July 16, 2018

Will Finland’s Basic Income Experiment Work?

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What do you think about giving everyone in your country a basic income? No matter if you are employed or unemployed, young or old, rich or poor? Social benefit systems can be extremely complex and bureaucratic. Basic income proposals seek to simplify those expenses by eliminating complex benefit systems.

Supporters of a basic income for everyone think it will reduce poverty, redistribute jobs and create a more equal society. Opponents believe people will simply choose not to work and it will create an unfair tax burden on the wealthier members of the country.

Finland became the first country in Europe to introduce a basic income for unemployed people of €560 a month in January 2017. The trial will last for two years and is intended to encourage people to look for a job whilst also combating inequality. The government believed that people were so worried about losing their benefits that they didn’t look for work. Another reason is frustration at the failure of previous “back-to-work” schemes. In this trial in Finland the basic income will be retained even after finding a paid job.

With an unemployment rate of nearly 10 per cent, the government in Finland would also like to reduce the amount they spend on unemployment benefits.

The government in Switzerland recently rejected a similar proposal after a referendum found 76.9 per cent of the population to be against a basic income. The Swiss scheme was controversial; the payment was expected to be around €2500 a month and would have required a major overhaul of the government budget. Other countries such as France and The Netherlands are believed to be considering similar plans. An organisation in Uganda is piloting a scheme in 2017.

What do you think will happen next in Finland? Will more people start a business or look for work? How many will stop looking and squander their money on vodka? Will those currently unemployed take the opportunity to gain education or train for their future? This isn’t just about economics, it’s about human behaviour.

 

Gerry Reilly, Senior Teaching Fellow About Gerry Reilly, Senior Teaching Fellow

Senior Teaching Fellow, delivers the on-campus Economics seminars and is part of the Strategic Planning teaching team.