Universal basic income: Why is Finland giving free money to its unemployed?

Friday 27 April 2018 19:30 BST
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Finland has been forced to deny widespread media reports that its universal basic income experiment had fallen flat.

A trial has been put in place whereby 2,000 unemployed people aged 25-58 are being paid a tax-free €560 (£490) monthly income with no questions asked.

Reports suggested the scheme had failed and would be stopped but Finland has described the news as misreporting and says the trial will continue until the end of 2018.

But why are they even trialling it? What are the benefits and can it really work?

  1. What is universal basic income?

    Universal basic income (UBI) is a welfare programme in which all citizens receive an unconditional sum of money from the government.

    It is hailed as a progressive system and its proponents include billionaires Mark Zuckerberg, Elon Musk and Richard Branson.

  2. Why is Finland trialing universal basic income?

    The experiment was launched in January 2017 and 2,000 participants have been receiving a €560 (£490) monthly basic income payment, which is independent of any other income they may have and not conditional on undertaking an active search for employment.

    Researchers will study the effect of increasing cash incentives for work and simplifying the social security system on the employment rate of the study participants.

    The Finnish centre-right government is austerity focused but is looking to reduce the country’s 8.5 per cent unemployment rate. This trial is being viewed as a method of doing just that.

    Supporters of a basic income argue it would help get unemployed people into temporary jobs, rather than forcing them to remain unemployed to qualify for benefits.

    They say it would provide a safety net, address insecurities associated with workers not having full-time staff contracts, and help boost mobility in the labour market as people would have a source of income between jobs.

    The study will also look at the well-being of the participants and their experiences when communicating and conducting business with the authorities.

  3. Did the trial fail?

    The quick answer is no. There were a number of reports that the experiment had fallen flat because it had proven to be too costly, but Finland says this is not the case.

    “The experiment is proceeding according to plan and will continue until the end of 2018,” Professor Olli Kangas, the leader of the research team at Kela (Social Insurance Institution of Finland), said.

    How the trial is going so far is unknown and the employment effects across the whole experiment will not be available until the end of 2019 or at the beginning of 2020.

    “The effects of the experiment will not be published while the experiment is in progress, because a public discussion of the results could influence the behaviour of the test and control groups. That would lead to skewed results,” Mr Kangas said.

  4. What next for Finland's experiment?

    The experiment will run through until the end of the year after which a detailed study will be released.

    It will compare the group of 2,000 who received UBI with a control group of about 173,000, who are made up of people included in the target population but not included in the study.

    One of the primary objectives is to see if there are differences in employment rates between those receiving and those not receiving a basic income.

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