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.
The concept of Universal Basic Income (UBI) is not a new one. Economists have debated it since 1797 when Thomas Paine proposed the idea. Since then, it has been experimented with in varying degrees by many regions and states in Scotland, Canada, Kenya, Uganda, and India. But never on a national level.
Finland began the first national UBI program on 1 January 2017. It is the first of its kind and will be observed eagerly by commentators around the world as it will provide conclusive proof of the merits or demerits of providing a universal basic wage for all citizens.
The scheme will continue for two years. Through it, 2000 randomly picked unemployed Finns (between ages 25 and 58) will receive 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%. Currently, a jobless person may 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. The Finnish government agency responsible for the country’s social benefits, KELA, says the scheme’s goal is to abolish the “disincentive problem” among the unemployed.
In Finland at least, the idea is attractive to both sides of the left-right divide. Liberals hope the program will lead to a dip in poverty while conservatives hope it will cut bureaucratic red tape.
The first UBI referendum in the world was held in Switzerland on 5 June 2016. It was rejected by a 76.9% majority. A nation-wide UBI scheme in Switzerland would have nearly doubled welfare spending. However, a similar proposal will be rolled out in the Netherlands soon, and the idea has also taken root in Italy.
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. 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.
There are many major proponents of UBI around the world. The idea’s future will be tied with how Finland fares in the next two years.