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World
03 Jan 2017

Finland launches basic income experiment for the unemployed

Finland's universal basic income experiment

Finland rolled out a unique social trial to pay its unemployed citizens a "universal basic income", becoming the first European country to do so.

In the two-year pilot project which began on 1 Jan, 2,000 randomly chosen citizens will receive €560 ($587) every month, with no reporting requirements on how they spend it.

If successful, the program could be expanded to all adult Finns.

In context

Finland's universal basic income experiment

Thomas Paine on equal basic income

Thomas Paine, one of the America's founding fathers, said that every individual was entitled to an equal basic endowment because "the earth, in its natural, uncultivated state was the common property of the human race".

Basic income trial removes the 'disincentive problem'

03 Jan 2017

Basic income trial removes the 'disincentive problem'

Olli Kangas from the Finnish government agency KELA, the country's social benefits agency said that "the basic income program aims to tackle the 'disincentive problem' among the unemployed, as the monthly guaranteed payment will continue regardless of recipient's unemployment status."

Some unemployed workers currently avoid low-income or part-time jobs for the fear of missing out on unemployment benefits, offered under Finland's social security system.

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Finland's unemployment rate

With a population of 5.5 million, Finland's unemployment rate was at 8.1% as of Nov 2016. About 213,000 people are without a job, same number as the previous year.

Details

Aimed at tackling unemployment and poverty

The program is part of measures taken by Finnish PM Juha Sipila, in a bid to cut down red tape, reduce joblessness and poverty.

Supporters believe the program could offer an alternative to Finland's complex and costly social security system under which citizens can avail 40 different benefit systems.

Each benefit is calculated differently and must be changed when a person's status changes.

Other parties interested in basic income project

03 Jan 2017

Other parties interested in basic income project

The basic idea of 'Universal Basic Income' (UBI) is to replace complicated welfare benefits with cash payment.

This has attracted a massive following, from bond investor Bill Gross to Tesla CEO Elon Musk.

Y Combinator, the Silicon Valley start-up also hopes to run a pilot in Oakland, California.

Pilot projects are being discussed in Canada, Iceland, Uganda, Brazil and India.

Downsides of the program

Opponents of the basic income program cite "cost and potential to promote non-work" as the main objections. Last year Switzerland citizens strongly rejected (more than 75%) the plan of a guaranteed income of $2,500 a month, in a referendum.

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