- Title: Finland pilots radical basic income idea despite feasibility doubts
- Date: 18th January 2017
- Summary: WEBSITE WITH INFORMATION ABOUT WHO CAN APPLY FOR SCHEME
- Embargoed: 1st February 2017 12:13
- Keywords: Basic income unemployment benefits trial Finland
- Location: HELSINKI, FINLAND
- City: HELSINKI, FINLAND
- Country: Finland
- Topics: Government/Politics
- Reuters ID: LVA0045ZLV7EV
- Aspect Ratio: 16:9
- Story Text: A group of unemployed Finns have just become the first Europeans to enjoy a guaranteed basic income; from January a monthly pay cheque has begun arriving from the state, regardless of whether they find work or sit at home on the couch.
In its purest form, the basic income idea aims to prepare society for a future when robots and artificial intelligence may replace huge numbers of humans in the workforce. This will allow unwanted workers to lead comfortable and dignified lives while machines create much of the wealth to pay them, supporters argue.
The Finnish scheme has different, less lofty ambitions; while offering a safety net for those who cannot or choose not to work, it seeks to encourage the unemployed to take often low-paid or temporary jobs without fear of losing their benefits.
Swiss voters rejected the concept of an unconditional minimum income for all last year, but authorities in the Netherlands, France, Canada and the U.S. state of California are among those looking at the possibility, though mostly at a local government level.
Finland has gone further by launching a two-year nationwide pilot scheme. Last week, 2,000 randomly-chosen unemployed Finns got their first monthly payment of 560 euros ($597) under the trial in the Nordic country which is struggling to recover from a decade of economic stagnation.
"The participants get this money, no matter what," said Marjukka Turunen at the Social Insurance Institution of Finland (KELA), which runs the programme. "They can ... stay at home on their couches and do nothing if they settle for this basic income."
But Turunen, who heads KELA's legal unit, said recipients could also top up the basic sum. "They can take on part-time jobs or start their own business," she told Reuters.
The object is to tackle the "welfare trap" that afflicts many European economies - unemployed people often find they are better off on benefits than in work when it is available, creating a heavy burden on strained government budgets.
The Finnish economy has struggled for the last decade due to a string of problems, including high labour costs, a decline of Nokia's former mobile phone business and recession in neighbouring Russia, a major trade partner.
Labour market data underline the welfare trap: the number of unfilled job vacancies has returned to its highest level since 2007, and yet unemployment remains at around 9 percent, with long-term joblessness rising.
Under the trial, the tax-free monthly payments replace unemployment benefits, with the difference being they will not be reduced or halted if the recipient earns extra income for working during the period.
The monthly sum - roughly equal to the basic unemployment benefit that covers food, personal hygiene, clothing and other daily expenses - is supplemented, when necessary, with earnings-related benefits such as housing allowance.
Nevertheless, the pilot has drawn criticism from economists, lawmakers and business lobbies. They variously argue that it is too narrow to yield credible conclusions, a waste of time and money, and an attempt to portray the government in a favourable light.
- Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2017. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: Video restrictions: parts of this video may require additional clearances. Please see ‘Business Notes’ for more information.