Finland Tests Guaranteed Basic Income

Print Friendly

Above Photo: By Asher Platts

Finnish citizens given universal basic income report lower stress levels and greater incentive to work

Participants receive €560 (£473) every month for two years and do not have to demonstrate that they are actively seeking work

Finland has been giving 2,000 of its citizens an unconditional income for the last five months and some are already seeing the benefits, reporting decreased stress, greater incentives to find work and more time to pursue business ideas.

The scheme is the first of its kind in Europe and sees participants receive €560 (£473) every month for two years.

Recipients do not have to demonstrate that they are seeking employment and they are not required to regularly report to authorities to prove they still need the payment, as is the case with standard unemployment benefits. They can spend the money however they like.

Under the pilot, if a participant finds work, they will continue to receive the stipend, removing one of the limitations of current welfare systems – the disincentive to find work.

The trial is one measure introduced by the centre-right government to tackle Finland’s unemployment problem.

Juha Jarvinen, an unemployed young father in a village near Jurva, western Finland, was picked at random to receive the payment, starting in January this year. He told the Economist that, unlike when he was receiving standard unemployment payments, he is now actively seeking work.

He had previously been offered a few part-time positions but taking them would make no sense, since it would jeopardise his welfare payments. “It is crazy, so no one will take a bit of work,” he said.

He said he is also in the process of starting a business, is much less stressed and no longer has to go through the “silly show” of filling out forms or attending regular interviews with employment agency officials.

“I’m an artist and entrepreneur. Sometimes I’m too active, I don’t have time to stop,” he said.

Not everyone is impressed by the pilot scheme, however. In February, Finland’s biggest union said the experiment was unaffordable and would encourage some people to work less while driving up wages in undesirable professions.

“We think it takes social policy in the wrong direction,” Ilkka Kaukoranta, chief economist of the Central Organisation of Finnish Trade Unions (SAK), told Bloomberg.

  • DHFabian

    We should discuss the myth that legitimate welfare aid would be a “disincentive” to work. For a time, the US had a system that combined welfare aid with work opportunities. One could pursue job skills training, often on the job, and were allowed a measure of flexibility to do this on a part-time basis, as needed, without losing welfare (esp. important for those with young children). Those who were unable to work (health, etc.) maintained their benefits without penalties.

    The results proved the opposite of what was expected. Even when financial supports were available, the “masses” chose to pursue jobs. In fact, some 80% of welfare recipients over time quit welfare for jobs. At the same time, those who couldn’t do this, didn’t end up homeless. If people lost their jobs, for whatever reason, they could reapply for welfare aid, ensuring a measure of stability.

    Welfare was never expected to “end poverty in the US.” That wasn’t — and couldn’t be — its intent. In real life, not everyone can work (health, circumstances) and there aren’t jobs available for all. The evidence shows that, given a real choice, people pursue jobs for reasons that go well beyond incomes alone. Our jobs are a vital part of our social interactions, and they provide a vitally important sense of purpose to our lives.

  • Aquifer

    “..driving up wages in undesirable professions” – isn’t that a good thing?

  • Dawn Jones

    I don’t understand the comment in the article. Which professions are they talking about?

  • Aquifer

    Good question … :)

  • pyradius berning

    No surprise, unions would feel threatened by an ‘automated’ policy that protects workers. Makes all those professionalized middlemen ‘fighting’ for the middle class redundant.