Voucher Communities - the Solution to Unemployment?

By: Dr. Sam Vaknin (Brussels Morning)

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Plan to Reduce Unemployment in Macedonia 2007 (Submitted to Zoran Stavreski, Vice-Premier, April 2007)

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Youth unemployment exceeds 20% in many parts of the EU, in China, Africa, Asia, and throughout the Middle East.


In hundreds of cities in two dozen countries, a fascinating experiment is proving that tackling unemployment effectively may require little more than imagination and institutional commitment.

I. Executive Summary

"Voucher Communities" are communities of unemployed workers organized in each municipality. The unemployed exchange goods and services among themselves in a barter-like or countertrade system. They use a form of "internal money": a voucher bearing a monetary value.

Thus, an unemployed electrician can offer his services to an unemployed teacher who, in return, gives the electrician's children private lessons. They pay each other with voucher money. The unemployed are allowed to use voucher money to pay for certain public goods and services (such as health and education). Voucher money is redeemed or converted to real money so it has no inflationary or fiscal effects, though it does increase the purchasing power of the unemployed.

II. The Clearing Authority

The Clearing Authority has four functions:

(1) To issue (print) the vouchers in various currency-equivalent denominations

(2) To create and maintain the project's information systems (see below).

(3) To issue laminated plastic (and, later, magnetic striped) identification cards to voucher recipients ("Voucher Beneficiary ID Cards")

(4) To provide binding dispute settlement and resolution mechanisms and forums

III. Liaison with municipal and state authorities

In some countries, vouchers issued by the Clearing Authority can be used to defray expenditures related to education and health and to pay local taxes. This is subject to agreements signed between the Clearing Authority and the relevant local and state authorities.

The Employment Bureau provides the Clearing Authority with information about the status of applicants (are they unemployed or not), pursuant to the receipt of written release from the applicant.

IV. Liaison with employers

Some Clearing Authorities act as employment agencies. They match jobseekers with employers who then proceed to pay their employees in vouchers. In these cases, the Clearing Authorities provides employers with vouchers on condition that they are used to employ the hitherto unemployed beneficiaries.

V. The Vouchers

The voucher is a contract between service providers. It contains the following elements and components:

(1) It is headlined "Contract" between payer and receiver to render services.

(2) A denomination (how many currency units the voucher represents) known as "Value Store".

(3) The serial ID or registration number of the voucher.

VI. Recipients and Beneficiaries

The vouchers are distributed to the unemployed and the homeless in order to enhance their purchasing power and enable them to resume an economically productive role in society.

The total sum of vouchers distributed to any given recipient or beneficiary should not exceed one third of his or her income from all other sources combined.

The vouchers should be distributed once every quarter and expire at the end of the quarter in which they were distributed.

The voucher recipients or beneficiaries can use them to pay only for services rendered by other recipients or beneficiaries. They should be allowed to freely negotiate transactions and agree prices among themselves.

VII. Information Systems

The Clearing Authority maintains a Central Registry in both hard, print copy and computerized form (Excel spreadsheet).

The Central Registry contains the following data and is indexed thus:

    (a) Name of recipient/beneficiary

    (b) Profession of recipient/beneficiary and services rendered by him or her

    (c) Contact details (address, phone number, e-mail) of recipient/beneficiary

    (d) Number and value of outstanding, unused vouchers in any given quarter

Customers of the service provider are allowed to comment online on the service provider's (the voucher recipient's/beneficiary's) performance and conduct and to rate it.

To summarize:

Each beneficiary/recipient of vouchers has a record in bother print and computerized forms.

The record comprises his or her name, professional qualifications, services rendered, contact details, number and value of outstanding and unused vouchers, and comments and rating by clients pertaining to the beneficiary/recipient's performance and conduct in rendering his or her services.

VIII. Macroeconomic and Microeconomic Implications and Outcomes

(1) Positive

Enhancing the purchasing power of the unemployed and the homeless

Restarting the economic cycle in deprived neighborhoods and regions

Increasing the psychological well-being and motivation of deprived and dysfunctional strata of the population

Engendering networks of service-providers and customers which can later integrate into the formal, monetized economy

No inflationary ill effects

No fiscal ill effects (no budgetary deficits)

(2) Negative

Possible hoarding of vouchers (largely prevented by the introduction of beneficiary/recipient ID cards)

Vouchers are a form of money substitute. Not only do they subvert the money issuance monopoly of the central bank, they also demonetize the economy and have no multiplier effects. In other words, they create a parallel system that is detached and distinct from the main money supply transmission mechanisms and channels.

This can be overcome by limiting the amount of vouchers in circulation and their duration (expiry or maturity date). The whole operation should be carried out in coordination with the central bank and the Ministry of Finance.

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