Finland Experiments With a Basic Income Scheme for Unemployed

Finland has recently begun a two-year trial providing basic income for the unemployed. The concept of a universal basic income, which aims to supply a monthly stipend regardless of employment, has gained currency in recent years. Finland, however, is the first country in Europe to put the idea into practice. Under the new provisions, 2,000 unemployed citizens, selected at random, will receive €560 (£460) per month. The amount will be deducted from the recipient’s other benefits. There are no restrictions on how the money is to be spent and the salary will continue if recipients find work.

The move was made by prime minister Juha Sipla’s centre-right government to reduce unemployment. Under Finland’s current system of benefits, recipients can reject poorly paid or short-term work. The government agency KELA has suggested this is more likely to happen when people fear their benefits will be reduced after returning to employment. The government hopes that a basic income will ultimately reduce poverty by tackling the ‘disincentive problem.’ The monthly allowance is considerably less than the country’s average private sector wage of €3,500. However, expectations remain high that the scheme will reduce bureaucracy while also helping recipients back into work.

Outside of Finland, implementing a universal basic income remains controversial. Dmytri Kleiner argues that: “basic income is often promoted as an idea that will solve inequality and make people less dependent on capitalist employment. However, it will instead aggravate inequality and reduce social programs that benefit the majority of people.”

Others observers are far more optimistic. Stuart Weir uses his experiences in India to argue for the feasibility of basic income. Taking part in a local scheme, he observes: “far from wasting the cash grants, as officialdom predicted, villagers invested them in renewing their houses and building latrines; bulk buying of foodstuffs; paying school fees and sending their children to school in uniform; investing in seeds and pesticides, goats and oxen, and at least one Jersey cow — which led to a significant shift from paid labour to self-cultivation; buying sewing machines for “own account” businesses making blouses, petticoats; treating unaddressed illnesses, such as TB and blindness, and remedying injuries.”

For another approach to basic income, read Rajesh Makwana’s rethinking of basic income in a sharing society. He argues: “the real advantage of a social dividend from resource rents is that it would facilitate, rather than impede, the creation of a more equal society that embodies the ethic and practice of sharing. Unlike the standard basic income proposal, this alternative approach would not compete with existing welfare budgets, and it would therefore complement solidarity-based systems of social protection.”

Ursula Huws also delves into the debate in her article on overcoming common criticisms of basic income. She notes that: “For people who believe that the world’s sixth largest economy should be able to protect its citizens from penury, and are committed to (re)developing a welfare state that reduces social inequality and enhances choice and opportunity for its citizens, perhaps the time has now come for a serious debate, not just about the pros and cons of UBI in the abstract, but about which other policies it should be linked with to ensure that these objectives are met. This involves grappling with some difficult questions.”