2018-04-24 09:13:00
By Laurence Peter BBC News
The Finnish government has decided not to expand a limited trial in paying
people a basic income, which has drawn much international interest.
Currently 2,000 unemployed Finns are receiving a flat monthly payment of 560
( 490; $685) as basic income.
"The eagerness of the government is evaporating. They rejected extra funding
[for it]," said Olli Kangas, one of the experiment's designers.
Some see basic income as a way to get unemployed people into temporary jobs.
The argument is that, if paid universally, basic income would provide a
guaranteed safety net. That would help to address insecurities associated with
the "gig" economy, where workers do not have staff contracts.
Supporters say basic income would boost mobility in the labour market as people
would still have an income between jobs.
Finland's two-year pilot scheme started in January 2017, making it the first
European country to test an unconditional basic income. The 2,000 participants
- all unemployed - were chosen randomly.
But it will not be extended after this year, as the government is now examining
other schemes for reforming the Finnish social security system.
"I'm a little disappointed that the government decided not to expand it," said
Prof Kangas, a researcher at the Social Insurance Institution (Kela), a Finnish
government agency.
Speaking to the BBC from Turku, he said the government had turned down Kela's
request for 40-70m extra to fund basic income for a group of employed Finns,
instead of limiting the experiment to 2,000 unemployed people.
Another Kela researcher, Miska Simanainen, said "reforming the social security
system is on the political agenda, but the politicians are also discussing many
other models of social security, rather than just basic income".
When Finland launched the experiment its unemployment rate was 9.2% - higher
than among its Nordic neighbours.
That, and the complexity of the Finnish social benefits system, fuelled the
calls for ambitious social security reforms, including the basic income pilot.
The pilot's full results will not be released until late 2019.
OECD finds drawbacks
In February this year the influential OECD think tank said a universal credit
system, like that being introduced in the UK, would work better than a basic
income in Finland. Universal credit replaces several benefit payments with a
single monthly sum.
The study by the Organisation for Economic Co-operation and Development said
income tax would have to increase by nearly 30% to fund a basic income. It also
argued that basic income would increase income inequality and raise Finland's
poverty rate from 11.4% to 14.1%.
In contrast, the OECD said, universal credit would cut the poverty rate to
9.7%, as well as reduce complexity in the benefits system.
Another reform option being considered by Finnish politicians is a negative
income tax, Prof Kangas said.
Do welfare states boost economic growth, or stunt it?
Under that scheme, people whose income fell below a certain threshold would be
exempt from income tax and would actually receive payments from the tax office.
The challenge is to find a cost-effective system that incentivises people to
work, but that does not add to income inequality, Tuulia Hakola-Uusitalo of the
Finnish Finance Ministry told the BBC.
What do others say about basic income?
Some powerful billionaire entrepreneurs are keen on the idea of universal basic
income, recognising that job insecurity is inescapable in an age of increasing
automation.
Among them are Tesla and Space X CEO Elon Musk, Facebook's Mark Zuckerberg and
Virgin Group boss Richard Branson.
US venture capitalist Sam Altman, who runs start-up funder Y Combinator, is
organising a basic income experiment.
Y Combinator will select 3,000 individuals in two US states and randomly assign
1,000 of them to receive $1,000 per month for three to five years. Their use of
the unconditional payments will be closely monitored, and their spending
compared with those who do not get the basic income.
In 2016, Swiss voters overwhelmingly rejected a proposal to introduce a
guaranteed basic income for all.
Supporters of the proposal had suggested a monthly income of 2,500 Swiss francs
( 1,834; $2,558) for adults and also 625 Swiss francs for each child.