Finnish government is currently drawing up plans to introduce a national
basic income. A final proposal won’t be presented until November 2016,
but if all goes to schedule, Finland will scrap all existing benefits
and instead hand out ?800 ($870) per month—to everyone.
It sounds far-fetched, but it’s looking likely that Finland will carry
through with the idea. Whereas several Dutch cities will introduce basic
income next year and Switzerland is holding a referendum on the subject,
there is strongest political and public support for the idea in Finland.
A poll commissioned by the government agency planning the proposal,
the Finnish Social Insurance Institution or KELA, showed that 69%
support (link in Finnish) a basic income plan. Prime minister Juha
Sipilä is in favor of the idea and he’s backed by most of the major
political parties. “For me, a basic income means simplifying the social
security system,” he says.
But for those outside Finland, the plan raises two obvious questions:
Why is this a good idea, and how will it work?
It may sound counterintuitive, but the proposal is meant to tackle
unemployment. Finland’s unemployment rate is at a 15-year high, at 9.53%
and a basic income would allow people to take on low-paying jobs without
personal cost. At the moment, a temporary job results in lower welfare
benefits, which can lead to an overall drop in income.
Previous experiments have shown that universal basic income can have a
positive effect. Everyone in the Canadian town of Dauphin was given a
stipend from 1974 to 1979, and though there was a drop in working hours,
this was mainly because men spent more time in school and women took
longer maternity leaves. Meanwhile, when thousands of unemployed people
in Uganda were given unsupervised grants of twice their monthly income,
working hours increased by 17% and earnings increased by 38%.
One of the major downsides, of course, is the cost of handing out
money to so many people. Liisa Hyssälä, director general of KELA, has
said that the plan will save the government millions. But, as Bloomberg
calculated, giving ?800 of basic income to the population of 5.4 million
every month would cost ?52.2 billion a year. Finland only plans to give
the basic income to adults, not every citizen, but with around 4.9
million adults in Finland, this would still cost ?46.7 billion per year.
The government expects to have ?49.1 billion in revenue in 2016.
Another serious consideration is that some people may be worse off
under the plan. As the proposal hasn’t been published yet, it’s not yet
known exactly who will lose out. But those who currently receive housing
support or disability benefits could conceivably end up with less under
national basic income, since the plan calls for scrapping existing
benefits. And as national basic income would only give a monthly
allowance to adults, a single mother of three could struggle to support
herself compared to, for example, a neighbor with the same government
support but no children and a part-time job.
Finally, the proposal raises the question of whether it’s really fair
to give a relatively better off individual the same amount of welfare as
someone who’s truly struggling. Finland’s constitution insists that all
citizens must be equal, though, of course, equality can be interpreted
in many different ways. So far, there’s no definitive answer as to
whether national basic income will create a more or less equal society.