Finland first in Europe to take basic income plunge

The introduction of guaranteed basic income has long been called for and Finland is the first to trial the idea. [stanjourdan/ Flickr]

Discussions between the supporters and opponents of the idea of Unconditional Basic Income (UBI) are fierce but Finland has bitten the bullet and implemented the concept across the country in a new landmark pilot project. EURACTIV Germany reports.

They crept into our everyday lives a while ago; Artificial Intelligence, biogenetics and the Internet of Things are now regarded as daily conveniences. As its precursors did before it, the so-called 4th Industrial Revolution or Industry 4.0 will significantly change the world of work.

In fact, the World Economic Forum’s (WEF) latest The Future of Jobs study predicts that by 2020 more than 5 million jobs in the 15 most important industrialised countries could be lost. Economists and social experts are renewing their calls for new long-term ideas that will meet these changing needs.

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Although the digitalisation of industry is a top priority among EU decision makers, Europe should not be concerned about job losses caused by growing automation. Instead, member states should teach the new generations the skills required for a digital future, believes the VDMA chief, Thilo Brodtman.

The concept of guaranteed income is not a new one. As early as 1974, the Canadian government introduced a five-year-long scheme in the small town of Dauphin in the Manitoba province, known as the Mincome experiment.

Since then, the idea of paying citizens a basic income has been repeatedly discussed across the world. But the gap between its proponents and critics often appears to be insurmountable, at least politically.

That’s not the case in Finland. Since 1 January this year, the UBI social experiment has been in place country-wide. 2,000 Finns, randomly-selected, will receive €560 a month, free of tax. Candidates were only eligible if they had already been receiving unemployment benefit or another form of income subsidy.

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Payments like housing allowances will continue to be paid and the €560 will still be on offer even if unemployed individuals find temporary work.

Finland’s unemployment rate stood at about 8.1% last year and youth employment topped 20%, so its government is taking the pilot scheme seriously as Helsinki looks to break people’s dependence on social welfare. Plans are in place to offer incentives to people willing to accept part-time jobs as well.

A press release issued by the Finnish government confirmed that the purpose of the project was to “answer the burning question as to whether basic income boosts employment or not”. It also highlighted the need to reduce bureaucracy.

The WEF study also confirmed that the changing world of work will need employees to have a more specialised skillset in the future. But this is not the case with many workers.

The study observed that there is already a deficit in all job categories and that within the next five years companies could face an unprecedented shortage of suitable hires in the low-wage sector.

“Without urgent and targeted action today to manage the near-term transition and build a workforce with futureproof skills, governments will have to cope with ever-growing unemployment and inequality, and businesses with a shrinking consumer base,” warned the report.

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However, whether UBI really represents an alternative to other social systems that have failed to address these concerns is a matter of debate.

Its critics insist that it is not financially viable and claim that it misses its stated target of getting people into work.

But previous attempts, albeit it on a smaller scale, show different results. The Mincome experiment in Canada showed a falling rate of sick leave, young people getting better qualifications and only 1% of basic income recipients quitting work.

It’s no wonder then that the Netherlands plans a similar scheme in 12 of its cities this year. The project, depending on family structure, will allocate those eligible with between €800 and €1,300 a month.

France and Scotland could soon follow suit too. Radical economist Guy Standing, who founded the Basic Income Earth Network, recently told The Guardian that “The sense of insecurity, the stagnating living standards, all of those things are clear in Scotland and the fact that so many within the SNP are supportive means there’s a real opportunity to do a pilot in Scotland.”

But the idea is given short shrift in Germany, where huge changes would have to be made to the country’s social welfare systems.

Pilot projects across Europe, if they gather steam and more support, could give the continent’s governments a lot of food for thought as automation takes a firmer hold of our society.

EU “has the power” to put in place a universal basic income

From Martin Luther King to Erich Fromm, the universal – or unconditional – basic income (UBI) has always had its supporters. The idea is not new. But the economic crisis has brought it back to the forefront “as a solution” to the most pressing issues facing the EU today.