative approaches to tackling long-term unemployment. According to Kasy & Lehner's study (2023), MAGMA virtually eliminated long-term unemployment in the target region without an increase in short-term unemployment. Participation in MAGMA had substantial positive effects on economic and social well-being, including employment, income security, and various measures of social integration and recognition.

These findings underscore MAGMA's potential to influence broader employment policies by offering innovative solutions to longstanding challenges in labour market integration and social welfare enhancement.

For further reference see: Kasy, Maximilian, and Lukas Lehner. 2023. “Employing the Unemployed of Marienthal: Evaluation of a Guaranteed Job Program.” STONE CENTER ON SOCIO-ECONOMIC INEQUALITY WORKING PAPER SERIES, No. 67. doi:10.31235/osf.io/cd25u.

ESF+ Community of Practice on Employment, Education and Skills Study 2024. "Towards zero long-term unemployment in the EU: Job guarantees and other innovative approaches." study-on-job-guarantees-initiatives-in-europe-2024-03-06.pdf (esf.lt).