Finland’s Universal Basic Income Which Promised Fixed Amount To Unemployed Fails
April 24th, 2018
Image Credit: Lombardiletter
Finland has decided not to extend the Universal basic income (UBI) trial which will end next year. The universal basic income, the trial of which was started in January, 2017, selected 2,000 unemployed people aged 25 to 58 who were paid €560 ($806) monthly, unconditionally.
Kela, a Finnish social security agency requested the government for extra funding to expand the two-year trial to group of employees this year, however, this request was turned down by the government saying the payments to the current participants will end in january, 2019.
Olli Kangas, one of the experiment’s designers said, “The eagerness of the government is evaporating. They rejected extra funding [for it].”
Supports of this scheme held an opinion that since the people would have income even the jobs, this would boost the mobility in the labour market.
Some people saw this scheme as a way to help unemployed people secure temporary jobs as it guaranteed safety net. Before the scheme came into being, a jobless person would refuse a low-income or short-term job out of fear of having their financial benefits reduced drastically under Finland’s complex social security system.
With the government planning to scrap the Universal basic income scheme, it hopes to replace it with other schemes for reforming the Finnish social security system.
Universal basic income
Basic income is an idea to provide residents of a country with regular unconditional fixed amount of money. This can either be from the government or some other public institution, in addition to income received from other sources.
Finland began the first national UBI program on 1 January 2017. It was first of its kind and was observed eagerly by commentators around the world as it was believed that it would provide conclusive proof of the merits or demerits of providing a universal basic wage for all citizens.
Through it, 2000 randomly picked unemployed Finns (between ages 25 and 58) were receiving a guaranteed sum of €560 ($806) per month – to be paid even if they find work.
The unemployment rate in Finland, a country with 5.5 million people, stands at 8.1%. The Finnish government agency responsible for the country’s social benefits, KELA, said that the scheme’s goal was to abolish the “disincentive problem” among the unemployed.
Proponents of a universal wage argue that it incentivises unemployed people to seek different jobs and, in the long run, cuts government spending on welfare schemes. Whereas the opponents of the idea argue that it is untested and costly, and say it could increase unemployment by ensuring an unconditional and steady flow of income.