Voucher Communities - the Solution to Unemployment?

By: Dr. Sam Vaknin

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

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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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