Controversy surrounding basic income in Finland

Publisert:25. januar 2017Oppdatert:30. januar 2017, 20:44
Finnish farmers protesting EU agriculture policy in Helsinki. Photo: STR News/Reuters

Finland has started a basic income experiment, where two thousand randomly selected unemployed citizens will receive 560 euros per month for two years. 

Heikki Hiilamo. Photo: Jarmo Nauska
Kela -offices. Photo: Kouvolan Sanomat

The basic income experiment in Finland, that started in January 2017, has received varied reactions from the country. Many of the politicians are not satisfied with the scope of the experiment or disagree about the largeness of the sum. The Finnish newspaper Helsingin Sanomat reports many politicians in the opposition parties are calling the experiment “nonsense” and “a joke”.

According to HS, even experts and scientists have criticized the experiment for being too narrow. As for now, only citizens that are unemployed and aged between 25 and 58 are included in the test. This leaves the experts wondering how other groups such as students, working class or younger citizens would do in the experiment.

On the other hand, many stay optimistic about the experiment’s potential to help unemployed citizens climb out of the so-called unemployment benefit trap. One of them is the professor of social policy, Heikki Hiilamo, from Helsinki University. 

- A functioning basic income system for either the unemployed or another kind of partial basic income definitely sounds plausible. A universal basic income, on the other hand, I am not so sure about, Hiilamo states.

A universal basic income, on the other hand, I am not so sure about.

Hiilamo has written articles in and on the website of the explaining his take on the subject. In his opinion, a universal basic income could possibly extend study times, encourage women to stay at home longer after giving birth and work as a negative incentive in several other situations. 

 

Critical times

There has been speak of basic income to some degree in Finland for a while and the discussion of UBI has become frequent globally as the world is trying to come up with solutions to the challenges robot automation will bring in near future. Finland’s economy has suffered the past few years, increasing the long-term unemployed group. Hiilamo explains the factors finally enabling the experiment:

- There are structural reasons behind the experiment: high long-term unemployment rate, many jobs disappearing in the industrial sector, and as the government now has changed, consisting of parties that are pro basic income, the actual realization of the idea was able to take place.

There are three so-called “carrots” (incentives) in the concept, according to Hiilamo. First of all, accepting part time or temporary jobs will become easier, as it will not affect one’s unemployment benefits and allows one to keep the basic income. In Finland, many have to deny offers for temporary work due to the effects it has on their future unemployment benefit, leaving them dependent on the government’s benefits. This is called the “unemployment benefit trap”. 

Second of all, the basic income system would decrease bureaucracy significantly, as citizens would not be forced to announce their incomes and handling applications of many kinds would diminish. 

Last but not least, citizens would have the opportunity to decline participating in the state’s rehabilitative programs directed to those struggling to find work. This can be a humiliating experience to some, as well as going to the local Social Insurance Institution (KELA) office to apply for benefits. Through the new income policy, this would be removed. At the moment, citizens who deny attending these courses lose their benefits for a certain amount of time.

 

Improvement is needed

According to , the goal of the experiment is to find ways to improve the now existing social insurance system in Finland. One of the biggest challenges is to create a social insurance system that responds better to the changes in work life. The government is also hoping to find out whether or not the new system would encourage more people to seek work, and how to simplify the complicated benefit application system. The selected group will be followed throughout the experiment and compared to a control group.

- If this experiment turns out successful, we could look at extending the idea to entrepreneurs, students, and other groups. We don’t have to include all at once, Hiilamo reminds in his .

If this experiment turns out successful, we could look at extending the idea to entrepreneurs, students, and other groups. We don’t have to include all at once.

 

Interest around the world

World leading experts such as Tesla CEO Elon Musk and the former U.S. president Barack Obama for the concept. Musk told  that the economic solution to the reality of robot automation could simply be paying people regardless of whether or not they find work. He predicts that machines would create wealth up to a degree where no money was needed to go around and no work was required. 

Cities and governments in France, Italy and Oakland, California have said they have an interest in running similar experiments in the coming years. Local experiments have already taken place in cities in the U.S. and Canada but the Finnish experiment is first of its kind as a nationwide randomized field experiment.

“It is a symbol that I believe shows that the country believes that their citizens, even those in the lower class, are able to contribute to society and benefit both themselves and their community”, Hiilamo states in his .